Ethereum (ETH) co-founder Vitalik Buterin expressed his support for using the cryptocurrency phenomenon to serve the interests of local governments and their citizens in a blog post published on Sunday.
Buterin specifically addressed the creation of city tokens and decentralized autonomous organizations, or DAOs. DAOs are self-governing organizations in which users write and enforce their own rules, such as voting on protocol amendments based on the amount of underlying crypto tokens they own.
The concept is still in its early stages. Nonetheless, Buterin asserted that city tokens should meet at least three of the five objectives listed below:
Act as a long-term source of revenue for the government; promote economic cooperation between residents and the city; and encourage saving and wealth-building among all stakeholders. Promote city-wide social initiatives. Reduce wealth disparities
In response to the last point, Buterin proposed that the vast majority of newly issued city tokens be distributed to residents as a form of universal basic income. The co-founder of Ethereum criticized current economic mechanisms for favoring “wealthy people over poor people.”
The blog post’s most prominent crypto city project is CityCoins, which is built on the Stacks (STX) blockchain. Stacks is a layer-one solution for implementing smart contracts on the Bitcoin (BTC) network. The protocol directs 30% of BTC mining revenue forwarded to STX holders to a wallet dedicated to each city.
Theoretical applications include discounts and benefits provided to CityCoin holders by local businesses. The MiamiCoin, a type of city token, has already been launched by the group. Miami Mayor Francis Sanchez has publicly endorsed it, claiming that it has the potential to “revolutionize the way governments are funded.”
Aside from socioeconomic effects, Buterin praised city tokens’ potential to improve existing governance:
“Real-time online quadratic voting and funding in the twenty-first century could do a much better job than 20th-century democracy, which appears to have been characterized in practice by rigid building codes and obstruction at planning and permitting hearings. Of course, if you’re going to use blockchains to secure voting, starting with fancy new types of votes seems far more secure and politically feasible than retrofitting existing voting systems.”