Recently, we have seen more and more categories getting into cryptocurrencies. In past weeks, everyone from the Venezuelan government to Japanese retailer Rakuten, all the way down to video game pioneer Atari, are all launching their own cryptocurrencies. Now, a US city is doing the same with a very unique approach.
Berkeley, California has seen its federal funding support dry up, so the city’s governing council have devised a strategy to find financial independence and fund important community projects such as affordable housing.
The Berkeley city government are partnering with San Francisco-based startup called Neighborly. They are partnering to divide municipal bonds into micro-bonds, which will then be sold as tokens in what they have dubbed an “initial community offering” - a traditional ICO with a spin.
Berkeley councilman Ben Bartlett explained the motivation behind the unique scenario his team is proposing:
"Essentially, we would like to explore some new ways of financing because we have terrific needs, and we're concerned about our ability to fulfill our moral and legal obligations for our residents here.”
Mayor Jesse Arreguin and Barlett say that dividing the bonds would allow the community to invest in whatever project they choose, in whatever denominations. They also believe that by backing the tokens via bonds, the initial community offering would not be as risky of an investment as traditional ICOs.
The buying and selling process will also be moved to the blockchain, which Arreguin and Bartlett say will increase transparency of the city’s financial actions, and will reduce transaction costs that create savings that can be reinvested into Berkeley’s budgets.
"This municipal coin, this token, whatever you want to call it, it's meant to...hopefully produce a really demonstrable new paradigm of shared prosperity.”
Arreguin and Bartlett aim to launch the ICO in May, with their first targets set on funding affordable housing, but will move onto other small projects such as funding for fire stations or ambulatory services.
[Image Credit: Introvert via Wikimedia Commons]