Alongside growing public interest in cryptocurrencies, non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs), cities are also venturing into blockchain and crypto.
In a speech at the recent SG Blockchain Day 2021 organized by Blockchain Association Singapore, Ethereum co-founder Vitalik Buterin, discussed how cities, particularly in the United States, have been experimenting with crypto ideas such as coins, NFTs and DAOs.
Miami Mayor Francis Suarez this month said the city would be giving a Bitcoin yield to its residents for staking the city’s cryptocurrency, MiamiCoin. New York City, too, now has its own cryptocurrency, called NYCCoin. NYC Mayor-elect Eric Adams wants New York to be a crypto hub and has also said he wants his first three paychecks paid in Bitcoin.
The Miami and New York coins — with another one in Austin on the way — are powered by CityCoins.co, which enables communities in cities to create their own coin, and have some portion of the issuance of those coins go to the local city governments. “It would encourage residents in those cities to do things to make those city coins actually useful,” Buterin said. CityCoins are powered by Stacks, a protocol that enables smart contracts on the Bitcoin network.
In Reno, Nevada, Mayor Hillary Schieve’s blockchain plans include using NFT sales to support local art projects and creating a Reno DAO where every resident would be able to participate, with revenue — such as profits from the city renting out its property — going into the DAO.
Wyoming, which has some of the most blockchain- and crypto–friendly laws in the United States, is now home to CityDAO, a company organized as a DAO with the mission of creating blockchain cities in the real world. The CityDAO team has bought 40 acres of land in a far-off corner of Wyoming and plans to buy more pieces of property in the future.
“Instead of being governed by a token, the governance is based on citizen NFTs, and eventually the governance might even be limited to maximum one vote per person,” Buterin said. “A lot of experiments, but it’s still a field that is at a very early stage, which on the one hand means that there isn’t a playbook, but on the other hand, means that there is a lot of opportunities.”
Possible use cases, according to Buterin, include an internal-use only coin for government purposes to make fund transfers within governments more transparent. “When taxpayers pay taxes, there would be an on-chain minting event that mints an amount equal to their tax payment,” Buterin said. “There would be a cryptographic receipt that proves that the amount of coins minted actually equals the amount of taxes that got paid. If you don’t want to reveal exactly what amounts people paid in taxes, there’s even ways to do it in zero-knowledge.”
The system could also be extended to auctions for government procurement where auctions could be run on-chain using central bank digital currency (CBDC), and contractors could make bids with a public bidding process. A smart contract could determine the winner, such as awarding jobs to the lowest bidder.
NFTs also could be another alternative, Buterin said. “The Singapore government technically already issues NFTs — the permits to drive a car. They are NFTs, just not NFTs on a blockchain — yet,” Buterin said. Governance experiments can include on-chain micro voting.
Blockchain would provide transparency and trust in the process, and zero-knowledge proofs can be included to enhance privacy, Buterin added. “Despite some of the inputs being private, you can still have these cryptographic proofs that whatever is happening is following the rules.” It would also be possible to integrate with the wider blockchain ecosystem, for example, access to decentralized finance (DeFi) markets should cities want to sell NFTs.
“Right now, this whole concept is still at a very early stage and there’s a lot of ideas that people are already thinking about, there is a lot of ideas that people could be thinking about, Buterin said. “I’m excited to see what the next year five years of cities experimenting with blockchain ideas have in store for us.”
See related article: Vitalik Buterin: How DeFi, NFTs and DAOs are building a value exchange layer for Web 3.0
