This week, CoinFlip President and Co-Founder Ben Weiss is taking over the Weekly Flip Thru to discuss all things related to Miami’s pursuit of a crypto economy.
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Miami’s Love Affair with Bitcoin
Earlier this year, Miami Mayor Francis Suarez announced his intentions to make Miami the most “crypto competitive city on the planet.” Suarez has exciting plans for the city centered around turning South Florida into a FinTech oasis. In order to do this, the city is fully embracing bitcoin.
A couple of weeks ago, City of Miami officials passed a resolution by Mayor Suarez that allows city employees to be paid in bitcoin — giving Miami workers the option of receiving some or all of their salary in BTC. The resolution also offers Miami residents the choice of paying property taxes and city fees using cryptocurrency.
Additionally, the resolution requests that the Florida state legislature allow Miami to add bitcoin to the balance sheet of its city treasury — a first for any major US city.
Alongside these changes in payments, the city will launch education campaigns in English, Spanish, and Creole to inform people about cryptocurrency. Plus, to make Miami a dedicated crypto hub, Mayor Suarez is looking to bring the Bitcoin 2021 Conference to Miami and other crypto-friendly events and businesses.
Moreover, the mayor, who is up for reelection this year, is considering financing his reelection campaign in bitcoin to solidify his tech-friendly persona, as well as personally investing in crypto.
In addition to introducing more bitcoin into Miami’s economy, the mayor is hopeful that more FinTech businesses will set up shop in the city. As we know, the COVID-19 pandemic has created an exodus of some big companies from existing FinTech capitals like San Francisco and New York City in search of more affordable locations. As a city on the beach with great weather, no state income tax, and tech-hungry political leadership, Miami welcomes entrepreneurs and crypto companies with open arms.
Why does Miami want to become the crypto capital of the USA?
Mayor Suarez sees Bitcoin and other cryptocurrencies as the move of the future. On that point, I strongly agree with the mayor. When explaining his decision-making process, Suarez pointed to another significant US government stimulus package’s potential impact.
As Suarez said out in this interview with Decrypt, “There are estimates that could create 40% of all the dollars that are in existence. That has the possibility of creating inflation, which again will be something that drives people into crypto.”
Stimulus packages mean increasing the money supply, which means a declination in the value of the dollar. Many call Bitcoin digital gold due to its ability to hedge against inflation. Like gold, bitcoin is scarce — there is a finite supply. Because of this limited supply, demand for bitcoin drives the price even higher. The government is addicted to printing money but there will never be more than 21 million bitcoins.
In addition to the potential impacts of inflation, Suarez is hopeful that soon Amazon will begin accepting crypto as a payment option. As he puts it, Amazon is associated with 70% of the transactions we do in our lifetime (which is a scary thought, but that is a subject for another day). Acceptance of bitcoin by Amazon would transform the landscape of crypto.
Another reason why Miami is looking to crypto could be due to its demographics. According to the latest census data, 53.7% of Miami residents are foreign-born. This means that it is likely that these people have family outside of the US that they might want to send funds to on occasion. International remittances can be quite costly, but Bitcoin knows no borders. With Bitcoin, you can send money to anyone, anywhere in the world faster and more cost-effectively. With other cryptocurrencies like Litecoin and Dash, the fees for making a transaction are considerably low, sometimes even less than one cent.
What are the Risks of a City that Runs on Bitcoin?
The resolution to become more BTC friendly has not yet been set in stone. First, the city has to find a third-party to help facilitate paying city employees in crypto. They also need to find a third-party, potentially the same third-party, that will make it possible for taxes and fees to be collected in crypto. Once a suitable third-party or parties are found, then the proposal will again make its way before the City Commission for approval.
As far as adding BTC to the Miami treasury balance sheet, state laws may prohibit the move. If this happens, Mayor Suarez has said he is committed to reforming that legislation so the city can move forward with its crypto desires. One risk associated with this investment is that the city does not currently hold any assets that are not cash or cash equivalents. Investing in Bitcoin is a first for any major city in the United States. It appears that Miami’s mayor is committed to paving the way for more cities to follow suit.
Another risk, of course, is bitcoin’s price volatility. Specifically, what if a city employee decides to be paid in bitcoin, but just as the payment is made, bitcoin’s price drastically drops? In response to this, Suarez says a third party will insure the currency to cover any immediate losses in value.
My Take on Miami’s Moves toward a Crypto Economy
I love Miami and I love Mayor Suarez. I think he is the best mayor in the country by far. Historically, Miami has been a significant city for tourism. But, as we know, the COVID-19 pandemic has hit the tourism industry hardest of all. I believe Mayor Suarez’s move to welcome bitcoin adoption and crypto-friendly businesses is an excellent solution in light of the crisis. If anything, the COVID-19 crisis has solidified a role for Bitcoin, crypto-business, and the role of FinTech in the economy.
CoinFlip experienced unprecedented growth in 2020 while so many other businesses struggled to keep their heads above water. It’s hard to see these businesses struggling, but it just goes to show that tech and crypto are the waves of the future. Miami has struggled to thrive without tourism, but I believe it’s not about how you fall but how you get up. Mayor Suarez’s drive to adapt to a new economy under adversity is extremely impressive and history will look back at him as an innovator and pioneer.
One of my favorite aspects of the Mayor’s approach is that it focuses on tech’s equity side. He understands that when these tech companies come, they will bring high-paying jobs and more blue-collar tech jobs. Speaking as a tech entrepreneur, I think other companies will appreciate Miami’s welcoming of innovation and the support of its political ecosystem. I know that Mayor Suarez’s approach will help bolster the city’s economy and help make great strides towards crypto adoption across the country.
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CoinFlip in the News
- Bitcoin is cratering again, showing why people should be cautious before investing in cryptocurrency — CNBC
- Do you owe taxes on your bitcoin? The answer depends on when you bought and sold — CNBC
- What Are Altcoins and Should You Invest In Them? — US News & World Report
- How the IRS Taxes Cryptocurrency — and the Loophole That Can Lower Your Tax Bill — Go Banking Rates