8 min read

Crypto Cities

Blockchain has the power to tranform the cities we live our day to day lives in.

A few days ago Vitalik Buterin wrote about Crypto Cities. The ideas or even possibilities of improving/replacing present day governments and corporations is someting worth looking into.

There is couple of terms we need to understand before we plunge into what Crypto Cities are and what new opportunities they offer.

DAOs (decentralized autonomous organizations)

DAO is an automated and decentralized organization. It has no central leadership, decisions get made by community organized around a specific set of rules enforced on a blockchain. It's an organization collectively owned and managed by their members.

DAOs are intended to mimic a company structure where rules and regulations are build using open-source code and enforced via smart contracts (programs stored on a blockchain that run when predetermined conditions are met) on a blockchain.

Most common phases that DAOs go through:

  1. Funding (after smart contracts are created it's driven by community investments)
  2. Deployment (on the blockchain)
  3. Governance (by owning and locking cryptocurrencies into a voting contract users get an ability to vote on proposals).

DAO disadvantages

  • The main disadvantage of DAOs that is a extremly new technology.
  • MIT technology has released a review where it considers a bad idea to trust the masses with important financial decisions.
  • Once a smart contract is deployed on a blockchain it cannot be changed.
  • No legal framework

The first DAO (arguably) is Dash as the project has a governance mechanism that allows stakeholders to vote on the use of its treasury.

Quadratic voting, funding and attention purchase

Quadratic Voting is a method of collective decision-making in which a participant votes not just for or against an issue, but also expresses how strongly they feel about it. It can help protect the interests of small groups of voters that care deeply about particular issues.

Source: Quadratic Payments: A Primer

See also this post to learn more about quadratic voting, quadratic funding and attention purchase: https://vitalik.ca/general/2019/12/07/quadratic.html

DeFi (Decentralized Finance)

Decentralized finance, or DeFi, is a system by which financial products become available on a public decentralized blockchain network.

Definition from Investopedia:

DeFi refers to a system by which software written on blockchains makes it possible for buyers, sellers, lenders, and borrowers to interact peer to peer or with a strictly software-based middleman rather than a company or institution facilitating a transaction.

On the shining stars of DeFi is AAVE, an open source DeFi protocol. According to some cryptocurrency enthusiasts AAVE is a Worlds Bank. AAVE allows anyone to take out loans without any credit approval. AAVE uses cryptocurrency as collateral for lending out money.

Crypto Cities Overview

El Salvador

In June of 2021 El Salvador became the first country to adopt bitcoin as legal tender.

It all started in 2019 with an anonymous donation of 12 bitcoins to a tiny beach town, El Zonte in El Salvador. The town of 3000 people has only 1 ATM in town and that ATM is a bitcoin ATM. El Zonte is known as a surfing hotspot and today it doesn't matter wether you're a tourist or a local carpenter, all transactions are done in bitcoin, including the local's salaries.

Under the hood, El Zonte's "Crypto Beach" uses a Lightning Network which was created to address the scaling issues of the Bitcoin blockchain.

President  Nayib Bukele announced plans to construct a “Bitcoin City” near a volcano that will be funded by the cryptocurrency.

Early adoption doesn't come without problems. Many people still shy away from using the cryptocurrency because internet access is patchy, bringing attention to a large digital divide.

CitiCoins.co

CitiCoins run on Stacks Protocol which provides smart contacts for Bitcoin blockchain (contracts/custom code are not natively supported).

One of the most known cities utilizing CitiCoins is Miami, Florida with its Miami Coin.

CitiCoins uses the term "mining" for buying the MiamiCoin. In this case mining doesn't have the same meaning as e.g. mining BitCoin (hash calculation), but it simply means buying STX (Stacks Token) and then buying MiamiCoin with it. At the time of the purchase 70% of MiamiCoins goes into the buyers wallet and 30% goes into the wallet of the city of Miami. So buying MiamiCoins practically means paying 30% fee for simply buying it. Or maybe like a 30% tax.

I'm not sure who is the owner of the MiamiCoins wallet. Possibly Mayor Francis Suarez?

Suarez announced the distribution of the yield from the MiamiCoins to every citizens wallet.

New York City Mayor Eric Adams is trying to keep up with the Crypto friendly city.

It seems like the dick measuring contest of who's more crypto friendly. To be fair, politics is a dick measuring contest in a way.

But that doesn't mean you have to wait for crypto city to be established by a Major or anyone from the government. Any citizen could issue a CityCoin is they wanted to. Maybe for fixing pot holes, support local artists, ...

Another city joining the CitiCoins club is Austin, Texas.

Reno, Nevada

Photo by Pelo Blanco Photo.

Hillary Schieve is the mayor of Reno, Nevada. She was on the mission to save the whale sculpture created/led by an artist Matt Schultz. The lease on the whale had expired in August 2019. The artists had tried to sell it to the city, which had little interest in the $500,000 price tag. The whale was in need of maintenance and repairs so Hillary decided to try to turn it into an NFT. If you haven't heard of NFTs read this. Hillary had a lot of conversations with Tezos regarding the NFT.

Sparks, Nevada

In 2018, Berns purchased 70,000 acres of industrial park land outside of Reno, and in July the company released plans for “Painted Rock Smart City and Innovation Park” that describe a settlement of more than 36,000 residents, with 15,000 homes, 11 million square feet of commercial space and an economic output reaching $16 billion within 75 years of development.

The company names Blockchains LLC is creating products for: IoT connected devices and services, Digital Identity Management and Digital Asset Management.

Blockchains | Unveiling The Future Of Blockchain Technology
At Blockchains, we envision a world transformed by blockchain technology, innovating with unlimited velocity; so, our efforts do not stop at software.

Based on their GitHub their first challenge is to enable smart devices of the internet of things to connect to blockchains. To overcome the excessive resources needed to connect to a and trust a blockchain (any blockchain) for a low performance IoT devices, Trustless Incentivized Remote Node Network, in short INCUBED (IN3) is the project, approached it by having multiple remote nodes to trust a transaction.  Some use cases for their IN3 protocol could be:

  • Smart Locks (imagine transforming AirBnB by connecting a smart lock to a blockchain and hiring the "lock" and whatever is behind it for a period of time.). Their site describes a Bike Smartlock.  
  • Mobile Apps (obvious choice nowadays, for e.g. payments)

Cities promising things but I couldn't discover much about the actual tech

It's my opinion that any worthy crypto project needs a GitHub or GitHub like account to examine what's being built. Ideally I can check if the project is alive and who is working on it. If it's not an open source project (at least parts of the project) it probably shouldn't be trusted for any kind of DAO endeavors. Of course that excludes the contracts providing they can be accessed publicly on the blockchain.

Dubai

The Emirates Blockchain Strategy 2021 focuses on four main themes: happiness of citizens and residents, elevating government efficiency, advanced legislation, and international leadership. I wanted to see their tech, possibly on the blockchain  but by visiting https://www.digitaldubai.ae/ I haven't found nothing that would satisfy my thirst for PoC or a "login site".  As it seems Dubai Smart City is working with ConsenSys, but it's not known to me how far they are with the plans: https://consensys.net/blockchain-use-cases/government-and-the-public-sector/smart-dubai/.

Senegal

Senegalese-American singer Akon announced plans to build an 'Akon City' running on 'Akoins' issued in November 2019. Akon’s main aim is reducing paperwork and procedures for entrepreneurs and small businesses.

Young entrepreneurs in Africa are facing real hardships in creating and building businesses — problems that have hampered sustained development for too long.
Akon

You can buy Akoin on cryptocurrency exchange BitMart, but I haven't found anything tangible to review the tech, except the aforementioned token itself.

ONE AFRICA. ONE KOIN
Akoin is a cryptocurrency powered by a blockchain based eco-system of tools and services designed for entrepreneurs in the rising economies of Africa and beyond

Conclusion

It seems that giving more power to the people living in the cities (or even some that don't) might bring a bit more accountability and transparency on how resources of the city are distributed.

Some processes might be sped up, like buying a house. There soon will be no reason to as why you couldn't simplify most of the bureaucracy. Translating it into code sounds complicated, but with some effort, possible.

Another important aspect of Crypto City is trusting your government with your data. At the moment if feels like privacy is going out the window with all the AI promised to run our future cities. Maybe having a code driven contract on how, when and why someone might be tracked by the government officials is possible with blockchain.  

Just a thought. Maybe for some aspects of running a city we don't need any official support for Crypto Cities. When supporting local artists, maybe providing food or shelter for the ones in need, we don't need a government agency. This can be done online, if people agree to it. There is probably tons of cases where people could create their cities cryptocurrency to improve the quality of their day to day lives.

You also might be interested in watching a Blockchain City the movie:

Maybe you feel I should of mentioned Zug's Crpyo Valley in Switzerland the home of Shapeshift, a cryptocurrency exchange and possibly Estonia, offering e-citizenship. I deliberately didn't go into that since they're location favorable to blockchain based business. I'm more interested in Crypto Cities and what they can do for their citizens, not just businesses.

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Igor Rendulic

  • Salt Lake City
Explorer, developer, ... Using this website as the bookmarking service for the things that might become useful in the future.
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