One fascinating development over the previous year has been the increase in interest in local government and the concept of local governments with more diversity and experimentation. The quick mainstreaming of crypto notions like as coins, non-fungible tokens, and decentralised autonomous organisations has been another noteworthy trend of the past year (DAOs). So, what would happen if the two tendencies were combined? Is it feasible to have a city with a coin, an NFT, a DAO, some anti-corruption record-keeping on-chain, or possibly all four? As it turns out, others are already attempting to do so.
- CityCoins.co is a project that creates currencies that are meant to be used as local mediums of exchange, with a percentage of the coin’s issuance going to the city administration.
- Experiments with NFTs, which are frequently used to fund local artists. A government-sponsored conference is being held in Busan to look into what they can accomplish with NFTs.
Why should we care about cities?
In response to long-standing difficulties and quick changes in people’s basic needs, many national governments around the world have shown themselves to be inefficient and slow-moving. To put it another way, many national governments are lacking in live players. Worse, many of the out-of-the-box political concepts currently being discussed or implemented for national administration are downright dangerous. There are 10 ideas, that are all just different types of centralised control and universal surveillance, for every idea that can be labelled as liberating or democratic.
In theory, cities and states are capable of genuine dynamism. Because there are significant cultural differences across cities, it is simpler to locate a single city where a radical notion has widespread support than it is to persuade an entire country to accept it. Local public goods, urban planning, transportation, and many other aspects of city governance face significant challenges and opportunities that could be addressed. Cities have tightly knit internal economies, allowing things like mass cryptocurrency acceptance to emerge on their own.
Existing smart city programmes are frequently criticised for their centralised administration, lack of transparency, and data privacy. Blockchain and cryptographic technologies, on the other hand, appear to be a promising key ingredient for a more open and participatory path forward.
What are city projects up to today?
Each of these experiments is currently on a tiny size and is still figuring things out, but they are all seeds that could grow into something interesting. Many of the most advanced projects are in the United States, but there is global interest; the city of Busan in Korea is hosting an NFT conference.
CityCoins.co is a project based on Stacks, a blockchain built atop the Bitcoin blockchain and ecosystem and powered by an innovative “proof of transfer” block production mechanism. An ongoing sale mechanism generates 70% of the coin’s supply: anyone with STX (Stacks’ native token) can submit STX to the city coin contract to manufacture city coins, with STX proceeds going to existing city coin holders who stake their coins. The remaining 30% is made available to the municipal government.
CityCoins has taken the unusual step of attempting to create an economic model that is not reliant on government assistance. The municipal government is not required to participate in the creation of a CityCoins.co currency; a community group can do it alone. Local companies can offer discounts or perks to those who stack their CityCoins, and CityCoins communities will create apps that employ tokens for rewards. In practice, however, the MiamiCoin community is not acting alone; the city of Miami has already openly embraced it.
CityDAO is the most radical of the experiments: unlike Miami, which is an existing city with the existing infrastructure that needs to be upgraded and people who need to be persuaded, CityDAO is a DAO with legal status under Wyoming’s DAO law that is attempting to build entirely new cities from the ground up.
The project is still in its early phases at the moment. The group is currently completing the purchase of its first piece of property in a remote part of Wyoming. To allocate land, make communal choices, and manage resources, the aim is to start with this piece of land and then add other plots of land in the future. Cities will be administered by a DAO and will make extensive use of radical economic theories like Harberger taxes. Their DAO is one of the few progressive projects that does not use currency voting governance; instead, it uses a voting mechanism based on “citizen” NFTs, with plans to limit votes to one per person using proof-of-humanity verification.
What cities could be up to?
there are two distinct categories of blockchain ideas that make sense:
- Using blockchains to create more trusted, transparent and verifiable versions of existing processes.
- Using blockchains to implement new and experimental forms of ownership for land and other scarce assets, as well as new and experimental forms of democratic governance.
Blockchains and both of these categories are a logical match. Anything that happens on a blockchain is relatively straightforward to publicly verify, thanks to a plethora of ready-made, freely available technologies. Any blockchain-based application may instantly connect to and interact with other blockchain-based applications around the world. In a manner that paper cannot, blockchain-based systems are efficient and publicly verifiable in a way that centralised computing systems cannot.
What are some existing processes that blockchains could make more trusted and transparent?
One easy concept that many people have brought up to me, including government officials from all around the world, is for governments to create a whitelisted internal-use-only stable coin for tracking internal government payments. Every tax payment made by a person or a company might be linked to a publicly available on-chain record minting that number of coins. The coins would be redeemed only by individual contractors or employees claiming their payments and salaries, and transfers across departments may be done “in the open.”
This system could easily be extended. For example, procurement processes for choosing which bidder wins a government contract could largely be done on-chain.
Many more processes could be made more trustworthy with blockchains:
- Fair random number generators (eg. for lotteries) could be used as a fair random number generator to improve the trustworthiness of government-run lotteries. Many other applications, such as sortition as a form of government, could benefit from fair randomness.
- Certificates, for example, cryptographic proofs that some particular individual is a resident of the city, could be done on-chain for added verifiability and security
- Asset registries, for land and other assets, as well as more complicated forms of property ownership such as development rights.
- Even voting could be done on-chain in the future. To achieve all of the requisite privacy and security qualities, a sophisticated solution incorporating blockchains, zero-knowledge proofs, and additional cryptography is required.
There are numerous great ideas for cities to try out that may be implemented by current or new cities. Of course, new cities have the advantage of having no previous citizens with pre-existing expectations of how things should be done; yet, the concept of constructing a new city is relatively untested in modern times. Maybe the multibillion-dollar cash pools in the hands of people and projects eager to try new things will be enough to bring us over the hump. Current cities, on the other hand, will likely continue to be the site where the majority of people live for the foreseeable future, and existing cities can benefit from these ideas as well.
Despite the inherently “trustworthy” nature of a municipal government, blockchains can be highly useful in both incremental and radical ideas. Running any new or old mechanism on-chain allows the general public to easily check that everything is going according to plan. Public chains are preferable: the advantages of existing infrastructure for users to independently check what’s going on greatly outweigh the losses from transaction fees, which are likely to drop dramatically due to rollups and sharding in the near future. If a high level of anonymity is necessary, blockchains can be paired with zero-knowledge cryptography to provide both privacy and security.
The fundamental pitfall that governments should avoid is surrendering flexibility too early. An existing city could fall into this trap if it launches a bad city token instead of a good one. A new city may fall into this trap by selling off too much land, giving away all of the benefits to a tiny group of early adopters. It’s best to start with self-contained experiments and work your way up to moves that are actually irreversible. However, it’s equally critical to take advantage of the opportunity in the first place. There is much that can and should be changed about cities, as well as many potential; despite the hurdles, crypto cities are a notion whose time has come.