It has been barely two months since the city welcomed Bitcoin Miami and promised to become the Bitcoin (BTC) capital of the world. Now Miami has once again made headlines by launching its own digital currency, MiamiCoin (MIA).
Miami will be the first city to have its own coin, created in partnership with a company called CityCoins. Let’s take a look at how the coin works and see if (and how) it could benefit the city and investors.
How it works?
CityCoins built MiamiCoin using a programmable blockchain called Stacks (STX). Starting August 3, people can mine MIA, a process that generates new coins and supports the network.
The idea is that individuals can use STX to mine MiamiCoin, and 30% of the income will go to Miami. The city can use that money to fund any project it wants, including, according to Mayor Francis Suarez, helping the homeless or funding police initiatives.
MIA owners can lock in the remaining 70% to earn Stack and Bitcoin rewards. It is unusual to be able to earn Bitcoin rewards in this way. However, the process of mining, buying MIA, and earning rewards isn’t entirely clear.
Can you spend it?
You will never be able to spend MiamiCoin as currency in the city. Federal law prohibits cities from creating their own currency. The US dollar is therefore the only currency you can spend in Miami.
According to CityCoins, the coins will become more useful over time. He states on his website: “CityCoins communities will create apps that will use tokens for rewards, local benefits, access control (to digital or physical spaces), trading, lending, contract execution. intelligent, etc. For example, the coins can be used to earn discounts at local businesses.
What are the batteries?
Stacks is an interesting project because it is based on the Bitcoin platform and has smart contract capabilities. It’s a Layer 2 solution, so it works on top of the existing blockchain. Smart contracts are small pieces of code that are used to program a blockchain database. One of the downsides of the Bitcoin ledger is that it cannot store smart contracts, so if Stacks technology works, it could add a lot of utility to Bitcoin.
Stacks also says that its language (Clarity) is special because it is encoded in a language that people can actually read. Additionally, investors can earn both BTC and STX by “stacking” their coins. This is the same mechanism that would pay MIA token holders.
Stacks initially exercised regulatory caution, which backfired somewhat. In 2019, when he launched the STX token, it was the first token to be SEC qualified. This SEC approval meant that STX was treated as a security that could only be bought and sold with registered stock brokers. Unfortunately, it could not be traded on Cryptocurrency Exchanges in the United States.
Last January, Stacks announced that they had completed the process to become a cryptocurrency and that the US stock exchanges could now trade STX. So far, only Okcoin has listed it.
At the end of the line
I admit being careful with MIA, and not because of its unfortunate acronym. Most crypto investors have a healthy fear of coins that could disappear in battle.
My hesitation is twofold: First, I don’t see why Miami chose to work with a cryptocurrency that is not easy to trade in the United States. List it. But it hasn’t happened yet. As a result, if Miami residents wish to buy MIA and donate to the city, they will earn the majority of their crypto rewards in STX. As such, they will find it difficult to exchange these coins.
Second, we get the impression that the project has put the cart before the horse. Mining MIA requires a reasonable level of technical knowledge (and a decent amount of a coin that cannot be easily purchased). And you can’t do anything with it yet.
Miami officials should first have determined how the coin will be used, how ordinary Miami residents can purchase it, and how they benefit from mining and staking (or stacking) the coin. Only then would it make sense to launch cryptocurrency – and not before.
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Emma Newbery owns Bitcoin.
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