Philadelphia explores cryptocurrency with CityCoins

PhillyCoin? GrittyCoin? HoagieCoin? Who is aware of what it could be referred to as, however Philadelphia is exploring its personal crypto.

Metropolis officers confirmed they’re in “very early inside discussions” about donation-generating cryptocurrencies that different cities are adopting to spice up revenues.

Town is in talks with CityCoins, a decentralized nonprofit that units “tech pleasant” cities as much as obtain 30% of earnings on cash mined of their identify. Miami turned the primary huge municipality to launch its personal coin final 12 months, and related city-based cash have since surfaced in New York Metropolis and Austin, Texas.

Chief data officer Mark Wheeler went public saying Philly is “prepared” to undertake the currencies, as first reported by the on-line cybersecurity publication State Scoop final week, however officers say there isn’t any exhausting dedication but.

“The Metropolis is curious to know the implications of fundraising or gift-agreement packages utilizing a cryptocurrency as foundation for donation in U.S. {dollars},” mentioned Labonno Islam, spokesperson for the Workplace of Innovation and Know-how.

Ought to town proceed, a Philadelphia-based coin might change into tradable in crypto markets worldwide and supply some passive income again to town, however specialists increase questions on dangers, rewards, and transparency.

Right here’s what you must know:

Blockchains, protocols, stacks — we all know, crypto is so much to unpack.

On the coronary heart of CityCoins is an open-sourced protocol referred to as Stacks and a course of referred to as crypto “mining.” A fancy computational course of that requires particular {hardware}, mining is how crypto lovers create all number of cash and put them into market circulation. Those that efficiently mine a brand new coin into existence earn cash in reward.

Consider CityCoins like a group the place miners generate city-based tokens like a Philly coin. When a consumer mints a brand new coin right here, 30% of the reward will get despatched to a digital pockets belonging to Metropolis Corridor, in accordance with the nonprofit’s tips.

Consider this dividend as a philanthropic donation to town’s coffers. Municipalities can convert crypto donations into U.S. {dollars} and put them towards numerous packages.

A possible Philly coin wouldn’t include important overhead prices for town, and if it does nicely in the marketplace, it might primarily be free cash for town.

After MiamiCoin hit the market in August, Miami Mayor Francis Suarez estimated coin revenues might web $60 million of their first 12 months, and town has since made its first withdrawals, placing the proceeds towards a metropolis rental help program.

Suarez and New York Metropolis Mayor Eric Adams have each had paychecks transformed into crypto, as proof of their dedication to the business.

Whereas town has been boosting itself as tech pleasant for years, Philly’s focus appears to be on these potential pots of gold.

“The Metropolis is in search of methods to maintain long-term initiatives that assist fairness throughout Philadelphia past philanthropic and conventional means,” Islam mentioned. “This doesn’t imply that cryptocurrency is the reply, however we’re taking a possibility to assemble extra data and be taught extra about it.”

Metropolis-based cash are marketed towards town’s natives, residents, and supporters. Pablo Molina, a cybersecurity coverage skilled and the chief data safety officer at Drexel College, framed the enchantment as much less concerning the coin itself and extra about branding.

“To some extent, it’s like placing a Philly identify on the T-shirt,” Molina mentioned. “It doesn’t make the T-shirt any higher, but it surely makes it much more fascinating and appetizing to some folks.”

Whether or not a Philly-branded coin proves to be funding is one other query.

For starters, pandemic-battered cities like Philly want dependable income streams, and the crypto markets are inherently unstable. Regardless of huge projections, nobody is bound but how secure city-based cash could be as a money generator — which makes them exhausting to plan round. Others have questioned how town would financially account for its crypto revenues normally.

Some critics say the concept additionally raises ethical considerations for town.

Mark Headd, Philly’s former chief knowledge officer, referred to as metropolis cash “pure nonsense” — a “gimmick” that would entice residents into get-rich-quick schemes, with few widespread rewards.

In a Medium put up final week, Headd argued partaking with crypto was “particularly troubling” for a metropolis with a staggering poverty fee and a persistent digital divide like Philly. Even when the coin proves to be funding for town and particular person residents, he wrote, many Philadelphians wouldn’t have the technical savvy to see any monetary positive aspects from it. And for many who can put money into Philly’s coin, the coin nonetheless presents a unstable danger like different cryptocurrencies.

Molina mentioned potential consumers ought to take into account it extra of a bet than an funding. “Some folks will make some huge cash, however you shouldn’t be prepared to speculate what you’re not prepared to half with,” he mentioned.

Molina mentioned there are additionally safety considerations across the metropolis’s potential reduce of the pie and whether or not revenues could be susceptible to crypto fraudsters. “The danger could be for the residents who assume they’re serving to town,” Molina mentioned. “Ultimately, not a lot might go towards town.”

The Kenney administration is skinny on specifics, however for now, it’s secure to say Philly received’t be that insufferable man on the occasion speaking your ear off about crypto — not but at the least.

Islam, town spokesperson, mentioned Kenney requested chief data officer Wheeler to coordinate with metropolis attorneys and vet the authorized obstacles introduced by crypto-donations.

Metropolis Council will seemingly have questions concerning the coin earlier than shifting ahead, however there have been no scheduled talks on the horizon as of Tuesday.