Crypto Corner: Get Ready For Crypto Island

Imagine, if you will, a place where cash doesn’t exist, everyone lives in fancy prefabricated homes (yes, prefab homes can be fancy), and every property is owned as an NFT… sound far out? Well, maybe it is, but it’s also becoming a reality. Such a place is being built right now and applications for citizenship are already being accepted. This maybe magical (maybe dystopian) place is called Satoshi Island, the first of its kind being built and touted as a “crypto paradise”.

Satoshi Island, located in the South Pacific between Australia and Fiji, is 32 million square feet of lush greenery surrounded by the sparkling, deep blue ocean. If all goes to plan, the island will become a haven for those who are truly ready to test the utopian fever dream that cryptocurrencies promise.

The island will be broken down into 21,000 individual parcels of land and contain seven “NFT zones” (known as neighborhoods to you and me). These zones will surround a central grassy patch emblazoned with the Bitcoin logo (obviously). And believe it or not, the fancy prefab homes start at a reasonable $60,000.

The island will be built around a decentralized financial system and blockchain-based democracy. That means the blockchain will govern the island… so, each holder of a citizenship NFT will have one vote and the right to live on the island. Although, this is tricky, because this doesn’t actually give them citizenship to Vanuatu, the nation of islands which has jurisdiction over Satoshi Island. However, that should be a minor inconvenience for anyone ready to test out such an experiment.

Crypto Cities For The Masses

While most of us won’t live in a place like Satoshi Island, more and more of us will live in or near cities with crypto aspirations… cities that either are, or plan to become, “crypto cities” or “crypto hubs”. A few cities that are meccas for crypto already exist, but more are popping up… and more cities are looking for ways to supplement with crypto and lure in investors and enthusiasts in order to revitalize and grow after being battered by the pandemic and a difficult economy.

Cites that are speeding ahead include Cheyenne (Wyoming), New York City (New York), Miami (Florida), Washington (D.C), and San Francisco (California). While the aim of most of these cities has been to foster adoption of crypto and an inviting environment for businesses, it’s more than that… some of these cities are inviting in cutting-edge new cryptocurrencies called CityCoins and are willing to take the plunge into uncharted territory (even for cryptocurrencies) to bolster their cities and grow their communities.

Ahead Of The Game: CityCoins

CityCoins are described as an avenue for citizens to generate crypto-based revenue for themselves and the cities where they live and are touted as designed to benefit citizens. So how do they work and which cities are trying them out?

Basically, each city involved gets a special crypto wallet for their individual city called a City Wallet. The wallet belongs to City Hall and acts as the city’s crypto treasury. Crypto is sent to the City Wallet as philanthropic donations and the city can take those crypto donations, convert them into U.S. dollars, and put them to use for various programs within their city. This is an oversimplification, but the general idea is that crypto is donated and the city uses it to benefit citizens.

What’s especially cool about the project is that average citizens (called users) generate the coins through processes called mining and stacking (basically like staking) and can then earn rewards for using them to support their city… so it’s a win-win situation. Two cities in the U.S. have recently decided to try out CityCoins, Miami and New York, and more are in talks.

Miami’s coin (MiamiCoin) was launched in August 2021 and within months of launch had generated $20 million worth of STX tokens (the underlying tokens that make the project work), ultimately putting money in the pockets of the city and its people. New York launched their coin (NYCCoin) in November of 2021, and citizens got right to work enthusiastically mining and stacking tokens for the city and their chance at being rewarded.

Keeping Up With Wyoming

While some cities will be willing to tiptoe on the very edge of crypto innovation, many will vie for their places as crypto leaders simply by becoming “hubs” for crypto-friendly citizens and businesses. One such example is Cheyenne, Wyoming, which has been described as it relates to cryptocurrency as “going all in”. The state’s blockchain committee chairman has stated that the primary reason for embracing cryptocurrency has been the diversification of the economy, that while they have a proud heritage of coal, gas, and oil, those spaces don’t have the growth potential they once did.

The Wyoming legislature has worked with private industry to put together some of the most crypto and blockchain friendly laws in the U.S. and it has paid off with some important crypto-related companies setting up shop there… companies like Kraken (a cryptocurrency exchange and bank that provides trading between crypto and fiat), Avanti Financial Group (operator of a crypto-asset banking company used to provide regulated services for digital assets), Cardano (a blockchain platform), and Ripple Labs (the firm responsible for the Ripple payment protocol and exchange network).

The laws that made this possible were enacted in 2018 and 2019 and set the foundation for smart contracts (contracts automatically executed on the blockchain), clarified the treatment of digital assets, and made it easier for investors to set up LLCs in order to store digital assets. Most recently, legislation was signed giving legal status to decentralized autonomous organizations (DAOs), which are member-owned communities that operate on the blockchain. Additionally, the Wyoming Division of Banking will issue what’s called a special purpose depository institution for banks that deal mostly in digital assets.

Better Or Worse?

It’s truly a brave new world, but are these crypto cities and crypto hubs helping or hurting? Serious questions are being raised about accessibility and if these initiatives are truly helping average citizens, or if they are simply making a new avenue for those that already have access to the technology necessary for engaging with crypto to further grow their assets.

Philadelphia was recently in talks to participate in CityCoins, but they have since been called off, and part of the reason cited are these ethical and moral questions surrounding accessibility. The city’s former chief data officer has called the city specific coins a gimmick with few rewards. He cited the city’s high level of poverty, noting that many who could benefit from such a program don’t have the digital access needed to do so in the first place… and he has a point. Not to mention the learning curve involved.

We’ll see other cities diving further into the cryptocurrency pool moving forward, with dollar signs (shiny bitcoins?) in their eyes. As for whether things will work out as planned, and the cities will be showered with new revenue streams, or we’ll simply see those who already have the know-how and the technology get richer while the poor get poorer, remains to be seen. Stick with us as we follow how things play out in future issues.