Miami this month became the first U.S. city to use cryptocurrency to help bankroll its budget, but other cities may soon choose to follow if this new way of using crypto technology takes hold.
The Miami city commissioners voted Sept. 13 to accept a gift of 30% of the revenue generated from MiamiCoin cryptocurrency, valued then at $4.3 million. When rewards are applied for mining the crypto, the 30% is “gifted” into a virtual wallet designated for the city.
“CityCoins offer people a way to support their city and grow its crypto treasury while earning Bitcoin BTC and Stacks STX for themselves,” according to developer CityCoins. The city of Miami has not endorsed MiamiCoin or issued an official statement on it.
For a new CityCoin to be activated, its contract must be deployed “mainnet,” or have its own blockchain protocol, followed by 20 unique wallets sending a transaction to the contract, according to CityCoins. Each CityCoin is powered by Stacks, a blockchain that enables smart contracts on the Bitcoin network. Stacks says its technology makes Bitcoin programmable, connecting to that cryptocurrency’s blockchain to enable smart contracts, apps and digital assets “that are integrated with Bitcoin’s security, capital and network.”
The cryptocurrency is a few times removed from, but still built upon, Bitcoin technology. “It’s actually possible to transfer MiamiCoin with a Bitcoin transaction,” according to a CityCoins tweet.
Miami Mayor Francis Suarez said in one of the city’s “Cafecito Talk” interviews with CityCoins, “When you see $100 billion of assets moving in the last six months … when you have Blockchain.com moving [to Miami], [financial services provider] eToro moving here, [cryptocurrency exchange] FTX making a big play here in the city … and obviously the Bitcoin conference moving here from L.A., it’s more than just talk and hype.”
“This is happening faster than people thought,” Suarez added. “It’s more ingrained than people think; it’s beyond real. This is, like, maybe unstoppable.”
The mayor has been working to position Miami as a technology hub, and what he has called a “capital of capital,” where tech companies and capital markets converge.
Meanwhile, the 30% “gift” proceeds of MiamiCoin continue to add up, Suarez told digital currencies publisher CoinDesk, to the tune of $2,000 to $3,000 every 10 minutes. He said it could build to some $60 million in a year. The mayor noted, however, that the city will accumulate those proceeds for about six months to monitor the cryptocurrency’s performance and volatility.
Some possible use cases of MiamiCoin? Suarez suggested that the city’s small businesses — like restaurants and supermarkets — could someday accept it as a payment method. For now, San Francisco-based cryptocurrency exchange OKCoin is the only place to buy CityCoins.
“The city of Miami is dedicated to becoming a model 21st-century city. We think that means embracing and supporting disruptive technologies that challenge the status quo and improve how we interact with one another,” the city stated in introducing a white paper it published about Bitcoin.
“Bitcoin, the decentralized financial network that allows individuals worldwide to store and send value to one another without intermediary agents like banks or payment processors, is a technology we believe will transform the world,” the city said.