Detroit To Allow Crypto For Tax Payments
The City of Detroit is looking to get into the crypto game. What was once the center of the automotive industry is seeking to make a revival. Will crypto help it become what it once was?
To start the process, the city is going to allow tax payments to be made with crypto. This is a step the city hopes will lead to some grow by appealing to crypto companies.
Detroit's timing might be ideal since there appears to be a wave of positivity towards crypto by the upcoming Presidential administration. If things lighten up on the national level, we could see states and cities benefiting.
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Detroit Accepting Crypto For Tax Payments
Officials stated this will be something that comes out in 2025.
Detroit city officials announced that residents will be able to pay their taxes with cryptocurrency starting in mid-2025. This decision positions Detroit as the largest city in the U.S. to accept cryptocurrency payments for public services.
As stated, this is the first step.
The longer goal is to attract businesses while also having the potential to integrate blockchain into City operations. This is a crucial point which we dig into in a bit.
In addition to the new payment system, Detroit invites blockchain entrepreneurs to propose unique public solutions for the city. proposals must be submitted to Justin Onwenu, the city’s director of economic opportunities, by December 15, 2024.
“We’re excited to explore the applications of blockchain in public services and to enable our residents to use cryptocurrency as a payment option.” – Detroit Mayor Mike Duggan
Over the years, we saw some smaller municipalities testing things out along with, at times, specific departments. That said, Detroit is the largest city to take this step.
There is a difference between the past and now.
According to the municipality, transactions will be conducted through a secure platform provided by PayPal.
PayPal is a trusted payment platform. That company started offering crypto services (payments) a couple years ago. It even came out with its own stablecoin (PYUSD). While this was a big move from a general standpoint, it seems like the tentacles might be more important than first envisioned.
Detroit officials obviously feel there is security in trusting PayPal. While many in crypto detest centralization, we have to admit this is what entities know. A city is not going to be able to custody itself. With payments, the fact that PayPal has a system makes it easier.
Blockchain Revolution
While the cryptocurrency aspect grabs the headline, the more important component, to me, is the idea of incorporating blockchain into the operations of the City.
Here is where Web 3.0 can receive a major boost.
A significant percentage of the data on servers for municipalities is public information. Obviously, things such as payroll are private but things relating to taxes, deeds, titles, and whatever else the city oversees on behalf of the public is often posted on the website.
Naturally, these are under the traditional client-server system.
There is a lot of discussion about real world assets being tokenized. Part of the challenge with some assets is they are dependent upon governments. For example, the registration and transferring of deeds are under their domain.
Incorporating blockchain into the operations of the City of Detroit could be a starting point. If the City decides to use blockchain for some (if not most) of its public data, that could open up development of applications that could utilize this.
It could also save a great deal of money. A city could dump a lot of this data to the blockchain, reducing its in-house server costs. Also, the management of the information (at least that which is posted on-chain) goes away.
Here is where the idea of a fee-less blockchain comes in. Obviously, each time a document is updated, paying even a cent or two in transaction fee is not viable. Something like Hive, which has no direct transaction fees, could aid in this.
While cryptocurrency gets all the attention, we have to keep in mind the value of decentralized, open source, permissionless databases.
This is something that will be truly revolutionary once people start utilizing them.
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