Cryptocities — territories of the future or utopia for geeks

13.06.2022 |

For article about cryptocities

The tendency to increase independence in the management of individual cities in developed countries has been traced for a long time. Since last year, when the coronavirus pandemic forced the authorities to apply not the most popular measures, especially in the financial sector, municipal organizations have been thinking about the problem of greater decentralization in management. One of such solutions could be crypto cities — an initiative started by distributed registry enthusiasts, picked up by mayors of many cities. Somewhere it’s just the use of bitcoin in the financial system, and somewhere everything has already gone much further.

The trend of development of crypto cities

If we talk about the past year, we can distinguish the development of three trends at once:

By combining even two of these trends, a new, breakthrough technology of a self-managed community may appear, where everyone will have access to most aspects of information and the ability to manage the processes taking place. For example, coins can help effectively fight corruption, and NFT will simplify the process of registration and transfer of ownership rights to many objects where proof of ownership is required. These can be not only objects of rights to digital works of art, but also rights to ownership of immovable objects and other civil relations expressed in non-interchangeable tokens.

What Crypto City Projects Already Exist

  • CitiCoin is a project that allows cities to launch their own cryptocurrency. At the same time, part of the issue is transferred to the municipal authorities, and support is provided by the manners that receive coins from commission fees. Already, the authorities of Austin, New York and Miami have turned to this technology. A San Francisco coin may still appear in the future.
  • Other coins, for example, Seoul’s own currency.
  • NFT, so far used as support for local artists. However, already now, for example, in Busan, conferences are being held on other possible aspects of the application of NFT.
  • City Reno , as a vivid example of combining many aspects of the application of distributed registry technology, where, in addition to its own coin, voting and lotteries based on blockchain are already used, the ability to lease real estate through a distributed registry, and much more.
  • CityDAO is a vivid example of an attempt to create a crypto city from scratch. The ideological inspirers decided to choose the blockchain Ethereum for their brainchild, which cannot be considered an unambiguous solution, however, the current implementation allows us to talk about the potential success of CityDAO.

What Crypto Cities Can Improve

Most national authorities are unable to respond effectively and quickly to both the long-standing problems of society and the rapidly changing needs of people. Simply put, there are no “live players” in the government. Moreover, a number of decisions of national Governments on various issues taken today cause fear. So for one solution that allows you to expand democracy and get more freedoms, there will be a dozen that restrict people and make society more centralized, with new barriers and universal control.

Although things may not be so bad for small nation-states, but for large, federal countries, the issue is more acute. So, in the examples above, it is clearly seen that at the level of municipalities and regional authorities, there may be manifestations of a certain dynamism and adjustment to the situation. So every city in a large state can have very real socio-cultural differences, therefore, to make an important decision that can cause relatively radical changes, it is easier to use smaller administrative units where these ideas will resonate with the overwhelming majority than to try to convince hundreds of millions of people with different religious views, attitudes to property and freedom, as well as with different ways of daily life.

There are real problems in the areas of local self-government: public goods, urban planning, transport and other areas that need to be addressed. At the same time, at the level of municipalities, where there is a close economic connection of society, it is much easier to apply certain solutions. For example, individual cities are able to introduce cryptocurrencies into their financial system, while independently of each other, which will make it possible to more accurately select a tool that meets the needs of the population.

Also, crypto cities allow you to give much more real freedoms to their residents. And the main freedom, as an example, is the ease of transition from one community to another. So moving from city to city will cause much less problems than the decision to change the country for life, which may be required when the government makes decisions that contradict the beliefs of an individual.

Thus, it is clearly seen that local self-government bodies are underestimated by national and regional authorities. To be honest, for example, in the Russian Federation, the municipal government does not even belong to state authorities. At the same time, at their own level, local governments are still trying to build a convenient urban environment. However, an approach in which there is even greater centralization, and there are more and more issues of ensuring the security of personal data, could be more transparent and effective with the use of a distributed registry.

If we talk about crypto cities only from the side of the distributed registry, then now we can single out the solution to two problems of modern society:

  • improvement of existing processes by increasing transparency for third-party audit,
  • creation of new forms of ownership based on blockchain, for example, experimental forms of ownership of land and other scarce assets, as well as new forms of democratic governance.

Improving existing processes

The simplest example, which many states are already working on, is the digital currencies of central banks. So a competent implementation of the idea will help solve many problems. So each tax transfer in favor of the state can be added to the public distributed registry. Data from individuals can be depersonalized to a certain extent, so that it is impossible to identify a specific payer, while monitoring the correctness of calculations and accruals, and for legal entities and public companies, information should remain publicly available.

This would open up many horizons of public money management. This would make it easier to track the execution and financing of public procurement and orders. For example, limiting the use of allocated funds before the delivery of the object, by analogy with bank guarantees, but without the involvement of third-party organizations and additional costs of performers. It would also be possible to exclude chains of contracting organizations, when one company, having won the tender, transfers its execution to another, which in turn can hire another contractor, thus reducing the cost of final work, taking part of the funds along the chain as “profit”, which in the sphere of disposal of public money can be regarded as unjustified enrichment.

From other existing processes , it is possible to distinguish:

  • Random number generator of state lotteries. This would exclude possible distrust, as happened, for example, with the winning of an apartment in the lottery at the elections by the precinct chairman, a billion in the “Russian Lotto” by a person associated with the organizers, as well as the lottery being held now among those vaccinated against COVID-19.
  • Asset registers. This would make it possible to eliminate errors in the records of ownership rights and other registry documents. So now it is not uncommon for Rosreestr to give contradictory data about the owners, or not to take into account encumbrances, which results in problems with real estate transactions.
  • Certification of products. This would make it possible to confirm the authenticity, conformity and safety of products by transparent and, most importantly, effective methods. The distributed registry will eliminate the double use of certificates for different units of goods, as well as track counterfeit goods.
  • Online voting. However, there are still a lot of bottlenecks in this issue related to the organization of security and access levels to the blockchain, which so far the initiative cannot be effectively implemented with the existing approaches and organization of electoral law in most countries.

Creating Experimental Blockchains

Above, we have analyzed the aspects of the organization of society in which the introduction of blockchain has already begun. In different countries, these initiatives are being promoted with more or less efficiency. However, the use of a distributed registry cannot be limited by this.

Unfortunately, there are not so many initiatives here yet, experimenting with which the municipal authorities are trying to improve the lives of their citizens. The main thing, as already mentioned at the beginning of the article, is the use of an internal cryptocurrency. Using CityCoin as an example, we can say that city coins will allow us to organize a more efficient society in a limited area. However, this particular implementation has one significant drawback — it is the distribution of coins between the first participants of the network. The mechanics of implementing a distributed registry are such that the largest issue will occur in the first five years. And even the next 50 years will not be able to close this gap. Nevertheless, there is room for experimentation, which allows us to hope for building a more just society when the bottlenecks in implementation are solved.

And the second implementation is a more radical version of blockchain voting. With this approach, most decisions, not just the most important ones, are made on the basis of public opinion. Thus, the majority will be able to create an environment around themselves that will be comfortable for this particular society. And, as it was said earlier, those who disagree with the majority’s decision always have the opportunity to relocate to another municipality, with a more suitable device, without having to go through a complicated procedure for obtaining visas, learning a language and other problems associated with moving to another state.

Conclusion

Although we have considered only five issues where the distributed registry finds its application, however, there are still many worthwhile ideas for building crypto cities. Some of them have a clear and consistent form in terms of implementation and implementation, while others are still at the stage of abstract thoughts. Some can be applied in existing microsociums, while others require a “clean slate”. And the latter has an advantage — people do not yet have a full understanding of how this or that mechanism should work, which means it is easier for them to adopt a new model. That’s just to build a new city from scratch, and most importantly to attract a sufficient number of residents to it, is not such an easy task.