MiamiCoin crashes, but is not going anywhere

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in stuffy On Tuesday last August, a new cryptocurrency was born. Called MiamiCoin, it was designed as a way for the crypto-savvy to support Magic City and possibly earn some crypto in the process. BUT tongue twist press release said MiamiCoins were “programmable city tokens that unlock a new community revenue stream for local governments while providing collaborative technology to its citizens and ecosystem of stakeholders.”

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In fact, you can do two things with MiamiCoin: mine and accumulate. Created by CityCoins, a Delaware-based company, the cryptocurrency has a cyclical life cycle. To get them, you need to buy another cryptocurrency token called Stacks, which is currently worth about 1 dollar per unit– and use it to bet on MiamiCoin. Only one lucky bidder or “miner” can receive MiamiCoins every 10 minutes; losers get nothing but the feeling of losing their stacks. Whoever wins MiamiCoins can sell them for $0.0015 each from Tuesday on Okcoin, the only exchange that accepts them. Or they can park them (or “stack” them, in cryptographic parlance) to earn periodic rewards in Stacks tokens. Stack rewards come straight from the wallets of more people who bet (and lose) with MiamiCoins. Stacks can, in turn, be stacked to earn bitcoin rewards.

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Michael E. Bloomberg, a visiting researcher at the Center for Urban Technology at Cornell University who served on the board of directors of the Massachusetts foreign exchange firm BerkShares, compares MiamiCoin to a lottery. “You put in a certain resource and you get something else,” he says. “If you win the draw, you will be rewarded with a coin that is worthless.”

Miamicoins are worthless within their namesake city: you can’t pay taxes, buy bus tickets, or rent an apartment in Miami with them, even if proponents say the use cases will be created over time. This does not mean that MiamiCoin was named by chance, as many other coins were accidentally named after dog breeds or viral TV series. While 70 percent of all stacks spent by miners vying for MiamiCoin go to stakers, the remaining 30 percent go to a cryptocurrency wallet meant for use by the city government. CityCoins presents this as a way to show their support for the city and help it fund valuable projects.

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As of April 26, Miami wallet has over $13 million in stacks. “CityCoin automatically generates income that can be returned back to the city,” says Patrick Stanley, a Los Angeles-based technologist who was part of the Stacks core team until 2020 and is now the main spokesperson for CityCoins. The non-profit organization is supported by the Syvita Guild, Z1, DoubleUp, Freehold and Stacks Community of crypto miners.

Stanley says that MiamiCoin’s mining method is no different from other standard cryptocurrency mining methods, with different parties vying with each other to maintain a decentralized system by allocating different resources to do so. “Just like Bitcoin [mining] you spend electricity, with CityCoins you spend cryptocurrency.”

Cryptocurrency projects rely on the skillful use of incentives. One popular method is to use celebrity endorsements to encourage people to get involved in the new cryptocurrency. In a way, CityCoins does the same thing: it’s not a government project for the City of Miami, but shortly after launching in June 2021, it went live. praise from Mayor Francis Suarez, who has invested in cryptocurrencies, tweeted that the first coin is “of course” in Miami. AT Washington Post interview in September, Suárez went so far as to say that the scheme could allow “government to be run without paying taxes by the citizens”. Confused, Suarez later said CoinDesk that Miamicoin could one day be used to pay taxes in the city. Following a vote by city commissioners in February, the Miami government cashed out $5.25 million from his wallet– classified as a donation from CityCoins – which will be dedicated to the rental assistance fund.

AT media appearancesBloomberg likened the mechanism to a “bribe” to lure publicity-hungry mayors into approving what he sees as an “unregulated lottery.” In a post on his own CityCoins Discord server, he wrote that those who make the most profit are the people behind Stacks, whose tokens are needed to mine MiamiCoin, and he objects to government officials playing along with this. “Accepting money encourages participation,” Bloomberg says. “Should the city take a grant from such a source? It’s a gray area.”

Stanley does not confirm these comments, saying that neither he nor his organization benefited from these projects. The Miami government did not respond to a request for comment. A person familiar with government discussions around MiamiCoin says city attorneys reviewed the initiative and made sure accepting the donation was legal under city and state law.

CityCoins has continued to expand since its spectacular debut in Miami. In November 2021, he launched NYCCoin, a similar project for New York. Stanley pitched the idea to then-mayor-elect Eric Adams, also a crypto proponent, during a November 5 Zoom meeting with his transition team’s tech arm. that one attendee compared Stanley’s presentation to “SNL parody”. “When someone finally asked, ‘Well, what can you do about it?’ [Stanley] said, “We’re working on it, but there’s a great NFT art market in Miami right now that uses MiamiCoin,” Bloomberg says. “And then, when we were short on time, he showed us the branding of the coin and the color palette.” Adams tweeted enthusiastically about NYCCoin a few days later. Mayor Adams’ office did not respond to multiple requests for comment.

AustinCoin is also in development. The Philadelphia iteration was recently canceled local government.

However, the main problem remains: to date, all these coins are worthless. Miners are burning tons of cryptocurrencies to get assets that may never find use in Miami or anywhere else. Which, in turn, affects their price. In September 2021, MiamiCoin was worth about 6 cents, and since February, its value has been falling. Some MiamiCoin miners don’t like it. On the CityCoins Discord, several people expressed their dissatisfaction, some reported losses of 90 percent or more, and one user named SARIJAPIJA pithy said: “Lost all my money on [MiamiCoin], Thanks guys”. Even Suarez, just days after Miami received millions in donations, tempered his initial enthusiasm, saying Miami Herald that he didn’t know if the cryptocurrency would “work or not” given that “innovation doesn’t always work.”

Stanley says such impatience is misplaced, as the project will take “years” to fully materialize. “People expect things to move at the speed of crypto,” he says. “One of the things that doesn’t move at the speed of cryptocurrencies is the government.” He says that while it may seem strange to launch a coin before it has any use, it is more efficient to have technicians and users come up with ways to use the existing coin. “Almost all tokens start out as hallucinations, starting with bitcoin,” he says. Stanley notes that 300 developers signed up for Workshop MiamiCoin which CityCoins is co-hosting with Miami Dade College in May as a sign of interest in the future of the project. “If you didn’t have the coin, these projects wouldn’t exist—they won’t exist waiting for the coin,” says Stanley. “So this is the first one and you can use the coin to develop city-specific applications.”

A person familiar with Miami’s government says the city is unlikely to play a major role in making the token meaningful. This is partly due to technicalities such as the fact that the city cannot hold cryptocurrency on their balance. But in general, according to the source, MiamiCoin is viewed by the city as a community-driven project.

This week, in order to solve the problem of unrest among their supporters, CityCoins held a vote change the speed at which it allows people to create new MiamiCoins and NYCCoins, a deflationary move to drive up the price. More importantly, Stanley said the change will also allow networks to maintain a voting system, allowing token holders to put forward and support proposals on how funds donated to the city can be used.

“We are in the very early stages of setting up checks and balances,” he says. He says that even if token holders can vote to allocate city wallet funds to a particular project, the government and possibly the residents of each city will have a say in the process.

He also hopes that the addition of these voting privileges will attract more people who actually live in coin-related cities.

This is an important point: most likely, most of the coins of Miami – or, for that matter, the coins of New York – do not belong to residents. The organization that has so far produced the majority of CityCoins, a “mining pool” called Syvita Mining, was founded by a 15-year-old Briton under the pseudonym Asteria, who also previously worked on Stacks. In February the organization joined the Stacks startup acceleratorand Asteria was replaced by Syvita’s current CEO, a former Austin-based financial professional known as BowTieMooneeb.

BowtieMooneeb says there are about 1,000 people who participate in the Syvita mining pool, investing at least 40 stacks, “all over the place.”

“They are geographically distributed,” he says. BowTieMooneeb says that Syvita’s income comes from a 1 percent exit fee from the MiamiCoin and NYCCoin pool. The popularity of both coins among miners has fallen. But he is optimistic about the future of the project. “Of course cities have a vested interest in their tokens being useful,” he says, “because if the value of their CityCoin goes up, that means more revenue is flowing into their city coffers.”

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