Berkeley plans to use cryptocurrency to combat affordable housing crisis

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Ben Bartlett/Courtesy

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Berkeley plans to launch the Berkeley Blockchain Initiative, or BBI, to use blockchain technology to combat the affordable housing crisis.

Mayor Jesse Arreguín and City Councilmember Ben Bartlett are heading this project in conjunction with campus Blockchain Lab and with Neighborly, a technology firm that aims to reimagine municipal finance for the contemporary landscape. Berkeley plans to use blockchain, a digital technology that creates a ledger of economic transactions, to create bonds for funding affordable housing projects.

“Neighborly is building a crypto-enabled technology stack that will offer a new, customizable structure to finance critical community projects in the form of a new class of cryptoassets: cryptobonds,” said Kiran Jain, Neighborly’s chief operating officer, in an email.

BBI entails the creation of a municipal bond using blockchain technology. This involves an “initial community offering,” analogous to the initial coin offering used to crowdfund cryptocurrency, which allows Berkeley to take control of fundraising, according to Jain.

Community members can purchase digital tokens backed by municipal bonds. If the plan succeeds, Berkeley will be the first city to issue cryptocurrency.

“Issuers like Berkeley could use cryptobonds to finance affordable housing and the critical social services that Berkeley needs to address its growing homelessness population while meeting the needs of the socially-minded Berkeley investor,” Jain said in an email.

Berkeley has about 1,000 homeless people and increasingly high rents. Arreguín and Bartlett have both named homelessness as a key issue in their platforms.

“We’re not going to accept that there’s no money, we’re going to create it,” Bartlett said. “Blockchain technology is the future of public finance and human economic interactions.”

Cryptocurrencies, such as bitcoin, are based off blockchain technology. Bitcoin has garnered recent attention for its large fluctuations in value, rising from $1,000 to $19,000 and back down to $8,000 since January 2017. This has brought its reliability into question, which Bartlett refutes.

“Because it’s not a coin, it’s a bond, there will be no fluctuation in price,” Bartlett said. “The blockchain platform is secure.”

The project will be privately funded, with guidance from city officials. Neighborly is underwriting this project,  according to Bartlett.

“We feel that since this new economy is emerging, Berkeley should shape it,” Bartlett said. “We have the human ethic to make sure the human economy is just and results in shared prosperity.”

Contact Madeleine Gregory at [email protected].

Correction(s):
A previous version of this article incorrectly stated that Neighborly was investing $1 billion into the city’s cryptocurrency project. In fact, Neighborly has conducted $1 billion in business this year.