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Welcome to today’s What is The Future For Cities podcast and its Research episode; my name is Fanni, and today I will introduce a research paper by summarising it. The episode really is just a short summary of the original paper, and, in case it is interesting enough, I would encourage everyone to check out the whole paper.

Our summary today works with the article titled Crypto cities from 2021 by Vitalik Buterin on his own blog. Since we are investigating the future of cities, I though it would be interesting to see how the ever trending crypto world and cities can work together. This article explores how and to what extent the blockchain technology and the city can collaborate and what enhancements are possible.

Buterin starts with the emerging trend from local governments to ride with the crypto wave and encompasse it into the city’s structure. There are examples from Miami, the planned DAO-city in Wyoming, enhanced voting or pedestrian friendly envrionments, among others. Also, there are experiments to combine cities with coins or non-fungible tokens, NFTs and DAOs. However, Buterin states the question whether these projects in their current form are good ideas or there should be any changes to make them better.

He continues to state the question why we should care about cities. Governments seem to be inefficient and slow-moving in response to long-running problems and rapid changes for people’s underlying needs, they seem to miss live players. Additionally, for every more democratic or freedom-expanding idea there are ten more of centralised control and universal surveillance.

Local governments, however, seem to be capable of genuine dynamism, based on the examples. Understandably, it is easier to find a single city where there is public interest in adopting any particular radical idea than it is to convince an entire country. The challenges and opportunities are real in local public goods, urban planning, transportation, and many other areas that could be addressed. Cities with their tightly cohesive and internal economies could adopt cryptocurrency realistically independently, for example. Moreover, cities are a great playing field for such experiments because people who do not like it can move, while nationality is a lot harder to change.

Based on these, local governments are likely a rather undervalued level of government. Given that criticism of existing smart city initiatives often heaviliy focuses on concerns around centralised governance, lack of transparency and data privacy, blockchain and cryptographic technologies seem like a promising key ingredient for a more open and participatory way forward.

Buterin continued with current city projects. Many of these are in the United States and on a smaller scale, but are promising and interesting. Reno’s mayor in Nevada focuses on blockchain ecosystem in the governance of the city. CityCoins.co has made the interesting decision of trying to make an economic model that does not depend on any government support. MiamiCoin is publicly endorsed by the Miami government supporting the MiamiCoin community, as a special case in the CityCoin field. CityDAO tries to create an entirely new city from scratch in Wyoming under DAO laws creating a legal status for themselves.

There are a lot cities could do for the better, with more bike lanes, CO2 meters, UVC light useage for reducing COVID spread. However, if concentrating on the blockchain part, Buterin argued for two distinct categories of blockchain ideas that would make sense: 1. Using blockchains to create more trusted, transparent and verifiable versions of existing processes, and 2. Using blockchains to implement new and experimental forms of ownership for land and other scarce assets, as well as new and experimental forms of democratic governance. As anything happening on a blockchain is very easily publicly verifiable, and any application can be part of the blockchain ecosystem if built upon it, the blockchain systems are more efficient and transparent in a way that paper is not. This is a necessary combination if you want to make a new form of voting to engage citizens with high-volume and real-time feedback on urban issues, for example.

So what are some existing processes that blockchains could make more trusted and transparent? Tax and governmental payments could be tracked more transparent, alongside with procurements. More processes could be trustworthy with blockchains: fair random number generators, certificates and proofs with a wider verifiability, and asset registries for land, properties and development rights. Putting these records on chain can make it easier to see what happened in a dispute. Eventually, even voting could be done on-chain, though it is crucial to be careful. A sophisticated solution combining blockchains, zero knowledge proofs and other cryptography is needed to achieve all the desired privacy and security properties. However, if humanity is ever going to move to electronic voting at all, local government seems like the perfect place to start.

And what are some radical economic and governance experiments that could be interesting? These are not necessarily final ideas but initial explorations and suggestion for possible directions. Once an experiment starts, real-world feedback is often by far the most useful variable to determine how the experiment should be adjusted in the future. Cities need to think long term and carefully selecting the path that makes the most sense for them.

Buterin created a possible approach for city tokens adaption. In one example, the homeownership of the residents could be more affordable and sustainable through government economic alignment with the residents, who are incentivised to save and build wealth and be socially proactive, while the government creates sustainable revenue sources and be egalitarian. Additionally, he also played with free city parking based on city coins held by the residents which would incentivise holding the coin, specifically for residents, also creating economic alignment across the whole city, and encourage sustainable use of resources and city assets. It is also crucial to avoid overly depending on one pecific idea than have a diverse array of possible revenues.

Another experiment could include more radical and participatory forms of governance. Quadratic voting, where you can have more choice and the votes show the preference spectrum not just the ends of it, could improve aesthetics of buildings, reform zoning rules, subsidising local businesses, local news and advertisements. More democratic feedback could plausibly create better incentives in all of these areas. 21^st century digital democracy through real-time online quadratic voting and funding could plausibly do a much better job than the 20^th century democracy, which seems in practice to have been largely characterised by rigid building codes and obstructurion at planning and permitting hearings. And of course, if you are going to use blockchains to secure voting, starting off by doing it with fancy new kinds of votes seems far more safe and politically feasible than re-fitting existing voting systems.

Existing cities will likely continue to be the place where most people live for the foreseeable future, and existing cities can use these ideas too, not just the new developments and projects. Blockchains can be very useful in both the more incremental and more radical ideas, even despite the inherently trusted nature of a city government. The blockchains gives the public an easy ability to verify that everything is following the agreed rules. If strong privacy is required, blockchains can be combined zero knowledge cryptography to give privacy and security at the same time.

Buterin closed with the main trap that governments should avoid: too quickly sacrificing optionality. An existing city could fall into this trap by launching a bad city token instead of taking things more slowly and launching a good one. A new could fall into this by selling off too much land, sacrificing the entire upside to a small group of early adopters. Starting with self-contained experiments, and taking things slowly on moves that are truly irreversible is ideal. But at the same time it is also important to seize the opportunitiy in the first place. There is a lot that can and should be improved with cities, and a lot of opportunities, despite the challenges, crypto cities broadly are an idea whose time has come.

As the most important things, I would like to highlight 3 aspects:

1. There are opportunities and of course challenges to combine cities with blockchain and the crypto world, but it is worth to do it wisely.
2. The implementation can happen incrementally and radically as well, there is no ideal pace or solution, but the one which is perfect for the city itself.
3. Blockchain can help to make cities better, and make them more democratic with a wider engagement with citizens, among others.

Additionally, it would be great to talk about the following questions:

1. What would happen to citizen participation and engagement with the use of these city coins? How far could it go if there would be a financial incentive for people to join in on social activities?
2. How far could this democratic approach go in the decision-making processes?
3. What would happen if citizens had this kind of ownership over the city with city coins?

What was the most interesting part for you? What questions did arise for you? Do you have any follow up questions? Let me know on Twitter @WTF4Cities or on the website where the transcripts and show notes are available! I hope this was an interesting research for you as well, and thanks for tuning in!

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