CityCoins — free magical money for your city! Maybe

Back in the first burst of Bitcoin clones, some altcoins were marketed as being part of a city or a country. Start a local coin, and everyone will get magically rich for free!

This is a form of affinity fraud — where you pitch to a defined group, saying “I’m one of you. Would I scam you?”

Auroracoin in Iceland was a famous example. Auroracoin was airdropped to Icelanders — most of whom sold their new AUR immediately, crashing the price. AUR still exists, and CoinMarketCap says it traded a total volume of $120 in the past 24 hours. [CoinMarketCap] Scotcoin is run by two guys out of a pub, and they get a bit of nonsensical press coverage every few years.

Local cryptos fell out of fashion in the ICO era — the favoured business proposition became just penny stock fraud, but on the blockchain.

Now we’re back, with CityCoins — free magical money for your city! [CityCoins]

MiamiCoin

Francis Suarez, the mayor of Miami, has been promoting cryptocurrency for a while now — he thinks this will attract tech investors to the city.

In February 2021, Suarez proposed paying city employees in Bitcoin — though this didn’t work out legally. In June, Miami hosted the massive Bitcoin Miami conference. [Bloomberg; Vice]

Suarez is the mayor who thought Elon Musk’s Hyperloop would be just the thing for Miami — digging a tunnel under a city built on waterlogged limestone. We can assume he’s not a technical guy. [The Verge; Miami New Times]

On 2 June 2021, Suarez tweeted: “Check out this on the first CityCoin being of course MiamiCoin!!!!!!!!!” [Twitter]

MiamiCoin was promoted locally on banners, signs and truck billboards.

CityCoins is built on Stacks — formerly BlockStack — which is a smart contract platform built atop Bitcoin, run by Muneeb Ali. MiamiCoin is a token running on Stacks. [Stacks; CoinTelegraph]

Patrick Stanley from CityCoins told CoinTelegraph in November 2021 that MiamiCoin had generated $22 million up to that time. Except, of course, that’s not dollars — it’s STX, the native token on Stacks. [CoinTelegraph]

STX used to be registered with the SEC as a security. The company claims STX is now a “utility token,” and no longer files reports with the SEC — though STX is still traded like an ICO minor altcoin. [Decrypt]

You “mine” MiamiCoin by buying STX tokens and sending them to the CityCoins smart contract. You get MiamiCoins. Some go to you, and some go to the city. Suarez has a vague plan to cash in the STX to bitcoins and then dollars for the city. [CityCoins; CityCoins; CoinTelegraph]

CityCoins tells users to hold and reinvest, and not to cash out. Now, you might think that’s a huge red flag warning as a thing that Ponzi schemes always tell their customers to do.

How do you turn your STX magic beans into actual dollars? Well, you go to any number of extremely questionable minor altcoin exchanges. You turn it into bitcoins or ether, or perhaps tethers. You then sell these on a real exchange. [CoinGecko]

New York

Eric Adams, the new mayor of New York, is famously a massive coiner — of the sort who has no idea how cryptocurrency works, and doesn’t care, ‘cos he’s busy partying with Brock Pierce. [Vice; Politico]

It’s unlikely that Adams has someone to advise him against this bad idea — because his current ideas on cryptocurrency are just as bad, and he’s already got the CityCoins guys in giving presentations to his staff.

One issue for NYCCoin — as they’re already calling it — is that neither CityCoins nor Stacks has a New York Bitlicense, required for cryptocurrency companies to operate in the state.

Expect CityCoins to use New York as social proof of their idea being good, and other cities to follow suit — whether or not NYCCoin actually goes anywhere.

Philadelphia

Jim Kenney, mayor of Philadelphia, has given the go-ahead for the city to look into a CityCoin.

The guy pushing the idea appears to be the city’s chief information officer, Mark Wheeler. As I write this, Wheeler’s Twitter display name is “Mark Wheeler markaroo.btc”. [StateScoop; Twitter, archive]

The formal vetting process for a PhiladelphiaCoin will involve considerable legal review. Philadelphia will also try to review the agreement between Miami and CityCoins.

 

 

So much for MiamiCoin

MiamiCoin suffered a pump-and-dump after it achieved its only crypto exchange listing to date, on OKCoin — from a peak of $0.054 on 20 September 2021, to $0.006 on 11 February 2022.

The total supply of MiamiCoin is now worth about $6 million — assuming there was anyone who wanted to buy them so you could cash out. [Protos; CoinGecko]

Suarez announced that Miami received a payout from CityCoins of $5.25 million. This wasn’t from selling the MiamiCoins or STX. It was a “donation” from CityCoins — a promotional expense, so that the scheme didn’t look too much like a disastrous failure. [NBC Miami]

It’s philosophically possible that Suarez will take the hint and get out of this crypto rubbish — but he’d need a new personality first.

How does this end?

The exit scam for CityCoins? Well, obviously: Penistone.

 



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10 Comments on “CityCoins — free magical money for your city! Maybe”

  1. $120 a day activity for a currency! That’s impressive! Almost as large as the economic activity of one average family!

    City coins used to be a real thing, especially in 1933 when each city minted its own scrip. Later on, streetcar or bus tokens served the purpose. Tradable for a real service, and worth buying from a friend or neighbor.

    Now city bitcoins are just a really dumb joke.

      1. What about the original Ripple Network? Not a blockchain. It was set up by Ryan Fugger as a mutual exchange, similar in concept to a local Canadian scrip called Nanaimo Hours. I think the original service is still operating. I am not sure about its legal status, but the idea was basically to offer credit to people one already trusted in real life, and use it to settle minor obligations online. Then AFAIK Ripple the XRP company used this idea to settle obligations between servers, as well as adopted the name. Disclaimer, I am quoting from distant memory, so cannot vouch for my accuracy.

      2. Isn’t that just an accident waiting to happen? Instead of having one central bank regulating a currency to be stable(ish) at low inflation, suddenly we’d need that times the number of cities that want a local currency. Many more moving parts, and more people involved who all have to know what they are doing and be honest, or we end up with economic collapse or quasi-company-scrip.

        Reminds me of when I was in Argentina in 2005: A taxi driver showed me currency independently issued by the provincial government because they didn’t have the money to pay their civil servants otherwise. He was pretty caustic.

  2. I’ve read this twice and I’m still trying to figure out how crypto was supposed to make money for the cities in question. So the city makes a cryptocoin, the people in the city buy it out of some sense of local pride, and … profit? From where? Were people outside of Miami also supposed to “invest” in Miamicoin?

      1. Ahh, I knew it had to be odd. Googling penis and ICO is just sad. PT Barnum would be proud. I have your 2 books but am wondering if another is coming out (yes, I know it’s a lot of work).

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