Mayor Diamond Hands strikes again. As Bitcoin endured a price plunge from last month’s high (and plummeting at this writing), Miami’s Francis Suarez confirmed that he’ll take part of his 401k in Bitcoin. On Friday, managing editor Samuel Burke of Real Vision — an alt finance channel that only invites “ the smartest investors and brightest minds” — asked Suarez why this is a good idea.
“I just think it is a good asset to be invested in,” Suarez said. “I think it’s one that’s obviously going to appreciate over time. It’s one that I believe in.”
He went on to cite the precise reason that this is a bad idea, saying, “partly why Bitcoin has succeeded so well is because people have confidence in it.” The same could be said of stock market bubbles and Ponzi schemes.
That’s about as much as Suarez explained about the investment, adding that people “see an open-source unmanipulatable system.”
Suarez is so confident that he’s staking Miami’s economy on it. Over the past year, he’s courted cryptocurrency conferences and businesses and put the name of the crypto-exchange FTX on a stadium. He launched MiamiCoin (now down 76% from its August peak) in partnership with the nonprofit CityCoin, which pays out 30% of the value of investor rewards to the city. That scheme, he bets, would eventually allow Miami to eliminate taxes and distribute “Bitcoin dividends” to residents. He’s taking his paychecks in Bitcoin. It would make more sense to gamble Miami’s future on the traditional logic behind gambling on stocks, hoping that an entity will realistically meet 2022 Q1 goals. At least, in that case, a company that theoretically produces something would get investment dollars.
His position primarily rests on crypto-libertarian buzzwords like “open-source” and “unmanipulatable” implying that Bitcoin can’t be manipulated by government regulators. Instead, that’s up to a pool of superrich actors who can easily tank Bitcoin if, say, a few people hold a whole lot of Bitcoin. People who own a lot of Bitcoin might also own a Bitcoin exchange. That exchange (or the others Suarez is glad-handing) might crash or decide to stop processing transactions. If Bitcoin crashes at the moment he decides to cash out his retirement, he’ll also have to hope that his sale is one of the seven transactions per second that gets processed first while he witnesses money go poof.
Officials have warned that Suarez’s announced plan to pay city workers in Bitcoin is wildly irresponsible. In an April 2021 report obtained by Vice, they pointed out:
…once Bitcoin is received by an employee it is not insured by the government like U.S. bank deposits are. This means that Bitcoin stored online does not have the same protections as money in a bank account. Additionally, there may be no or minimal customer service options when using Bitcoin because it is inherently decentralized.
But it’s a little late to turn around. MiamiCoin is here, and Suarez is promising that it’s going to generate free Bitcoin for Miami residents. New York City Mayor Eric Adams is signalling that he intends to come along for the ride.
It’s unclear how Suarez would receive part of his 401k in Bitcoin. Suarez’s office was not immediately available for comment.