MIAMI – As cryptocurrency value took a major plunge this week, with Bitcoin and other cryptocurrencies losing value, MiamiCoin, a private cryptocurrency benefitting the city, has seen its own decline.
It went from an all-time high of $0.06 in August to just $0.000952 as of Wednesday evening, according to crypto exchange platform Coinbase.
This week’s Bitcoin crash came after a major cryptocurrency lender effectively failed and halted all withdrawals from its platform.
Miami Mayor Francis Suarez is a well-known crypto promoter and Miami has become a hub for the cryptocurrency industry. MiamiCoin, which is privately funded and operated by CityCoins, launched in August 2021 with the goal of putting crypto windfalls into city coffers.
“A percentage of the benefit for verifying the transaction from one person to another is what goes into the city’s digital wallet,” Suarez said. “The biggest misconception is that the city has put money into (MiamiCoin). We did not. The city has just been a beneficiary of it.”
That means Miami won’t lose money on MiamiCoin, in spite of the crash. So far, Suarez said $5 million of MiamiCoin funds have been earmarked toward rent relief.
Suarez said MiamiCoin may or may not pan out, but said to him, the most important thing was telegraphing to the tech ecosystem that Miami is open to pioneering innovation.
“MiamiCoin is only in its first year, it is very young,” Suarez said. “Some are gonna make it, some of them are going to change the dynamic, some of them won’t.”
Local 10 News asked Silvinia Moschini, the founder of Unicoin, which promotes itself as an “equity-backed currency,” whether investing in MiamiCoin was like playing Russian roulette.
“Well, I think that investing in any coin that is not asset-backed is like playing Russian roulette because the rationale is not sustainable, just like Bitcoin that lost value,” Moschini said, likening those types of cryptocurrencies to people who gamble in Las Vegas. “(They know) that the house always wins, so there is a market for that. It is not the market that I prefer. It is not my risk profile.”
“When people invest, they should know that they could lose everything and they need to understand they should not bet or invest anything more than they are comfortable losing,” she added.
Moschini said CityCoins is part of a larger ecosystem of what she called first-generation cryptocurrencies that are tanking against a backdrop of macroeconomic uncertainties, from rising interest rates and inflation, impacting even the valuation of well-known cryptocurrencies, like Bitcoin or Ethereum.
“A vast majority of these were based on no substantial backing or no backing at all, and that caused when the economy got tight and investors becoming more cautious, this collapse that we are seeing now,” she said.
Moschini said that she believes the maturation of the industry will include asset-backed cryptocurrencies that are “much more regulated and that protect the coins’ holders in a more consistent and transparent way.”
Moschini, who praised Suarez for supporting “innovation” and “entrepreneurship,” said the future is in “tightening up” the market.
Suarez said he believes that as the industry matures, it could open up new practical applications for crypto, like paying municipal bills and fees.