The “shared ownership” economy is a long time coming and it’s a truly novel way to promote economic development. Nearly all community members indirectly benefit from local businesses (excepting liquor stores and other vice shops), through improved quality of life, appreciating home prices, and attracting newcomers with higher incomes into the community. But with blockchain and web3 technologies, community residents can invest in businesses, local projects and public goods and earn an equity stake in the very assets and public services they support and rely on. Their stake can be in the form of crypto tokens that reflect shared ownership (and perhaps governance) in a business or project, or through a non-fungible token (NFT) that can appreciate in value and confer certain programmable benefits such as a greater share of votes in community proposals, priority access to public goods like parking spots, discounted access to business products and services, or even future community investments. Our collective imagination is the limit here. Here is a key article by Vitalik Buterin laying out the fundamentals of this emerging topic.
One exciting example is the CityCoins project. A city coin is cryptocurrency that can be mined or purchased and held as an investment asset. The mining process distributes tokens to miners, citycoin holders, and to a city’s treasury wallet that can be claimed by the mayor at any time. As wild as this sounds, this project is real and its first major success is Miami. In 2021, the council of Miami agreed to claim its city coin treasury holding over $24 million at time of writing, and will use that money for any public project it deems fit. Miami raised money without raising taxes. NYC has done the same and (at time of writing) is sitting on $30 million in new revenue. Naturally, other cities are following suit.
Now cities like Miami and New York are obvious good places for CityCoins to start, but smaller cities can also benefit from this project – thinking mostly about cities that are underfunded and in need of an economic boost. When I visit a new town and think about whether I’d like to live there, I do what everybody else does. I look for things like good schools, nice homes, and a decent main street with well-kept stores. I also look for shops like Whole Foods and Trader Joe’s. These stores give me a hint that the area is on a growth trajectory (nobody wants to buy into a declining neighborhood). The problem is that entrepreneurs decide where to take a risk when opening a new business, and they make these decisions very carefully. They don’t normally set up shop in low-income neighborhoods or in rural communities where there’s too few people. And when it comes to brand name stores, malls and shopping centers, the corporations and private equity firms select these locations very carefully with an eye on outsized returns.
Focusing on rural communities – these areas face serious challenges with respect to healthcare and overall quality of life. The low population size makes it difficult to financially sustain a health system, and this has become obvious from the large number of rural hospital closures. This of course leaves rural residents with poor access to care and worse health outcomes. They’re stuck in a feedback loop of low economic investment and poor quality of life. You can’t raise taxes on people living in rural communities where the median income is pretty low. So what’s the solution?
Crypto projects like CityCoins offer a new way to invest in communities. And this approach doesn’t rely strictly on local residents; anybody can buy a city coin. And there are multiple, aligned entities that stand to benefit from participating in CityCoins. The first are state governments. States like Washington, Vermont and Pennsylvania have large rural areas and spend a great deal of time and money in improving health outcomes and quality of life in these communities. If there are proposals for improving economic development in rural communities, state governments are more than happy to listen. The second major economic player in rural communities are health insurance companies. Commercial health insurance aims to keep people healthy and out of the hospital, but that’s difficult to do in rural communities. These companies are often forced to keep health systems alive, either by providing stable revenues to hospitals regardless (or somewhat regardless) of how many people receive hospital care through a payment mechanism known as global budgets, or by buying hospitals outright. And then there are life insurance companies that share similar incentives with health insurance companies – keep people from dying too young.
To sum it up – there are a number of stakeholders, ranging from local residents, to investors, to large corporations that can come together and participate in a city coin to bring much need revenues, support struggling health systems, and generally improve quality-of-life in a struggling city. The technology is here and we’re seeing examples play out in real time. All that’s left is to take action. Here’s a discord link to get involved in CityCoins and start contributing to the future of civic engagement.
~ James
