Cities Are The Future
And that's true for the future of money as well as the future of everything else.
Dateline: Woking, 4th December 2021.
The founder of Ethereum, Vitalik Buterin, recently wrote that while many national governments are “inefficient and slow-moving” in adjusting to changes in the needs of populations (and, I might add, environments), cities and states have the potential to deliver much more flexible and dynamic responses. Vitalik focused in particular on cities, observing that there are great cultural differences between cities and therefore it is easier “to find a single city where there is public interest in adopting any particular radical idea” than it is to find, or convince, whole nations.
This is a fascinating perspective, and one that I have much sympathy for. In my 2017 book "Before Babylon, Beyond Bitcoin" I suggested that the multiple monies of the future will be linked to the multiple communities we will inhabit and that there were reasons for thinking that the city identity might well turn out to be the most important. I remember reflecting on Dan Hill's perspective that Europe has functioned via urban centres for much, much longer than it has functioned as a collection of nation states and that (as in so many other ways) the money of the future is going to look more like the money of the past.
Cities as well as being the focus for economies and economic growth are above all physical locations and, as I recall the futurist Gill Ringland suggesting in her financial services scenarios for 2050, the ability to enter, do business and to reside in desirable cities will become a valuable right and the basis for one of a number of demographic asset classes. There was an illuminating Financial Services Club discussion about this in London last year, where the even more expansive view that cities might begin to dictate the policies and trajectories of the nation state was put forward.
In this context, Gill's prescient narrative of the C50 (the organisation of the 50 richest city-states that will replace the G20 as the mechanism for “managing” the world economy), forms a solid narrative around the future economic organisation of a successful, functional world. As the respected commentator Martin Wolf wrote in the Financial Times some years ago, "this is the age of cities, not of national economies" (and he went on to say that "it is high time London became a true city state”).
City Centric
I find these views very interesting, because they surely imply that the money of cities will become the most important kind of money for the average person. In a world in which the public have abandoned Sterling for London Lolly and US Dollars for New York Notes and LA Loonies, city currencies might be a key medium of exchange in the future economy that grows into the metaverse but retains deep roots in the universe. In this universe, most transactions remain local. Note that even at the supra-national level in a single market, only 1%-2% of European transactions are cross border and an even smaller proportion are national. Even in the proto-metaverse e-commerce world, still nine in ten European transactions are local.
These ideas have been around for a while. In the Havas "14 trends for 2014" Marian Salzman wrote about post-nationalism, countries breaking up and London becoming independent from the UK. These views may have seemed fanciful to readers then, or indeed now, but I am not so sure they can be easily dismissed. CityCoins, which is a startup backed by Balaji Srinivasan and others, is launching MiamiCoin, a token that raises money for the city while allowing its holders to earn mining and staking fees. According to the company, MiamiCoin has already raised $21 million and there are plans to launch an NYCCoin as well. (Ahead of the curve, Akron OH as been experimenting with a city coin to reward citizens for shopping locally and there have been similar initiatives in the UK, such as the Brixton Pound.)
Some crypto billionaires want to go even further and create their own cities (in, for example, Nevada) but the link between cities and currencies is not confined to rich first world enclaves. The noted rapper Akon is about to begin building another crypto city in Africa. He already started work on a city in Senegal and the new one will be in Uganda. Both of these cities will run on Stellar rails using the "Akoin" cryptocurrency. Inhabitants will buy goods and services using AKoins, which will form the basis of the cities economies. He is planning to use a solar power plant to make green energy central to the developments.
(Akoin has recently launched a debit card with Baanx that will allow worldwide payments. Lynn Liss, co-founder of Akoin said that this partnership will bring new players into the marketplace and “give millions of people access to crypto, and access to a global network of merchants offering goods and services”. That's life changing, and a positive step forward for crypto use. During a recent trip to Malta, Akon himself made the first payment using the new card.)
Cryptoassets and token trading aside, there are already communities beginning to experiment in this way. Last year, for example, in virus-ravaged Italy the town of Castellino del Biferno in southern Italy's Molise region started to issue its own money (the "Ducati"), redeemable at local merchants only, with a 100% reserve in euros. This money (strictly speaking, a “currency board” rather than a “currency”) was intended to keep value circulating within the local economy but there's no reason why an actual local currency might not circulate over a wider area. In the north of Italy, to continue with this particular theme, anti-euro Lega nationalists and the alt-Left Five Star Movement were at one time planning to go around the euro and create a rival payment structure based on 'IOU' notes (a course of action I may accidentally have helped to stimulate).
Local Heroes
If the economy shifts and people find themselves in a depression, then more regions may well decide to decouple themselves from national and supra-national currencies in order to manage their own monetary policy on the road to recovery. In a world before mobile phones, tokens and de-fi this would have seemed unimaginable! Imagine trying to print and distribute and maintain and manage a Miami Metro Moolah, with Miami Moolah cards for residents and pretty bills for visitors. A hurdle, for sure. But frankly it would take five minutes to create such a money today and the ability to create city monies that would compete to the benefit of consumers and businesses is no longer beyond the abilities of the average City council. Pretty soon, they'll be able to download a new currency as shareware.
So why don't we use these currencies already? Well, a key problem for complementary currencies of many kinds has been "finding a suitable way to cover operating costs". This is where there might be a crossing of the streams at last. On the one hand, the pandemic means new thinking is acceptable and many people are looking toward city-centric means of exchange as a specific kind of complementary currency that may contribute to rebuilding economies, and on the other hand the technologies of money have advanced considerably in recent years as the electronic money evolutionary tree has grown and flourished. Brixton bank notes might be pretty, but a Brixton app makes more sense, especially in the post-pandemic contact-free retail environment of the future.
Is Vitalik on to something? I think he is. Would such competing currencies really be a big problem? If I live in London and use London Loot for the train, for lunch and at the supermarket, is it such a big deal to convert it to Chicago Cabbage or Bronx Bucks to buy something online? Especially when your phone does it for you and an AI f/x bot is vigilant on your behalf to get the best prices? I don't think so.
A world economy built up from cities and their hinterlands would obviously demand different financial services and institutions from one based on national economies and while you may think that the idea of Bay Area Bread or Lagos Lolly sounds a little far-fetched, please be assured that I am not the only one who thinks the future will be more city-centric as city centres revive in the inter-pandemic new normal environment.
This was foreseen by the wonderful Jane Jacobs’ in her book "Cities and the Wealth of Nations" that was published way back in 1984. Personally, my Jacobs-influenced city-centric perspective was reinforced when I happened to read a Canvas8 report "The city an an identity anchor" (which echoed Gill's points about identity) and the World Economic Forum (WEF) 2017 report "Cities, not nation states, will determine our future survival". The first C50 meeting can’t be that far away and I’m sure that money will be on the agenda.
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