Cities that embraced cryptocurrency are now dealing with the fallout

However, city officials have greatly promoted their currency of the same name to encourage individual and corporate investors to buy or mine it. Mining is the process by which a network of dedicated computers generates and releases new Bitcoins and validates new transactions.

The recent crash has reduced the value of the cryptocurrencies MiamiCoin and NewYorkCityCoin to record lows, and the governments of these cities have not owned or invested in the currencies and are not accepting them as payments. I haven’t suffered any loss.

The value of coins fluctuates depending on the demand from investors. The city’s share (30%) of that investment is stored in a digital wallet whose value fluctuates as demand fluctuates.

“Residents who buy Miami Coin have a 99% chance of suffering,” Bloomberg said. He explained that the credibility of cryptocurrencies was a source of income as follows. “It’s like imposing a $ 1,000 tax on residents, keeping $ 300 for the city, and burning $ 700.”

MiamiCoin City WalletWas valued at $ 24 million before the collapse of the major industry in January and $ 15 million before the collapse of May, but has fallen to less than $ 7 million. The hit did not affect the city’s financial resources, but residents and others who bought or mined MiamiCoin lost much of their investment.

Brookings Metro Fellow Tonanzin Carmona agreed. “At the individual level … this is a big concern [that] lots of [elected officials] We have promoted cryptocurrencies as a way to build wealth, “Carmona said. “But there are many drawbacks. It’s notorious volatile …. Cryptocurrencies can be time consuming, costly to use, not accepted everywhere, and only used in certain spaces. I can do it.”

Still, Miami was announced by Mayor Francis Suarez in February. “Historical moment.” Suarez said the money would help lessees offset the cost of rent increases.

Suspicious ambitious plan However, the rapid decline of the entire crypto market since January has left some cities’ ambitious plans for potential benefits from speculative sources of funding suspicious.

Suarez pitched Miami Coin as a way for the city to eventually stop collecting taxes from residents. Officials in Jackson, Tennessee are planning to provide city employees with a way to convert salaries into cryptocurrencies. Others have considered the possibility of cities accepting cryptocurrencies as payments for city services, but no one, including Miami, has begun to accept digital currencies. This is a move that requires a fairly large review of financial regulations in cities, states, and federals. “At this point, it’s not worth it to the inhabitants,” Carmona said of the city-approved cryptocoin. “You can’t do anything with MiamiCoin.”

The mayor, who encourages investment in cybercoins, “is actively encouraging people to participate in the plan,” Bloomberg said. Carmona noted that adding unpredictable and valuable currencies to government bank balances is dangerous and supports regulations that make it difficult for cities to accept digital currencies as payments instead of cash. ..

She said that the optimism of officials about the future that cryptocurrencies would deny the need for taxes or that would be accepted in city transactions is a “marketing gimmick” and that city officials would “speculate” residents. He said he was hype the coin of the same name to encourage them. Philadelphia city officials abandoned discussions last month about the potential PhillyCoin venture. In February, even Suarez Miami Herald, “Innovation does not always work.”

Even Patrick Stanley of CityCoins, the organization behind Miami Coin and other city-approved cybercurrency efforts, admits that the cryptocurrency industry is plagued by fraud and hype. But he said it bounced off. “Some types think that all cryptocurrencies are fraudulent,” Stanley said. quartz.. “Another type of person thinks 99% of cryptography is a scam, but 1% is important. I belong to the latter group.”

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