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Philly officials should steer clear of cryptocurrency | Editorial

It isn’t surprising that the nation's poorest large city would explore alternative sources of revenue. Given its risks, volatility, and environmental impact, digital currency shouldn't be one of them.

The value of Bitcoin cryptocurrency has declined by roughly a third over the past year.
The value of Bitcoin cryptocurrency has declined by roughly a third over the past year.Read moreGetty Images

In recent months, civic officials in New York City and Miami have each endorsed new plans to generate money for their cities’ coffers using cryptocurrency. After those initial forays into municipal finance, might the digital currency movement come to Philadelphia next?

Some local leaders, it seems, certainly hope so. Last week, city officials acknowledged that they were in “very early internal discussions” about the possibility of using donations from Philadelphia-branded cryptocurrency as a way to raise money.

While economists like Federal Reserve Board member Neel Kashkari have described crypto as “95% fraud, hype, noise, and confusion,” supporters of the digital currency see it as a new and exciting way to build wealth. Philadelphia’s chief information officer Mark Wheeler appears to be one of them. Reporting from Billy Penn showcasing instant messaging posts from a user named “Markaroo” (a nickname Wheeler also uses on his Twitter account) who identifies themselves as the CIO of Philadelphia may be an illustration of just how elated some city leaders are about this plan.

They shouldn’t be.

» READ MORE: Philly is exploring cryptocurrency to boost revenue. Here’s what that means.

Despite the enthusiasm of its early adopters, cryptocurrency is still a risky technology with a raft of potential harms. The complicated process of “mining” for the currency using computers is itself a massive source of energy consumption, and individual cryptocurrency transactions use more power than the average American household in a month.

It is also worth questioning the choice to partner with CityCoins. While Miami Mayor Francis Suarez lauded the initial $5.25 million the city has gained from its “Miami Coin,” the city has been forced to reevaluate the program as the coins have lost nearly 93% of their value. That kind of volatility is not uncommon — Bitcoin cryptocurrency has lost roughly a third of its value over the last year — and should give us all pause about creating any new “PhillyCoins.”

Most importantly, the city has serious technology problems that Wheeler’s office should be tackling. OnePhilly, the city’s human resources system, has been plagued by issues, including failed payroll deductions. When the city’s Office of Innovation and Technology took over the City Commissioners’ website, it removed the Ballot Box App, an important way for members of the public to quickly and easily look up past election results. This feature remains offline. Aspiring entrepreneurs face a confusing maze of forms and websites because the city has yet to create an easy-to-use, one-stop shop for them. The city’s technology department has plenty on its plate already without taking on managing a cryptocurrency.

» READ MORE: Money for nothing: Cities' crypto push draws fans, critics

Innovation and new technologies can be a big opportunity for municipalities, and it isn’t surprising that a cash-strapped city like ours would explore ways to collect additional revenue without having to impose more taxes on the residents of the poorest large city in the nation. Still, when it comes to cryptocurrency, Mayor Jim Kenney should be mindful of his administration’s last high-profile venture into the tech world — the national embarrassment that was Philly Fighting COVID. Do we really want a repeat of that debacle?

Philadelphia has enough problems — cryptocurrency doesn’t have to become another one.