California is going crazy for cryptocurrency, and Silicon Valley entrepreneurs aren’t the only ones looking to raise money through initial coin offerings. Business Insider reported Berkeley’s municipal leaders are considering an ICO to help the city fundraise for affordable housing and social services for the growing homeless population.
According to a survey by Alameda County, the regional homeless population grew from roughly 4,040 in 2015 to 5,629 by 2017. This represents around a dramatic surge compared to survey data reaching back to 2009. Numbers generally fluctuated just a few percentage points between tallies, a stark contrast to the recent 39 percent increase. On the other hand, federal support for social services is dwindling under the Trump administration. So California’s infamous bastion of liberalism is experimenting with alternative economic models.
"Berkeley is the center of the resistance, and for the resistance to work, it must have a coin," Berkeley City Council Member Ben Bartlett told Business Insider. "It's actually enabling us to fulfill our duty as a government. Our duty is to provide for our people.” Bartlett formed a committee with Mayor Jesse Arreguín, members of the UC Berkeley Blockchain Lab and the fintech startup Neighborly to plan for a potential token sale in May, if all the bureaucracy and compliance requirements check out. The Berkeley tokens would be backed by a municipal bond. Buyers could also spend tokens at local restaurants and shops, or pay rent at participating apartment complexes.
Californians are hardly the first to consider a government-sponsored ICO. Venezuelan President Nicolás Maduro is on the cusp of launching Petro tokens with a global token sale. He seeks international investors who want to support Venezuela's economy with a cryptocurrency that is allegedly pegged to the nation's oil assets. In December, Estonia’s e-Residency program announced plans to launch estcoin to "raise money and support for the development of our digital nation.” Estonia’s digital ID program allows people around the world to participate in a virtual community and run remote business as Estonian startups. The program includes around 30,000 virtual residents from 154 countries. At least 41 percent of surveyed participants said they joined the program for mobile business perks.
Quartz reported the president of the European Central Bank warned Estonia against issuing its own currency, concerned about any potential conflict with the fiat euro. However, Estonia is yet to set a date for its token sale. In the meantime, the residency program’s director is focused on making the token a distinct digital asset instead of a clear-cut currency. “Estonia’s only currency is the euro and this is an essential feature of our EU membership, which we are proud to have,” director Kaspar Korjus wrote in a blog post. “We would never provide an alternative currency to the euro, but it’s possible that we could combine some of the decentralized advantages of crypto with the stability and trust of fiat currency and then limit its use within the e-resident community.”
Likewise, Berkeley’s proposed cryptocurrency would not compete with the dollar. Instead, it would join a growing number of blockchain-based assets, such as tokenized securities and bitcoin derivatives. Theoretically, cryptocurrency bonds could work on a local or a national level. Last year the World Bank announced plans to support blockchain bonds in Kenya, a pilot which reportedly raised around $1.1 million by April. Only time will tell how many types of cryptocurrency will eventually provide unique use cases for functioning government programs.