Miami Mayor Francis Suarez is fired up with the idea of funding his city via cryptocurrency:
The lofty idea is the byproduct of a cooperation with CityCoins, a nonprofit that allows people to hold and trade cryptocurrency representing a stake in a municipality. By running software on their personal computers, CityCoins’ users mint new tokens and earn a percentage of the cryptocurrency they create. A computer program automatically allocates 30 percent of the currency to a select city, while miners keep the other 70 percent.
Since the nonprofit unveiled “MiamiCoin” in August, it has sent about $7.1 million to Miami....“When you think about the possibility of being able to run a government without the citizens having to pay taxes. That’s incredible,” Suarez said, adding that the partnership creates a “counternarrative” to the idea that city programs require raising taxes or “private sector philanthropy.”
Incredible indeed.
To be clear, MiamiCoins don't actually represent a share of Miami. They merely have Miami in their name. The city of Miami makes money only if fans of the city buy MiamiCoins and then CityCoins turns over a share of the purchases. Plus, of course, there's the usual future jackpot of holding onto their MiamiCoins and selling them for billions—maybe trillions!—once they skyrocket in value. Who needs taxes anymore?
The best you can say about this idiotic scheme is that it seems to be risk-free for Miami. If they get some money, great. If they don't, no harm done. Unless—
Well, unless they get so enthused that Miami's financial wizards decide to start playing games, much as my home of Orange County did in the '90s. That would be bad.
The best thing that could happen to Miami right now is for CityCoins to decline and die quickly. Miami will have its $7 million and will no longer have to fight the urge to do anything stupid. We can hope.
POSTSCRIPT: Feel free to come up with worst-case scenarios. Here's mine: MiamiCoins become the currency of choice for organized crime and drug smugglers and Miami gets rich. But only because it's literally being funded by organized crime and drug smugglers. Every time the feds come in and announce a bust, municipal revenues crater. The rest is left as an exercise for the reader.
I think your "i" key may be stuck. The names ought to be "CityCon" and "MiamiCon."
Sounds like a good deal for the city.
Yeah, right up until they start depending on it as a revenue source, and then their funny money collapses and bankrupts the city.
earmark it for a rainy day fund or a one-time project but right, not to be used as operating revenue
Considering that the mayor of Miami is touting it as a way for the city to do away with taxes... that doesn't appear to be the plan.
Earmark it for the securities fraud lawsuit settlements that Miami will provide paying out when the whole Ponzi scheme collapses.
The trial lawyers will be drooling when they realize they’ve finally found the perfect defendant: a knowing, willing participant in a ridiculous scam that has vast taxing power and deep pockets.
Kinda sorta like relying on sin taxes to fund things other than reducing the “sin”. Eg (iirc) Philadelphia funding kindergarten with sugar taxes.
Bitcoin will crater any day now. Any day now....
Just Google “How many cryptocurrencies have failed?” and then explain why giving away 30 percent of the upside makes this a better plan.
Miami will be reclaimed by the Straits of Florida before that happens.
Now look at them yo-yo's that's the way you do it
You play the guitar on the mtv
That ain't workin' that's the way you do it
Money for nothin' and chicks for free
Now that ain't workin' that's the way you do it
Lemme tell ya them guys ain't dumb
... and now you don' even need to learn to play the guitar!
My wife and I painted the first (older) house we bought in the summer of 1985 (it really needed it) - "Money for Nothin'" was our anthem for that summer.
And, as you were married, the chicks were indeed for free. Well, the chick anyway.
Have you been married? The investment is certainly worth it, but it isn’t free.
Mark Knopfler did nothing wrong.
The other downside is that the mining of these "coins" requires a HUGE amount of energy, which merely compounds our already serious climate crisis, and depending on the energy source, reeks other forms of environmental havoc as well.
Errrrr, wrong. The energy required to mine them is no "Climate crisis". It's just a waste of energy. A debt driven illusion like all money is.
its a good thing Miami is like the least affected city in America by Climate change and all the negative affects will be felt elsewhere...
And people wonder why we can;t act on Climate change, the city that is actually the most at risk is partying like the Mask of the Red Death.
Eventually, the Miami Heat's American Airlines Arena will rebrand as Bang Brothers Aquarium.
Well, they are mining away on the Columbia river in Washington state. Not sure why the Gov allowed this idiocy when there is such a drought.
It's just another way Miami will soon be underwater.
It's like projection.
Are we at peak tulip yet? Is this the sign? Isn't the joke on Wall Street that you know it's time to sell when your mother-in-law wants to buy?
The primary use case for cryptocurrency is criminal activity - drug transactions, extortion, money laundering, and so on. MAYBE the systems are resilient enough to resist tampering and manipulation by said criminals, but maybe not.
AND, I am not saying everyone trading crypto is a criminal. Just that the only thing it can do that normal bank accounts in currencies can't is be exchanged in an anonymous way that's difficult to trace.
Interesting, isn't it, that there is one other currency that can be exchanged anonymously. Oddly enough, it's called "currency." And, unlike various cryto-babble, it's backed by the full faith and credit of the U.S. Government. That might not be as strong as it once was, but it's still the best game in town.
Yeah, but the Feds get all pissy when you try to print your own dollars. Something something counterfeiting something. And they keep the value stable, so it's hard to get rich speculating on it.
Not that this would be of interest to anyone who comments here but you can't actually make anonymous transactions in currency, at least not domestically. Considerable oversimplification but cash transactions of $10K or more have to be reported on a currency transaction report (which includes cash received by lawyers) and structuring a transaction to evade the reporting requirements is itself a federal crime. So it's actually risky (and very expensive) to use currency for things like large scale drug or weapons transactions.
The two main advantages of crypto seem to be artifacts of government inaction rather than something that's baked into them. Crypto accounts are anonymous because the US government (and other governments) chose to allow them to remain so and be exempt from the reporting and "know your customer" requirements for normal bank accounts. The other advantage is that governments apparently treat transfers between crypto accounts using the same rules as for bank checks (basically no CTR but theoretically a never-enforced requirement to report suspicious transactions.
So except to the extent that the FBI is able to use technical means to read and track crypto transactions, all of the secrecy advantages of crypto over currency are real but entirely dependent on the willingness of the federal government (and of other governments) to allow crypto companies to ignore the requirements that would apply to banks.
As an aside, this suggests that Miami's new tax-free prosperity would be built on the same kind of shaky foundations as everything else there. If the feds chose to end crypto they can do so with a press release and there's nothing Florida can do about it since the money laundering laws are "enforced" by the federal government.
I thought that was very interesting. I'd never really thought about crypto as another version of the gig economy before, but there you go.
Use a computer to copy the market for something that has a lot of annoying regulations and oversight and bam, you're rich! It's like Uber, but for money.
You’re rich, yes, but only so long as the feds are willing to turn a bind eye (and for roughly ten years thereafter). When or if you run out of their forbearance, you’d better have made enough money to comfortably afford the necessary fixers (perhaps even a senator), lawyers, and judges or you’ll be spending eternity in a federal prison.
If only Dennis Hastert had Bitcoin!
Enough Bitcoin would mean that Hastert would still be in Congress and still molesting little boys. Knowing what he had hanging over him, Hastert should’ve taken vastly more graft so that he could’ve afforded to have his case fixed. Wrong time, wrong place, and too little money. Sad!
Much more so in the "Miami Vice" era from roughly the late 70's through the 80's because you had a lot of boss dealers (essentially wholesalers) who were buy huge shipments in Colombia or Peru, etc, and importing the product with Miami as the friendliest port of entry. That left a lot of people on all sides of the transactions with trash bags filled with currency and a huge number of Miami businesses very much happy to help out with cleaning up anybody's money.
If I understand the history correctly, the rise of the cartels (who have legal access to big money center banks to launder their money) and the shift to the southern border as a primary place of entry has done a lot of damage to the Miami economy.
I'm not sure that crypto will be a suitable replacement because the kinds of criminals who will be using it are mostly small-timers. As you say, lots of extortionists, kiddie porn sellers, and assorted small time criminals.
If the officials in Miami think crypto is going to bring back big-time money laundering, I think they're sadly mistaken. Most of the really big drug money is staying with the cartels (who are increasingly vertically integrated) and they've got relatively inexpensive (and essentially legalized) access to big money-center banks in the states who can provide all kinds of services (investments in securities and real property; legal wire transfers, bank accounts) at extremely competitive prices. My guess is that the cartels (who have the big money) are not going to go back to moving their cash through Miami's crypto setup when they've got access to banks at a fraction of the cost and risk.
Miami will be live action Grand Theft Auto, except no respawn. The City would have incentive to not police, to truly defund police. Once the Feds can stand it no longer, a giant wall will be built around it solving two problems - ocean rise and a national prison.
So, fund the city via charity? I'll be curious to see if the Peter Thiels of the world pony up as part of the experiment. Don't they believe with Ayn Rand that charity is a horror because it saps the will?
I would just kill Theil. Taking out the trash one corpse at a time.
That worst case scenario actually sounds like a book I would quite enjoy reading. Someone like Neal Stephenson...
Also I assume at this point every time the OC bankruptcy comes up someone responds with "there's always money in the banana stand"....
Afghanistan banana stand…
I believe they are referencing a subplot from Arrested Development. I quite liked that show, back in the day.
Phrase association can lead to interesting places. 🙂
+$10
Somebody burned that stand down, here it will drown the sea of its wickedness and pride.
Just an ordinary money laundering scheme. I once watched a documentary (Frontline?) About money laundering. Miami was ones of the centers of the industry.
It does mean the city becomes somewhat attractive to various criminals. Easier to pay your property tax with your pedo-bucks.
What then to make of El Salvador adopting Bitcoin as an official currency: https://www.cnbc.com/amp/2021/06/05/el-salvador-becomes-the-first-country-to-adopt-bitcoin-as-legal-tender-.html
Also, may one pay ones city fees and sales taxes with MiamiCoin?
Ha, I bet not. They're going to want actual, meaningful currency for that.
So, it is a tax coalition of the willing … ?
This is so far past idiotic it's a toll call.
The scheme actually starts off successfully and Miami gets about two years of revenue out of it. Then they ask why not cash it out for its full value now? They sell it to Wall Street for a few multiples of the revenue stream.
Of course they also guarantee that revenue stream for the next 25 years with their general purpose revenue in order to reassure the investors. Because what could go wrong?
Looks like Miami's going to be underwater in the future in more ways than one.
Does anyone see a parallel to the Moai of Easter Island? Increasing resources being devoted to a useless product that ended up in a bankrupt economy and a ravged environment.
The city of Miami decides to "invest in itself" and buy billions of dollars of MiamiCoin.
I love the postscript.
Its a fair bet that the politicians don't even understand this.
It does not appear to be a separate "coin" or a separate crypto.
It looks like its based on Bitcoin, where a second layer of programming ("Stacks") seems to allow for mining but, there is the 70/30 allocation.
I don't know how they got that a MiamiCoin is worth 2.6 cents, but perhaps that is because it can be redeemed to some fraction of a Bitcoin.
Its almost like the pitch has nothing to do with investment, its people who want to get into small time Bitcoin mining on their own PCs.
If this scheme were ever implemented, Miami really would become Mos Eisley on the Atlantic. A much swampier version, of course, though every bit as wretched a hive of scum and villainy.
So, it's a tax, with a refund, and the coin is like a bond they hold, except it can completely vanish? And maybe no one will feel like doing it, so it won't work, so the city will make it mandatory, so people will have to do it, because it's good for them, and good for everyone. And CityCoin gets to make some money.
Libertarians are the smart people!
The amount of cognitive dissonance that permeates the cryptocurrency cult is pretty astonishing.
They deride standard currencies as "inflationary" while ignoring that the aggregate quantity of all crypto tokens is growing exponentially. It's essentially meaningless that any one cryptocurrency puts a cap on supply when totally new ones can be created so easily and are being created at an accelerating rate. Only a few years ago when I started paying attention to the nonsense, there were only a few hundred cryptocurrencies in existence. CoinMarketCap now lists nearly seven thousand!
Also can't help but notice that a disproportionate number of believers in this "free money" are libertarians. The irony!
Considering Glibers are creations of the government, they represent things fun to kill.
The whole premise is insane. “Invest” in Japanese yen! They’re sure to explode in value!
What good is a currency that no one has any idea what it will be worth in a year?
You can't "buy" things with these Citycoins. Their function is to enable a separate blockchain that operates on top of the Bitcoin blockchain. This newer type of blockchain isn't about cryptocurrency; it's about enabling other functions upon the process of mining Bitcoins.
That part about separating cryptocurrency from blockchain and the whole Tyler Cowen excitement about blockchains? That's what this is. In the future, you may be involved in transactions that implicate these new blockchains but not even realize it. After all, few care about the back end of the internet, so why would they care about the back end of a transaction?
Citycoin enables what might be seen as a de facto tax of the blockchain, even though it's a voluntary contribution with no strings attached. My issue with all this is about control. Sure, Citycoin may be a nonprofit (for the time being), but, are we okay with the privatization of government revenue streams? This is where it's not like a tax at all. The worst-case scenario is where Miami essentially takes this revenue stream for granted, cutting taxes IRL.
Kind of makes you wonder why Miami didn't just fund itself by selling confiscated coke in the 80's....
Oh that's right- everyone wasn't a moron then.
What could be more ironic than Miami trying to fund itself from a technology that makes global warming worse?
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