CityCoins and the dawning of a new Civic Engagement
[This is essay 2 of 7 of The Tech Progressive Writing Challenge. Join the conversation in the build_ Discord.]
One of the challenges of the crypto market is that, for many, it doesn’t feel ‘real.’ Plenty of people make lots of money, and then get better at making even more. Often there’s a promise that they’re investing in a protocol that will do something great.. someday. But as far as how crypto has affected the day to day life of the average person, despite ballooning to well over $2 trillion dollars, it hasn’t done much.
But CityCoins are different. CityCoins are designed to provide novel sources of funding for local governments, while providing a currency for the local community to use and build upon. While it’s still in its infant stages, it aspires to bridge the gap between the virtual world of crypto which feels inaccessible to many, and the real-life cities in which we live.
If it works, it can provide forms of civic engagement and innovation that begin to reshape the citizen experience. And it’s theoretically more powerful than other forms of engagement that have come before, because it generates its own copious funding.
The first city to fully implement CityCoins is Miami. Thanks to the leadership of Mayor Frances Suarez, people are already mining, trading, and experimenting with Miami’s own MiamiCoin (MIA). “CityCoins create a new paradigm that could raise for the city upwards of $60 million dollars in the first year,” according to Suarez. Those estimations have only increased since its successful launch in September of this year. After accepting the partnership Mayor Suarez announced that he will use proceeds to benefit three buckets:
- Programs to mitigate the potential risks of climate change for Miami citizens
- Funding new initiatives for under-privileged communities
- Crypto education and incentives for tech entrepreneurs
He has since added that he will provide the residents of Miami with a “Bitcoin dividend,” which is generated by the growing treasury, and which currently oscillates between $20mm and $30mm. In his most recent interview with Peter McCormack for the What Bitcoin Did Podcast, Mayor Suarez announced his plans for the ~$30mm produced so far. He will convert $5mm to fiat to prove to people that it’s real, and “stake” the remaining $25mm. That ‘staked’ bitcoin will produce a quarterly bitcoin dividend for the residents of Miami. He will then provide registered voters with digital wallets (you have to be a registered voter to be authenticated) which receive Bitcoin dividend payments quarterly. According to a member of his staff, that wallet will also hold MiamiCoin
So that is a high level description of how the city will spend its proceeds. But what about all that MiamiCoin out in the wild? The other half of the project is about how residents and investors will use their MiamiCoin. This is where a huge portion of the innovation will happen, and is far less understood.
How is MiamiCoin being used?
A community quickly grew around MiamiCoin on Discord. It’s still very early days for the coin, but it’s gaining some early use cases. You can now mint and sell NFTs. This is done with the STX protocol, upon which MiamiCoin is built. Another recent development is MiamiVoice, which allows you to vote on proposals for initiatives the city should consider. There’s no apparent partnership with the city linked to it, so at this stage it looks more like a proof of concept. But it does show promise. In order to interact with it, you have to download the STX wallet, Hiro Wallet, buy some MiamiCoin on okcoin, and link your wallet to MiamiVoice. All in all it takes about five minutes, and for a novice is an educational process. It’s satisfying to gain access to the proposals, although there’s not much there yet.
While the community continues to develop use cases for MiamiCoin, they face the same pressure as any crypto project — the need for a clear and valuable use-case. The use-case for the city is easy: free money. But what’s the use-case for the user? Why buy and hold it over other coins?
Crypto is new and shiny, but local currencies are not. The unfortunate truth is, the vast majority don’t make it. If you’re trying to get people to use something other than the US Dollar, there has to be a good reason. Otherwise, why put forth the effort?
I’ll get into some potential use cases below, but first, some of the issues they will face.
Issues to overcome
One challenge is the mining process. Mining is how MiamiCoin is created from scratch. I won’t go into the details, but If you’d like to see the process done, I recommend this video.
You basically throw money on the table for a chance to win a pot of coins. Your chances of winning come from the percentage of money you put in versus everyone else competing for that block. You either win or you don’t, sort of like a game of dice. Games of chance rub some people the wrong way, and with large public projects inside democracies, optics matter. But then, if you don’t want to go through the hassle, you can buy MIA cheaply on okcoin as mentioned above.
There is also a persistent culture inside crypto in general where everyone expects their coin to “go to the moon.” While it’s not impossible that MiamiCoin does that, it’s not exactly designed to. The way CityCoins are constructed, 30% of all of the value is handed to the city rather than to generating a return. So there’s going to need to be a better reason to invest in them than get rich quick like other cryptos. The reason should be aligned with different forms of value creation than pure economic self interest. This is an opportunity for the city to do interesting things with its 30% that incentivize users to keep mining and holding. But the incentives aren’t as straight-forward as with most other coins, and investors who think it’s going to be the next memecoin that appreciates 100x will likely be disappointed.
I view driving away greed-motivated community members as a blessing in disguise. Those who accept MiamiCoin’s constraints yet still want to build will be those who are able to stick around and help it grow to be a viable long-term project that both returns money to investors, improves life for the residents of Miami, and helps bring cities into the 21st century.
My recommendation — let the people decide
One option for what to do with the treasuries remaining $5mm that’s converted to USD is to let the people decide on suitable local initiatives. I’ve helped New York and Atlanta involve residents in spending public money on local projects. Below is what it would look like for Miami to host a citizen-led initiative to ideate and vote on these initiatives.
First, the public is invited to submit ideas for how to spend the funds. The money could go to local non-profits in the arts, education or environmental space; they could go toward beautification and parks facilities; they could go to homeless services; they could go to arts instillations (as if Miami needs more art); they could go to grants for entrepreneurs chosen by the people; or they could go to investing in the MiamiCoin ecosystem to grow it and bring greater returns in the long run. It can go anywhere that people imagine, as long as it falls within the guidelines the city would provide.
As the project proposals come in, the public can view them online, creating a marketplace of proposals for how to make the city better.
After all the ideas are submitted, the residents of Miami would get to vote on the winners. A way to incentivize MiamiCoin ownership could be that residents need to hold it in order to submit a project to be voted on. This should be free to residents, as Mayor Suarez is already planning on getting them wallets for the Bitcoin dividend. MiamiCoin is a fraction of a penny, so it would be easy to include it in the wallet.
The government can choose whether they want voters to be required to have their wallet setup in order to vote for the winners. If they don’t require it, they’ll get higher participation. But if they do, it could be a great initiative to get Bitcoin and MIA wallets to more Miami residents.
This is a very positive and informative way for the general public to be introduced to MiamiCoin. They’d quickly see it being used to go to real world projects and addressing real life issues. Giving it a tangibility like this would boost the value enormously not only to residents, but people from outside Miami who believe in the idea. If it works well, Mayor Suarez could pioneer a movement that works in other cities, and incentivizes the spreading of CityCoins.
All of the above applies to New York, which has partially accepted a CityCoins partnership. Coincidentally, I’ve already done a process like this in New York using city funds. The potential of using a crypto budget is even better for reasons I won’t go into now.
Can CityCoins help create a better politician?
I’ll conclude with one of the things I love most about CityCoins. They will allow forward-thinking and resourceful politicians to generate streams of revenue that their predecessors couldn’t dream of. They can take that revenue and do projects which are far more imaginative and impactful than they could have done before, benefitting their city, boosting their platform, and giving them a huge competitive advantage.
Rather than staying in office on empty promises, the politicians of the future will be able to point to the amount of resources they were able to attract, and demonstrate how they deployed them to help their population. This actually starts to sort for a superior, results oriented city leader.
It’s too early to judge the success of CityCoins or Suarez’s stewardship of MiamiCoin. But as someone who has spent years in the civic engagement space, their efforts are plowing some historic new ground and everyone involved, especially the residents of Miami, should benefit.
