When Vitalik Speaks, You Listen
Summary of Vitalik Buterin’s latest publication “Crypto Cities”
As you will know from my last newsletter, I have my real estate exams coming up. There has been a mess up with the RICS and the exams postponed with no new date confirmed. On the upside, this has allowed me to focus on the newsletter.
This week, I look into Vitalik Buterin’s (founder of Ethereum) most recent publication “Crypto Cities”. Not many people know more about blockchain than Vitalik does and I felt obliged to digest his thoughts.
When Vitalik Speaks, You Listen
Vitalik starts his publication by describing the rise in experimentations from cities and the rise of crypto ideas since the start of the pandemic. Combining these two trends, Vitalik focuses on “Crypto Cities”. Vitalik looks into a couple of city ideas that have taken shape in the past 18 months.
Blockchain experiments in Reno, Nevada
Hillary Schieve, Mayor of Reno, is exploring blockchain related ideas for the city with the aim of creating a local economy benefitting all citizens. Some of the ideas include digitising art in the form of an NFT (see the Whale below) or creating a Reno DAO used as a source of revenue. With the DAO, the city would for example, own property, rent it out, with the rental income going back to the DAO holders, ie. citizens of the city.
The concept is still in its early days, but the Mayor is optimistic about driving the project forward. This podcast is definitely worth a listen.
Reno’s “Space Whale” being considered as an NFT
Citycoins.co
City coins are set up with the intention of becoming a medium of exchange for cities. Miami has introduced these with the MiamiCoin. A good way of describing their use comes from the Citycoins.co website.
CityCoins offer people a way to support their city and grow its crypto treasury while earning Bitcoin BTC and Stacks STX for themselves. With any CityCoin, you can mine it, hold it, stack it to earn STX, borrow it, lend it, and program it.
So far, the project appears to be a success.
Vitalik argues that the economic model of CityCoins is tilted towards the early adopters and so whilst it might make sense in the short term, it is a risky strategy.
MiamiCoin Value - as of 7 Nov 2021 (ie. war chest)
CityDAO
Unlike the two previous examples, CityDao is aiming to create a city from scratch. Last week, the project purchased its first plot of land, being the first DAO-owned plot of land. This means the land is owned by a blockchain-based entity in which members vote on the city’s direction with tokens. The land was purchased in Wyoming, considering Wyoming is the first state to legally recognise a DAO as an entity. CityDAO is yet to release its whitepaper outlining how the city will be developed.
Vitalik’s Views
Vitalik goes on to share his own ideas for crypto cities. His views are that if cities implement blockchain they could create more trusted, transparent & verifiable versions of existing processes and implement new & experimental forms of ownership & democratic governance. Vitalik suggests that blockchain will allow for more efficient processes such as tracking internal payments, proof of residence on-chain adding verifiability & security, as well as putting records such as asset registries on-chain.
Vitalik also explores possible directions if cities were to implement comprehensive city tokens. He argues that there is currently a conflict between a home as a place to live and a home as an investment asset. Additionally, when owning a home, residents are incentivised to keep supply tight and land prices high, whilst renters are incentivised to do the opposite. Removing these flaws, Vitalik recommends introducing fungible city tokens. What would these tokens offer?
Alignment between residents and the city, where the coin becomes more valuable as the city does, encouraging residents to hold the coin and endorse the city.
Promote saving and wealth-building by making it attractive to accumulate coins.
Encourage more pro-social activity, such as positive actions that help the city and more sustainable use of resources.
Egalitarian & divisibility of the tokens avoiding a divide between the rich and the poor.
Cities would need to incentivise residents to hold the tokens for the concept to be a success, achieved by providing benefits such as voting rights on planning permissions, free parking, or priority access to city projects & events.
Vitalik’s Conclusion
Vitalik concludes by suggesting these experiments can happen in existing as well as new cities, both having their advantages and disadvantages. For the foreseeable future though, most people will be living in existing cities. There are of course downsides, for existing cities the risk of launching bad tokens too fast, with new cities giving too much power to a small group of early adopters. Despite the challenges, Vitalik believes crypto cities have several opportunities and are an idea whose time have come.
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