Detroit to accept crypto for city payments starting in 2025, becoming the largest U.S. city to do so. The city will use PayPal to facilitate payments in Bitcoin, Ethereum, and other cryptocurrencies for taxes and city fees. This move aims to make Detroit a more innovative city and offer residents an additional way to pay for services.
Why is Detroit Accepting Crypto?
Detroit’s decision to accept cryptocurrency payments looks like a marketing move to position the city as an innovation hub. While the idea sounds exciting, it might not make much sense for most crypto holders. For instance, Bitcoin has risen 80% in value since the start of the year, so many people prefer to hold onto their coins rather than spend them.
The city has partnered with PayPal, which will convert any cryptocurrency payments into U.S. dollars instantly. This means Detroit isn’t actually holding any crypto. Instead, the payments will be processed and converted to USD, making it easier for residents to use crypto for everyday transactions without worrying about price changes.
Which Cryptocurrencies Will Be Accepted?
Detroit has not yet specified which cryptocurrencies will be accepted, but it is expected to include those supported by PayPal. PayPal’s stablecoin, PYUSD, which is pegged to the U.S. dollar, could also be used to make payments, making it a safer choice for transactions.
Is This a Good Idea?
While it’s an interesting move, using cryptocurrencies like Bitcoin for everyday payments may not be the best choice for most people. In fact, spending Bitcoin could be a bad idea. Just think back to 2010 when someone used 10,000 Bitcoin to buy two pizzas. Today, those 10,000 coins would be worth over $700 million! This shows how much value Bitcoin can gain over time, making it better to hold on to than spend.
The Rise of Stablecoins for Payments
Stablecoins like PayPal’s PYUSD and USDC are becoming more popular for transactions. Unlike regular cryptocurrencies, stablecoins are tied to the value of the U.S. dollar, which means their value doesn’t change as much. This makes stablecoins a safer option for making transactions. Stablecoins can also be used to quickly swap between digital and traditional money, making them easier to use for everyday payments.
Crypto Used for Paying Taxes and Government Dues Elsewhere
While Detroit is the largest U.S. city to accept cryptocurrency for payments, it is not the first place to experiment with crypto for government dues. Countries like Switzerland, Estonia, and Portugal have explored or already implemented crypto-based payment systems. In Switzerland, the canton of Zug (also known as “Crypto Valley”) allows citizens to pay certain government fees using Bitcoin and other cryptocurrencies. Similarly, Portugal has been open to cryptocurrencies, and some local taxes can be paid through digital currencies. These examples show how governments around the world are slowly beginning to accept cryptocurrencies for various payments, including taxes and public service fees.
Why Detroit’s Crypto Decision Might Not Be a Game-Changer
While Detroit’s move to accept crypto is interesting, it might not change much for most people. Right now, using cryptocurrencies for payments can be complicated, risky, and unintuitive. It’s also hard to predict if crypto will ever replace traditional banking systems.
Many people hope that one day, cryptocurrencies will make transactions faster and easier, without the high fees and slow processing times of traditional banks. But, as of now, crypto is still not widely adopted, and it doesn’t solve a major problem for most people.
This new step by Detroit might help bring more attention to cryptocurrencies, but it is still unclear whether it will become a practical solution for everyday payments.
