Long Live the City!
Updated: Mar 5, 2022
Rumors of the death of the city are greatly exaggerated. Our cities continue to be increasingly important. Cities are estimated to generate 80% of all economic growth. In 1950, only 33% of the global population lived in urban areas, today that number is over 75%. Based on current trends, 9 out of 10 future mega-cities (exceeding 10 million people) will be in the developing world. While the pandemic may have slowed the trend of urbanization, it is unlikely to stop or reverse in the decades ahead. However, the pandemic has provided an opportunity to rethink and reimagine our cities.
The importance of cities is not a new phenomenon. City-states had existed long before the nation-state emerged after the Treaty of Westphalia (1648). Previously cities like Rome, Carthage, Athens, and Sparta operated as important autonomous sovereign entities.
The reemergence of powerful city-states may be a positive future. Cities give people more choice. There are numerous visible fractures in the nation-state model as we move into the 21st century. Trust in 20th-century institutions is at all-time lows. Many national governments have shown an inability or have been slow in responding to their citizens' evolving demands. Cities are complex adaptive systems requiring responsive local governance. The decentralization of power from the nation to the city may have a strong moral justification.
Local currencies | Old idea, new technologies
While there is a long history of city-states producing their own money, nation-state currencies have secured significant monopoly power today. Cryptocurrencies have emerged as a potential challenge to that monopoly.
While monetary sovereignty may be essential in a true city-state, the existence of competing and complimentary private currencies could catalyze new future possibilities for cities.
While still an early experiment, CityCoins presents a novel development with promising early traction. The City of Miami recently received its first disbursement from Miamicoin (MIA) totaling $5.25 million.
However, despite the early positive traction of CityCoin in several cities, significant legal and regulatory challenges remain. One potential concern is the SEC interpretation of city coins under federal security regulations. Citycoins could argue they are utility tokens, but they will need to make a strong case for additional and ongoing utility over time.
Vitalik Buterin has written on crypto cities proposing several ideas for experimentation, including a more comprehensive vision for city tokens. Vitalik outlines ideas around token incentives and economic alignment with the city's growth over time. The core of his thesis is that local governments should avoid sacrificing their optionality too quickly.
Cities have long been a fertile ground for experimentation. Cities by design bring people close together, leading to significant collaboration and progress. Long live the city!