Although there have been several attempts over time to create “crypto cities” – special zones that depend on blockchain technology to operate, most experiments have failed, and crypto executives think they know why.
One of the newer high-profile projects was Akon City, the brainchild of Senegalese-American singer Akon. Announced in 2018, it was presupposed to be a $6 billion smart city with a crypto-based economy, but was officially abandoned in July.
Satoshi Island, a project to accumulate a whole island near Vanuatu, was launched in 2021 with the aim of making a house for crypto professionals in a blockchain-based economy. The last update took place in July and the project was still working to determine essential services and finalize its licensing agreement with the island's stakeholders.
Source: Satoshi Island
There were also once big plans to construct a blockchain-powered city called Puertopia on the Roosevelt Roads naval base in Ceiba, also announced in 2018. But there haven't been any significant updates in years.
Cryptocities solve the incorrect problems
Speaking to Cointelegraph, Ari Redbord, global head of policy and government affairs at blockchain intelligence firm TRM Labs, said many crypto city experiments fail because they concentrate on unattainable goals.
Many crypto city projects envision constructing a whole city from scratch, using a blockchain-based economy, funded by tokens, and otherwise completely independent of society.
However, Rebord argued that a greater opportunity lies in modernizing existing economies – by embedding artificial intelligence to research risks, detect fraud, drive smarter decisions, and blockchains to offer the layer of trust that ensures transparency and accountability.
“The idea of a crypto city is already emerging for me. It's about improving the systems we already depend on. As institutional adoption increases and governments establish clearer rules, the world's financial infrastructure is moving on-chain,” he said.
“Every city is becoming a crypto city, not through ideology, but through technology – faster, safer and more transparent rails for the transfer of value.”
A pure crypto city possible, but difficult
Kadan Stadelmann, chief technology officer of blockchain platform Komodo, told Cointelegraph that self-sovereign cities based on cryptographic and decentralized systems are possible in an ungoverned space equivalent to international waters.
To achieve success, he believes blockchain is required to make sure transparency, security and flexibility across a big selection of sectors, including energy and food.
It would also require extreme commitment and a centralized vision from the population, who should be willing to forego modern conveniences until it’s fully implemented.
However, it might also bring other threats, equivalent to from governments searching for to gather taxes and implement local laws, and could be potentially defenseless against attack.
“Even if a person buys an island, what should they do if some pirates appear on it? There is not any police or military on the island. There can be no hospital. A sovereign city multiplies these risks again and again over,” Stadelmann said.
“It could also be that crypto’s vast resources are best used to enhance the world we have already got.”
Better idea: Special crypto zone in a contemporary city
Vladislav Ginzburg, the founder and CEO of blockchain infrastructure platform OneSource, told Cointelegraph that a contemporary city-state like Dubai with government support could be a more viable option than ranging from scratch.
“Some cities have already done a superb job in digitizing government services, for instance Kiev and Dubai, so a crucial first step is definitely possible,” he said.
Maja Vujinovic, co-founder and CEO of Ethereum finance firm FG Nexus, can be skeptical that a crypto city could succeed without government support as it might struggle with ownership and governance.
“The realistic path is just not a brand new sovereign city; it’s crypto-native neighborhoods inside government-backed zones where licensing, anti-money laundering and immigration are already resolved,” he said.
“The ingredients for achievement are: a government partner with delegated regulation and visas, committed multi-billion dollar capital, clear crypto rules and anchor employers in AI, crypto and biotech.”
Sean Ren, co-founder of AI-native blockchain platform Sahara AI, believes a crypto city will likely be doomed to fail if it hopes to evade government control and regulation.
However, a purpose-built zone inside an already established city would need to be used to check latest technologies, equivalent to B. tokenized ownership or AI data management have a greater likelihood of success.
“The real opportunity is just not in creating walled gardens for tech elites, but in creating regulatory sandboxes that incorporate lessons into national policy,” he said.
“A city designed to responsibly test AI training rules, data provenance standards or token-based economies could add real value.”
