Mayor Adams Loses $1,393.20 of His First Paycheck After Cryptocurrency Markets Crash
By Yehudit Garmaise
Since Friday, when Mayor Eric Adams converted into his first paycheck, which amounted to $9951.92, into cryptocurrency, he has lost $1393.20 of his earnings from his work in his first two weeks as mayor of New York City, he revealed on CNN yesterday.
After winning the November 2021 election, the mayor had pledged to take his first three paychecks in cryptocurrencies, however, because a labor regulation does not allow New York City to pay its employees in digital assets, Mayor Adams was paid in US dollars, which he then converted into the cryptocurrencies of ethereum and bitcoin.
Over the weekend, however, the values of digital financial assets, called cryptocurrency, plummeted: with bitcoin plunging to a six-month low, ether slipping to its lowest value since July, and other coins hitting even bigger downturns, Mayor Adams is not worried.
"It's the same as when I invested in the stock market and my 401K," he told CNN when asked whether he had any regrets about his decision to convert his first paycheck to cryptocurrency. "We saw a drastic drop during 2018 and other times. When you're a long-term investor, you don't keep your eyes on your portfolio. You buy low and, hopefully, you get to the recovery that you desire."
In fact, it is the unpredictability of cryptocurrency’s values that have made mainstream investors wary it, while professional investors remain quite interested in the new financial assets.
Mayor Adams’ experience of investing in cryptocurrencies illustrate two negative aspects of doing so: that bitcoin is far more volatile than the stock market, and that the costs for converting US dollars into cryptocurrencies are substantially higher than the transaction costs for purchasing exchange-traded funds of stocks, explained a frum professor finance, who agreed with Mayor Adams that bitcoin's price may later surge.
"The purpose of bitcoin is to send a message that New York City's open to technology," he told CNN on Sunday. "We're going to see a large amount of new technology in the city of New York and encourage our young people to be engaged in these new emerging markets.
Instead of money that is printed on paper bills and engraved on coins, cryptocurrency, is any form of currency that exists digitally and secures transactions through cryptography, which is a message system that allows only senders and their intended recipients to view the contents of messages.
Like any currency, cryptocurrencies, which get their name from the Greek word kryptos, which means “hidden,” gain their value based on the scale of community involvement. Cryptocurrency gains value if the demand for it is higher than the supply. When a cryptocurrency is useful, people want to own more of it, driving up the demand.
“New York is the center of the world, and we want it to be the center of cryptocurrency and other financial innovations,” said Adams, who hoped to provide a “leading example of empowering people through tech with a more diverse set of options to manage their finances,” said New York City Chief Technology Officer Matt Fraser about the mayor’s decision to convert his first paycheck to cryptocurrency.