Mayor-elect Eric Adams has vowed to make New York City “the center of the cryptocurrency industry” as part of a broader effort to appeal to businesses.
Cryptocurrencies and their fundamental technology, blockchain, have fueled a boom in investing over the past decade, culminating in the gold rush this year over non-fungible tokens, or NFTs, digital image tokens that use blockchain technology.
Adams has been scarce with details over how he wants to position the city, already a global financial center, as a hub for cryptocurrencies.
His interest in the digital coins has already come under scrutiny. Last month, he was found to have flown to a political conference in Puerto Rico on the jet of Brock Pierce, a major cryptocurrency evangelist who controversially had planned to make the territory into a cryptocurrency hub, after first claiming that he paid his own way. A spokesperson for Adams said that the mayor-elect paid for the flight, but Adams has not produced a receipt for it.
Here are some answers on what Adams’ cryptocurrency plans could mean for New York City.
New York City Mayor-elect Eric Adams smiles at supporters, late Tuesday, Nov. 2, 2021, in New York, after the mayoral election was called in his favor. (AP Photo/Frank Franklin II)
Please remind me — okay, fine, tell me — what cryptocurrency is.
In brief: cryptocurrencies are forms of digital money. The best known is bitcoin, currently worth about $60,000 per coin, but others, like Cardano and Dogecoin, have become widely popular in the cryptocurrency investment world. They function on a technology called blockchain, in which a network of computers confirm and maintain the complete list of financial transactions made with whatever cryptocurrency you’re using.
The reason this technology is newly popular is because it offers an alternative to centralized banking, in which massive financial institutions use private technology to track payments. Cryptocurrencies use a decentralized network of privately owned computers — often grouped together in massive, energy-sucking server farms — to solve complex computer problems in order to confirm transactions. Each computer helps maintain the record of all the transactions, which is publicly available.
In exchange for doing this —running computers endlessly to maintain the cryptocurrency’s ledger — the people operating the computers get some of the cryptocurrency. This is called mining, and, when done using a cheap energy supply, it can be quite profitable.
Although the coins aren’t backed by anything — such as a government, in the case of money, or a public company’s stocks — their value is driven by buyers’ faith in the technology as a safe place to invest their money, the currencies’ relative freedom from political forces and, typically, by a constrained supply of the digital coins.
The novelty of blockchain, a technology unveiled in 2008, is that the ledger is virtually impossible to manipulate, making it immune to fraud and identity theft. In Estonia, an early adopter of blockchain, the technology allows citizens to hold all of their medical records in their digital wallet, as well as file taxes almost instantaneously. (The only public services they can’t access digital-only are getting married, getting divorced or conducting real estate transactions, according to a 2019 report.)
What has Adams said he wants to do?
Adams has been a little vague.
In a tweet last month, for instance, he said he plans to take his first three paychecks in bitcoin, even though the city does not cut …….