Technology’s ability to radically reform the way industry and society operates has touched almost every area of our lives. During this year’s Better Government Competition (BGC), numerous groundbreaking transportation policy alternatives were submitted that leveraged the power of technology to propose solutions and programs previously considered impossible. Some of our most innovative “tech” entries drew from outside traditional transportation technology. One such proposal introduced a seldom discussed idea: harnessing the grassroots capabilities of cryptocurrency and blockchain to democratize public infrastructure financing.
This proposal, entitled “Crypto,” was presented by Steven Fallon, an undergraduate engineering student at UMass Lowell. Mr. Fallon’s proposal, if implemented, would create a city-backed cryptocurrency to enable increased grassroots investment in public transportation projects by private citizens. Instead of replacing or disrupting traditional commerce, the localized coins would provide quick and efficient avenues to public works investment to more people. As envisioned, the cryptocurrency would open up city transportation projects, allowing people to support public infrastructure by purchasing the municipal cryptocurrency and thereby investing in the bonds needed to finance infrastructure development. The desired result for cities would be an increase in funding for infrastructure projects; residents and investors would see more equal access to opportunities and profits, as well as a say as to which projects get financed.
The author suggests that the results could improve cities in ways that are unimaginable. In Berkeley, California, the government is considering utilizing cryptocurrencies to remove the middleman in municipal bonds, selling them directly to citizens and crowdfunding public projects as they are announced. Tokenized bonds would allow for significantly smaller investments than the thousands or millions of dollars that projects cost today. An everyday resident who may normally be unable to invest in the real estate development or municipal bond market will suddenly have the same access as everyone else, opting to invest $5, $20, $500, or $20,000, for example, and while most cryptocurrencies, such as Bitcoin, are extremely volatile, this new investment model can be considered drastically safer, as the resident’s investments would be backed by city assets rather than an arbitrary amount of computer calculation that comes with most digital currencies.
A popular investment model seen today in Boston and similar cities is the “PPP,” the public-private partnership, in which public agencies partner with private groups to finance development projects that benefit the public. The recently opened Boston Landing Commuter Rail Station and development site is the product of one such partnership between the MBTA, the City of Boston, and New Balance. With tokenized city coins, we could see many similar projects implemented following the “PPPP,” the people-public-private partnership. The PPPP would operate in the same manner with the same results, with the added investment from residents and small-scale investors.
Mr. Fallon’s cryptocurrency proposal is just one of the many ways new technology can change the way citizens interact with government. Stay tuned for other approaches BGC authors to harness crowdsourcing for the public good.