Bitcoin Hotspots : The Mayor of Miami announced that they would begin paying citizens of the city a bitcoin dividend. I don’t think anyone had “a US city will pay their citizens in bitcoin” on their 2021 bingo cards.
This is not the first US city to do something like this though. Earlier this year, the mayor of Cool Valley, Missouri committed to giving every citizen $1,000 of bitcoin.
The catch? You aren’t allowed to sell it for a pre-specified number of years. In Cool Valley, the bitcoin payments are coming from private donors who have contributed the bitcoin for the specific purpose of being paid to citizens.
In Miami, the proposed bitcoin payments would be coming from yield that is generated by their treasury assets coming from the MiamiCoin wallet that they recently decided to claim.
For those that don’t know, MiamiCoin is built using Stacks, which brings smart contract functionality to bitcoin, and uses the security model of bitcoin to ensure the layer one is decentralized and secure.
The City of Miami has received over $20 million of these digital assets so far. If you were to annualize these earnings, that would make up approximately 20% of the total tax revenue for the city.
Once the city has these digital assets sitting in their treasury, they are able to earn yield on them. That yield is what the mayor is proposing to pay out to citizens in bitcoin.
It appears that there are still some details to figure out here, but my understanding is that a citizen in the city of Miami will be able to set up a digital wallet (the brand or company of their choice!) and receive bitcoin dividends on a periodic basis.
There are plenty of people who have questions or concerns around how the yield is generated, and how sustainable it will be, but it is hard to argue that more citizens being onboarded to bitcoin would be a bad thing.
If you zoom out, this concept of a city treasury is not only happening in Miami.
The city of New York recently had their city-specific system launched and it appears that people are very excited about participating. It would be a game-changer if NYC and Miami, two major cities in the United States, start to earn bitcoin yield and then pay it out as dividends to their citizens.
Whenever I see new ideas like this, I try my best to learn what the critics think as well. The largest critiques seem to revolve around questions related to (a) why does the city need a city-specific coin? and (b) what are the regulatory regimes/treatments that this type of asset would fall under?”
I don’t pretend to have the answers to either of these questions, so will keep digging until I understand them better.
In the meantime, it is becoming more and more obvious that cities around the United States are going to adopt bitcoin. We already have four mayors receiving a portion or all of their salaries in bitcoin, along with now two cities promising bitcoin payments to citizens. Pretty crazy.
The last point that I think should be provided for analysis is universal basic income. I personally don’t believe that the idea of a government creating money and handing it to their citizens until the point of dependency is a good idea.
By no means am I an expert on the subject, but I tend to favor capitalism over all others. With that said, if cities hand out bitcoin until the point of dependency, then that also doesn’t feel right.
The difference in those two equations is that a fiat currency and digital sound money are polar opposites of each other from a monetary policy standpoint. The sound money continues to protect, and potentially appreciate, the holders purchasing power, while the fiat currency devalues it.
We are living during an interesting time period. There are many different people and organizations working to create a better system. Some of these attempts will fail and some will succeed.
The single asset that I have the most conviction on over the long term though is bitcoin. It is durable and it is resilient. You love to see politicians and city governments waking up to this now.
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