V God: The era of encrypted cities has arrived

On October 31, 2021, Vitalik published an article “Encrypted City”, believing that encryption technology will change cities, and introduced some encrypted city projects. He believes that the era of encrypted cities has arrived. Golden Finance is compiled as follows:

An interesting trend last year was that people’s interest in local governments increased, and there were greater differences in their ideas and more experiments. In the past year, the mayor of Miami, Francis Suarez, has been pursuing the same strategy as a technology start-up to pursue the interests of the city, frequently interacting with mainstream high-tech industries and crypto communities on Twitter. Wyoming now has a DAO-friendly legal structure. Colorado is experimenting with quadratic voting. We are seeing more and more experiments creating a more pedestrian-friendly street environment in the lower world. We even saw radical projects of varying degrees — Cul de sac, Telosa, CityDAO, Nkwashi, Prospera, etc. — trying to create entire communities and cities from scratch.

Another interesting trend last year was the rapid mainstreaming of cryptocurrency ideas, such as cryptocurrency (coin), NFT, and decentralized autonomous organization (DAO). So, what happens if we combine these two trends? Does it make sense to have a city with cryptocurrency, NFT, DAO, records on the anti-corruption chain, or even all four? It turns out that someone has already tried this:

  • CityCoins.co is a project to establish a cryptocurrency, aiming to become a local medium of exchange, and part of the cryptocurrency will be issued to the city government. MiamiCoin already exists, and “San Francisco Coin” seems to be about to launch.
  • Other experiments on cryptocurrency issuance (for example, see this project in Seoul)
  • Experiments with NFTs are often used as a way to fund local artists. Busan is holding a government-supported meeting to discuss what they can do with NFT.
  • Reno Mayor Hillary Schieve’s broad vision for the city’s blockchainization, including NFT sales to support local art, RenoDAO issuing RenoCoins to local residents, real estate rental from the government, blockchain security lottery , Blockchain voting, etc. to obtain income.
  • Created from scratch ambitious urban project for encryption Currency: see CityDAO, it describes itself as ” Ethernet Square building on a city block chain” –DAO governance and so on.

But, in their current form, are these projects a good idea? Are there any changes to make them better ideas? Let’s find out…

Why should you care about the city?

Many governments around the world have shown inefficiencies and slow actions in responding to long-standing problems and rapid changes in people’s potential needs. In short, many governments lack a rapid response mechanism. To make matters worse, many political claims for national governance that are being considered or to be implemented are frightening to be honest. Do you want to be taken over in the United States by someone similar to the Portuguese dictator Antonio Salazar during World War II, or perhaps “American Caesar”, and then bring down the scourge of the American left? For every idea that can be reasonably described as free expansion or democracy, there are ten different forms of centralized control and separation walls and universal surveillance.

Now consider the local government. As we have seen from the examples at the beginning of this article, cities and states can achieve real vitality, at least in theory. There are huge and very real cultural differences between cities, so it is easier to find a city where the public is interested in adopting any particular radical idea than to persuade the entire country to accept it. Many other areas of local public goods, urban planning, transportation, and urban governance have very real challenges and opportunities that can be solved. Cities have a tightly integrated internal economy, where things like the widespread adoption of cryptocurrencies can actually happen independently. In addition, experiments in cities are unlikely to lead to dire results, because cities are regulated by higher levels of government, and cities have an easier escape valve: people who are dissatisfied with what is happening can exit more easily.

So in short, the local government seems to be a seriously underestimated government. Given that criticisms of existing smart city initiatives usually focus on issues such as centralized governance, lack of transparency, and data privacy, blockchain and encryption technology appear to be promising key factors in achieving a more open and participatory path forward.

What are the current crypto city projects?

Actually quite a lot! Each of these experiments is still small, and to a large extent still trying to find solutions, but at least they are all seeds that can become interesting things. Many of the most advanced projects are in the United States, but the world is interested; the government of Busan in South Korea is holding an NFT conference. Here are some examples of what is being done today.

Reno’s blockchain experiment

Hillary Schieve, the mayor of Reno, Nevada, is a fan of blockchain, focusing on the Tezos ecosystem. In her urban governance, she has been exploring blockchain-related ideas recently (see her podcast https://youtu .be/uqXW0Kt-RzU):

  • Selling NFTs to fund local art, starting with the NFT of the “Space Whale” sculpture in the city center
  • Create a Reno DAO, managed by Reno tokens, and Reno residents are eligible to get it through airdrops. Reno DAO can start to get a source of income; a proposed idea is for the city to rent out the property it owns and use the income for the DAO
  • Use blockchain to protect various processes: blockchain secure random number generators for casinos, blockchain secure voting, etc.


Reno Space Whale Sculpture


CityCoins.co is a project built on Stacks, which is a blockchain run by the unusual “Proof of Transfer” (abbreviated as PoX instead of PoT for some reason) block algorithm, which revolves around Bitcoin Blockchain and ecosystem construction. 70% of the token supply is generated through the continuous sales mechanism: anyone with STX (Stacks native token) can send their STX to the city token contract to generate city coins; STX income is distributed to existing city tokens Coin holders. The remaining 30% is provided to the municipal government.

CityCoins made an interesting decision, trying to build an economic model that does not rely on any government support. The local government does not need to participate in the creation of CityCoins.co coins; a community group can issue a token on its own. Answers to a common question “What can I do with CityCoins?” include things like “The CityCoins community will create apps that use tokens as rewards” and “Local businesses can help those who… accumulate their CityCoins Provide examples of discounts or benefits. However, in practice, the MiamiCoin community does not act alone. The Miami government has actually publicly supported it.


MiamiCoin Hackathon Winner: A website that allows co-working spaces to offer discounts to MiamiCoin holders.


CityDAO is the most radical in the experiment: unlike Miami and Reno, Miami and Reno are existing cities, and people believe that existing infrastructure needs to be upgraded. CityDAO is a DAO with legal status under the DAO law of Wyoming, trying to create a new city from scratch.

So far, the project is still in its early stages. The team is currently completing their first land purchase in a remote corner of Nevada. The plan is to start with this land, and then add other land in the future, build cities, managed by DAO, and use radical economic ideas such as Harberger tax to allocate land, make collective decisions and manage resources. Their DAO is one of the few advances to avoid token voting governance; on the contrary, governance is a voting scheme based on “citizen” NFTs, and it has been proposed to go further through the use of proof-of-humanity verification. The idea of ​​limiting voting to one person. NFTs are currently being sold to crowdfund the project; you can buy them on OpenSea .


I think what can the city do?

Obviously, in principle, cities can do many things. They can add more bike lanes, they can use carbon dioxide meters and far-ultraviolet lamps to reduce the spread of COVID more effectively without inconvenience to people, and they can even fund life-prolonging research. But my main specialty is blockchain. This article is about blockchain, so… let’s focus on blockchain.

I think it makes sense to have two very different blockchain ideas:

1. Use blockchain to create a more credible, transparent and verifiable version of the existing process.

2. Use blockchain to implement new experimental forms of ownership of land and other scarce assets, as well as new experimental forms of democratic governance.

There is a natural fit between blockchain and these two categories. Anything that happens on the blockchain is easily verified publicly, and there are many free tools available to help people do this. Any application built on the blockchain can be immediately inserted into and interact with other applications in the entire global blockchain ecosystem. Blockchain-based systems are efficient in a way that paper does not have, and can be publicly verified in a way that centralized computing systems do not have-if you want to create a new form of voting, let citizens give high-level votes , This is a necessary combination-massive real-time feedback on hundreds of different issues.

So let’s get into the details.

Which existing processes can blockchain make more credible and transparent?

A simple idea that many people, including government officials from all over the world, have repeatedly proposed to me is that the government creates a whitelisted stablecoin for internal use only to track internal government payments. Every tax from an individual or organization can be bound to a publicly visible on-chain record to mint the amount of tokens (if we want the amount of personal tax to be private, there is a zero-knowledge proof method that can be fully disclosed, But still convince everyone that it is calculated correctly). Transfers between departments can be done “explicitly”, and these tokens can only be redeemed by individual contractors or employees requesting their payments and salaries.

c4PK7rpbgaaPjVp8bNU8ofTSLE3X4kx0eYHGV5xV.pngThis system can be easily expanded. For example, the procurement process of choosing which bidder to win a government contract can be done mainly on the chain.

Using blockchain can make more processes more trustworthy:

  • Fair random number generator (for example, for lotteries)-VDF, such as the one that Ethereum is expected to include, can be used as a fair random number generator and can be used to make government-run lotteries more trustworthy. Fair randomness can also be used in many other use cases, for example as a form of government lottery.
  • Certificates, such as encrypted proof that certain individuals are residents of the city, can be completed on the chain to increase verifiability and security (for example, if such certificates are issued on the chain, if a large number of false certificates are issued, it is easy discover). This can be used for certificates issued by various local governments.
  • Asset registration is used for land and other assets, as well as more complex forms of property ownership, such as development rights. Since the courts need to be able to distribute in special circumstances, these registries may never become fully decentralized bearer tools like cryptocurrencies, but put records on the chain, which makes it easier to see what happens if there is a dispute. What is the order?

Eventually, even voting can be done on the chain. Here, many complexities and evils are faintly visible, and it is very important to be careful; a complex solution combining blockchain, zero-knowledge proofs and other cryptography is needed to achieve all the required privacy and security attributes. However, if humans really want to switch to electronic voting, local governments seem to be a perfect starting point.

What are some interesting radical economic and governance experiments?

But in addition to these blockchains covering what the government has already done, we can also view the blockchain as an opportunity for the government to conduct new and radical experiments in economics and governance. These are not necessarily the final thoughts of what I think should be done; they are more preliminary explorations and suggestions for possible directions. Once the experiment begins, real-world feedback is usually the most useful variable in determining how the experiment should be adjusted in the future.

Experiment #1: A more comprehensive vision of city tokens

CityCoins.co is one of the visions of how city tokens work. But this is far from the only vision. In fact, the CityCoins.so approach carries significant risks, especially in terms of how seriously the economic model is leaning toward early adopters. 70% of STX income from minting new tokens is allocated to existing mortgagers of city tokens. More tokens will be issued in the next five years than in the next fifty years. 2021 is a good deal for the government, but what about 2051? Once the government approves a particular city token, it will be difficult to change direction in the future. Therefore, the city government must carefully consider these issues and choose a long-term meaningful path.

This is a different possible sketch of the narrative of how the city token works. It is far from the only possible alternative to CityCoins.co’s vision; see Steve Waldman’s excellent article, which advocates the use of a localized city of exchange as another possible direction. In any case, city tokens are a vast design space, and there are many different options worth considering. Anyway, let’s get started.

The concept of home ownership in its current form is a significant double-edged sword. Many people believe that actively encouraging and legally constructing specific ways of home ownership is one of the biggest economic policy mistakes we make today. There is an inevitable political tension between housing as a place of residence and housing as an investment asset, and the pressure of satisfying the community that cares about the latter often ends up seriously damaging the affordability of the former. Residents of a city either own houses, which make them excessively exposed to land prices and introduce abnormal incentives to combat the construction of new houses, or they rent houses, which make them have a negative impact on land prices, expose them to the real estate market, and thus make them in the real estate market. Economically, it runs counter to the goal of making cities a livable place.

But even with all these problems, many people still find that owning a house is not only a good personal choice, but also worthy of active subsidies or social encouragement. An important reason is that it encourages people to save money and build their net worth. Another important reason is that despite its shortcomings, it has established an economic alliance between residents and the communities in which they live. But what if we can provide people with a way to save and build economic alliances without defects? If we can create a divisible and interchangeable city token, residents can hold as many as they can afford or feel comfortable, and as the city prospers, will its value rise?

First, let’s start with some possible goals. Not all are necessary; only three out of five are completed in one token, which is already a big step forward. But we will try to hit as many of them as possible:

  • Obtain a sustainable source of income for the government. The city token economic model should avoid redirecting existing taxes; instead, it should look for new sources of income.
  • Establish an economic alliance between residents and cities. This first means that as cities become more attractive, the tokens themselves should obviously become more valuable. But this also means that economics should actively encourage residents to hold more tokens instead of distant hedge funds.
  • Promote savings and wealth accumulation. This is what home buyers do: when homeowners pay their mortgages, they build up their net worth by default. The same can be done with city tokens. Accumulating tokens over time becomes very attractive and can even gamify the experience.
  • Encourage more activities that benefit society, such as positive actions that help cities and use resources more sustainably.
  • Be equal. Don’t give too much preference to the rich over the poor (because poorly designed economic mechanisms often happen by accident). The divisibility of tokens has avoided the obvious binary division between rich and poor. A lot has been done, but we can go further, for example. By allocating most of the newly issued bonds to residents as UBI.

One model that seems easy to meet the first three goals is to provide benefits to holders: if you hold at least X tokens (where X can increase over time), you will get some services for free. MiamiCoin is trying to encourage companies to do this, but we can go further and let government services also operate in this way. A simple example is to allow existing public parking spaces to be used free of charge only for those who hold at least a certain amount of tokens. This will achieve several goals simultaneously:

  • Create motivation to hold tokens and maintain their value.
  • Create incentives specifically for residents to hold tokens, rather than other remote investors who are not aligned. In addition, the effectiveness of incentives is limited on an individual basis, so it encourages widely distributed currency holdings.
  • Create economic alliances (cities become more attractive -> more people want to park -> tokens are more valuable). Unlike self-owned houses, this will be consistent with the entire town, not just a very specific location in the town.
  • Encourage the sustainable use of resources: This will reduce the use of parking spaces (although people without tokens can still pay if they really need them), and support the desire of many local governments to open up more space on the road to be more pedestrian friendly. Alternatively, restaurants can be allowed to lock tokens through the same mechanism and require parking spaces for outdoor seating.

But in order to avoid improper incentives and avoid over-reliance on a particular idea, it is very important to have multiple possible sources of income. An excellent place to give value to the city’s tokens and at the same time experiment with novel governance concepts is zoning. If you hold at least Y tokens, then you can vote a second time on the fees that nearby landowners must pay to bypass zoning restrictions. This method based on mixed market + direct democracy will be more effective than the current overly cumbersome licensing procedures, and the cost itself will become another source of government revenue. More generally, any of the ideas in the next section can be combined with city tokens to provide city token holders with more places to use them.

Experiment #2: More radical and participatory forms of governance

This is where radical market ideas such as Harberger taxation, quadratic voting, and quadratic financing come in. I have put forward some of these ideas in the above section, but you don’t have to own a dedicated city token to implement them. The government’s limited use of quadratic voting and funds has already taken place: see the Colorado Democratic Party and Taiwan’s Presidential Hackathon, as well as experiments that have not yet received government support, such as Gitcoin’s Boulder Downtown Stimulus. But we can do more!

One obvious place where these ideas can have long-term value is to incentivize developers to improve the aesthetics of the buildings they are constructing (please find out some recent examples of professionals arguing about modern architectural aesthetics). Harberger taxes and other mechanisms can be used to fundamentally reform zoning rules, and blockchain can be used to manage such mechanisms in a more trustworthy and effective way. Another idea that is more feasible in the short term is to subsidize local companies, similar to the urban stimulus plan, but on a larger scale and longer lasting. Companies have been generating various positive externalities in local communities, and these externalities can be more effectively repaid. Local news can get quadratic funding to revitalize a long-struggling industry. The pricing of advertisements can be set by real-time voting based on how much people like each particular advertisement, thereby encouraging more originality and creativity.

More democratic feedback (and maybe even retroactive democratic feedback!) may create better incentives in all these areas. Digital democracy in the 21st century through real-time online quadratic voting and funding can be significantly better than democracy in the 20th century, which seems to have been in practice, especially in terms of building codes, planning, and hearings. Of course, if you intend to use the blockchain to ensure the security of voting, starting with novel voting seems to be safer than reinstalling the existing voting system, and it is also politically more feasible.


The compulsory solar punk pictures are designed to arouse people’s positive imagination, if real-time quadratic voting can set subsidies and prices for everything, what might happen to our cities.

in conclusion

Existing cities or new cities can try many ideas worthy of urban experimentation. The advantage of a new city is of course that no existing residents have existing expectations about how things should be done; however, in modern times, the concept of creating a new city itself is relatively untested. Perhaps the multi-billion dollar pool of funds in the hands of those who are keen to try new things and projects can help us tide over the difficulties. But even so, in the foreseeable future, existing cities may still be where most people live, and existing cities can also use these ideas.

Blockchain is very useful in the more gradual and radical ideas presented here, even if city governments are inherently “trusting” in nature. Run any new or existing mechanisms on the chain so that the public can easily verify that everything complies with the rules. The public chain is better: The benefits of the existing infrastructure for users to independently verify what is happening far exceed the loss of transaction costs, which are expected to quickly decrease due to rollup and sharding. If strong privacy is required, blockchain can be combined with zero-knowledge proofs while providing privacy and security.

The main trap that the government should avoid is to sacrifice selectivity too quickly. An existing city may fall into this trap because it issues a bad city token instead of slowing down and issuing a good city token. A new city may fall into this trap by selling too much land, sacrificing its entire advantage to a small group of early adopters. It is ideal to start with an independent experiment, and then slowly work on truly irreversible movements. But at the same time, it is also important to seize the opportunity. Cities have many areas that can and should be improved, and there are many opportunities; despite the challenges, the era of encrypted cities has arrived.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/v-god-the-era-of-encrypted-cities-has-arrived/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-11-01 10:39
Next 2021-11-01 10:42

Related articles