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Gold Coast Mayor Tom Tate suggests paying council rates with cryptocurrency, despite $2 trillion crash

By on June 4, 2022 0

Gold Coast Mayor Tom Tate has suggested rates could be paid with cryptocurrency for years to come, despite the collapse of the $2 trillion market – more than half of its total value – in course of the last six months.

As the council prepares to deliver its annual budget on June 14, Gold Coast residents can expect to see a rate increase of at least 4% – the biggest increase in 10 years.

But Mr Tate also announced that the council will seek to hire a private sector investment manager to encourage ‘innovation’ and investigate ‘joint ventures’ on council-owned land.

“Why can’t we pay rates on cryptocurrency if the risk isn’t high?” he said.

“It sends a signal that we are innovative and that we are attracting the younger generation… [but] I’m not saying we do, I’m just saying we’re always looking to take it to the next level.”

While a national blockchain industry group welcomed the prospect, a cryptocurrency researcher urged more caution.

The Council needs a “risk appetite”

The idea behind cryptocurrency is that it creates a payment method that cuts out the middleman, like a bank.

While many find the technology confusing, industry body Blockchain Australia chairman Adam Poulton said the cryptocurrency is “just another form of money” with an exchange rate pegged to the Australian dollar.

“They can choose to receive that Bitcoin and hold it themselves, or they can actually exchange that Bitcoin to Australian dollars, referencing that exchange rate, and have those Australian dollars appear in their bank account.”

But given the price swings that cryptocurrencies have experienced, as well as the existence of scams and the recent stock market crash, Poulton said “the board should consider [its] risk appetite”.

“The last thing they would want to do is accept $2,000 in rate, keep it in Bitcoin, and halve the price of Bitcoin,” he said.

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Here’s why Bitcoin and other cryptocurrencies crashed(Madeleine Morris)

“The other risk is that Bitcoin could go up in value and they’ll actually have three or four thousand dollars.”

He said the council could instead accept 95% of a fares bill in Australian dollars and the remaining 5% in cryptocurrency.

“We’re happy to risk that extra 5% and keep it and see what future use cases could be used with it,” he said.

“But there are a lot of things you need to be familiar with to use and interact with cryptocurrency in a safe way to protect your financial wealth.”

More time needed for education

Associate Professor Vallipuram Muthukkumarasamy from Griffith University’s School of Information and Communication Technology said cryptocurrency integration has been talked about for years, but still remains an “investment speculative”.

“In 2015 at that time there was a lot of hype thinking ‘it’s going to take over in a year or two,'” he said.

He said that while the underlying technology has “a lot of opportunity”, its implementation was the problem when dealing with large bureaucratic organizations like local government.

“It’s a paradigm shift, it’s a new technology,” he said.

“Consulting rates, it’s open for that, it’s definitely a possibility but then the acceptance, the verification of the technology and its implementation, are issues.

“A lot of learning has to happen and confidence building has to happen with that.”

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