Having the second-largest cryptocurrency by market capitalization is no small feat, and with the migration to the Proof-of-stake consensus, Ethereum’s road to $1Trillion might have been largely underreported. Before it gets to the mark, Ethereum’s founder, Vitalik Buterin, has called for the inclusion of cryptocurrencies in the development of our local and state government. He put more emphasis on incorporating DAOs (Decentralized Autonomous Organizations) in governance as it makes for more citizen inclusiveness in formulating policies and laws. The votes will be based on token ownership, and we might finally have the best shot at reducing wealth inequality. Although this idea is still largely untested, the concept behind it seems practical. Let’s look in detail at the concept of crypto cities and how workable they are in our modern economies.
What are crypto cities, introduction to DAO, what must a city do to be a crypto city?
In a nutshell, a crypto city is a smart city that has incorporated cryptocurrency. It stems from introducing the tenets of decentralization, openness, and transparency to governance. To make this work, cities will need to have crypto tokens. Residents can then propose laws, vote on them, and get a more inclusive role in governance. This has majorly been caused by the demand for more opportunities for crypto adoption. Cities such as Miami and Texas have leveraged China’s ban to build crypto cities using two different strategies. Miami wants to have a DAO-like governance structure, with their Major vocally receptive to the idea of crypto salaries. On the other hand, Texas is leveraging on its cheap energy costs to bring Proof-of-work blockchains into alternative energy uses.
Vitalik Buterin’s claim is quite clear, as the concept of DAOs has shown that it is possible to have a group of people governed by a common goal and being put in check by a decentralized and common code. With the DAO at work, the principal-agent dilemma is solved as the interest of the rulers and the ruled are aligned. Although it has not been tested on a scale as large as city-wide or state-wide governance, seeing some crypto protocols thrive on being decentralized organizations is a sign too clear to be ignored. One of the most popular protocols operating this way is the MakerDAO protocol. Like the MakerDAO, crypto cities must have a token that will aid decision-making: more like a governance token.
According to Buterin, the token must fulfill at least three objectives out of a possible five.
- Be flexible enough to be a sustainable means of government revenue
- Propel economic balance between the city and its inhabitants
- Help the involved stakeholder to build wealth
- Help improve innovation and developments
- Eradicate wealth inequality.
All the objectives except the fifth one have a feasible approach to being fulfilled. Still, Buterin pointed out that to help more people build wealth and reduce inequality bridges, a large percentage of the newly minted crypto tokens should go to residents in the form of UBI (universal basic income). Perhaps, the most important benefit of the crypto city is that it reduces the time for court hearings. It makes use of the blockchain, and the results of decisions can be trusted. Perhaps we will save ourselves the stress of appealing election results.
Future outlook of the crypto community
Currently, statistics reveal that only about 9% of the 7 billion people on earth own and use bitcoin. With this, there is a long way to go with mass adoption, but when we compare the statistics with the over 9,000 altcoins, it doesn’t change so much. With different approaches being undertaken to improve these statistics and bring more people into the crypto market, it is realistic to take a holistic approach by offering crypto tokens for residents. This way, crypto exposure is not individualistic and more people have an easier entry point to digital currencies.
A lot has changed in recent years. There are more trading platforms like Redot.com, Binance, and Coinbase attending to different people in different continents, and the emergence of DeFi has made the crypto world more anonymous and profitable for passively earning. While these, together with the newly approved Bitcoin ETFs, have improved exposure to cryptocurrencies, their effects will be nothing compared to the massive wave of crypto cities.
Crypto cities might not be the Utopia we all dream of, but without any doubt, the quadratic voting and funding that cryptocurrencies bring to cities and their development are going to be more revolutionary than we currently experience. Vitalik Buterin discovered this and has been a strong voice supporting crypto cities. Even critics who are vocal on their disgruntle with cryptocurrencies can almost see no fault with the Ethereum foundation brought to improve city development. Miami has broken the ice, and there are many after cities following suit. Some of them include
- Nevada entrepreneurs are proposing an entirely-run blockchain city.
- the city of Berkeley is looking to issue bonds with cryptocurrencies
- San Francisco is looking to accommodate CityCoin (a community-driven token for opening a new stream of income for local governments)
- Austin and Newyork are also competitors on the CItyCoin launch.
Elsewhere in the world, there are some exciting cities that can be called crypto cities.
- El-Salvador made the headlines a few months ago when they became the first country to accept bitcoin openly.
- Seoul’s mayor is considering the idea of a city token, the S-coin, which would be primarily used for funding social welfare.
- Two Belgian and some Latin American cities allow parking tickets to be paid in Bitcoin.
- China, yes, China has its digital currency despite clamping down on other cryptocurrencies.
- Although widely criticized, Even Nigeria has adopted crypto-tokens called the E-naira.
Many more countries are expected to follow suit in more years as cryptocurrency stays in our government. Perhaps, Etherum’s co-founder is right after all. All these; the exchanges like Coinbase, trading platforms like redot, crypto cities like Miami, and the bitcoin ETFs all have one goal which is wide adoption of cryptocurrencies