Illustration by Gina Ledor
The City of Berkeley is considering initiating an Initial Coin Offering (ICO) to create a local cryptocurrency that would raise funds to support homeless people and affordable housing. In collaboration with the UC Berkeley Blockchain Lab and a public finance company called Neighborly, Mayor Jesse Arreguin and City Councilmember Ben Bartlett are proposing the creation of a micro bond, a tokenized citybond that would function like a cryptocurrency. The ICO would create a local cryptocurrency that residents could buy and use through an app. Purchases of the digital coin would help the city finance projects, and also be a valid currency for certain purchases within the city.
Bartlett hopes the cryptocurrency will help fundraise to support Berkeley’s homeless population, which was estimated at 972 people in January 2017. Bartlett said this number could grow due to federal funding decisions.
“The city has a big homeless population and I personally feel unsupported,” said a homeless man who goes by Nomad. “I’m in favor of anything that helps fund services for homeless folks.”
Recently, cryptocurrencies such as Bitcoin and Ethereum have risen in popularity. Bartlett and Arreguin hope that Berkeley can use this technology to create a digital token tied to small city bonds, or micro bonds. According to Bartlett, municipal bonds are currently thousand of dollars and are used to fund large projects such as sewers and hospitals. A micro bond, he said, could be 25 dollars, and go towards smaller projects like bike racks.
Bartlett hopes the cryptocurrency will be a vehicle to benefit social justice. He mentioned an idea proposed by a homeless man to establish a food truck for the homeless. Such a project would be launched with micro bond funding, and then people could buy food at the truck with the local cryptocurrency, and money raised could be used to purchase food for homeless people.
“You’ll be able to buy things at local stores,” Bartlett said. “You’ll be able to maybe donate a coin and help a homeless person, and then you can see how it’s spent on the blockchain,” which records cryptocurrency transactions. While the bonds themselves would be small, he hopes that they could become popular enough to help fund large projects. Eventually, Bartlett said the token could be used to finance the development of affordable housing.
One component of any cryptocurrency is mining. Networks like Bitcoin require massive computing power to manage the blockchain technology, and operate by having many people run the network together on their personal computers, in essence creating a distributed supercomputer.
These “miners” are rewarded new Bitcoins for their computing. Berkeley’s cryptocurrency, Bartlett said, will not work like this. Computing will be run by Neighborly, and coins would be mined by performing community service, like volunteering at a soup kitchen.
Bartlett said the project has garnered interest from several other governments. “I’ve gotten calls from two states and four cities because people see the need to create resources,” he said.
Bartlett expressed hope that the City of Berkeley will be the first of many governments to implement local cryptocurrency technology. “We have to make sure the future economy cares about people,” he said. “That’s why we’re making sure the core of this is about homelessness.”