As of September 2017, the Swiss town of Zug will offer all of its citizens a digital identity on the Ethereum blockchain.

Zug, a Swiss town with the population of nearly 30,000 citizens, has been famous for its dedication to cryptocurrencies. Zug has been called the “Crypto Valley” of the financial world since many of its citizens are entrepreneurs who specialize in digital currencies. Numerous Bitcoin and blockchain enthusiasts have flocked to the town to take advantage of the entrepreneurial environment and the crypto-awareness of the citizens. Last year, the town even began accepting bitcoin payments for government services on a trial basis. In addition, one of the 10 bitcoin ATMs in Switzerland is in Zug, which is operated by the Zug-based Bitcoin Suisse.

On July 7, Zug published a press release on its official website stating its plans to offer digital identities for its citizens. According to the press release, the digital identities will be based on an app that “secures personal information using blockchain technology and associates it with a crypto address.” The system is completely decentralized, thus the citizens will register their identities on the app independently, which will be verified by the town’s own “identity control” procedures.

The Swiss government, in cooperation with external partners, is currently focusing on a centralized solution to create its own digital ID service. However, according to Zug’s press release, the government’s efforts have failed since the application of a centralized digital system is complicated and such systems are “technically considered obsolete today.”

“We want a single electronic identity — a kind of digital passport — for all possible applications. In our city, we do not want this digital ID to be centralized but on the blockchain. We only verify and confirm the identity of a person,” Dolfi Müller, the mayor of Zug, said in a statement.

According to the mayor, blockchain-based identity applications should not be limited to urban services, fee collection or room rentals. In the first phase of the digital ID, a consultative “e-vote” will be held to determine the usage of the innovative system. The voting is expected to take place in the spring of 2018.

The Ethereum-based digital identity application is being developed by the Institute for Financial Services Zug (IFZ) of the Lucerne University, Zug-based ConsenSys  and the Zürich-based tim.

“Today, our digital identity still lies with major search engines and social networks that profit from it. A self-managed, secure and certified identity is indispensable for the functioning of an increasingly digital society. For the Crypto Valley Zug, we believe in a research collaboration with the financial sector and government agencies,” Mathias Bucher, lecturer at the IFZ, said.

“This pioneering project is technically highly interesting and fits perfectly with the competencies of our company: digitize with the greatest possible security and great user-friendliness,” Mr. Bucher added.

Both ConsenSys and tim expressed their excitement about Zug’s digital identity project. Rouven Heck, Product Lead at ConsenSys, was delighted that the small town chose the ConsenSys web-based wallet and identity management system  uPort  to handle the project.

“By registering on the public, global Ethereum blockchain, the city of Zug offers its citizens an innovative access for both local and international services,” said Heck.

Thomas Wüst, Founder and CEO of tim, emphasized the high security of the new system.

“This solution provides tremendous added value for enhanced security, as private data remains under the full control of individuals while providing a much more streamlined use of digital services,” Wüst said.

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