Despite numerous ambitious projects and growing interest in building blockchain-based “crypto-cities,” most have either fallen short of expectations or been abandoned entirely. Industry experts believe the key now lies in integrating blockchain technology within existing city frameworks rather than building entirely new autonomous regions. This shift toward modernization is shaping the future of cryptocurrency markets, regulation, and digital infrastructure.
- Many projects to build fully encrypted cities have failed or been abandoned.
- Experts suggest focusing on upgrading existing cities rather than creating standalone cryptocurrency communities.
- Blockchain technology is increasingly becoming part of mainstream city infrastructure through government-backed initiatives.
- A purely cryptocurrency city in an ungoverned space faces serious risks, from security to legal issues.
- Partnerships with governments can accelerate the integration of cryptocurrency capabilities into modern city-states.
The idea of a “crypto city” has captured the imagination of enthusiasts and entrepreneurs for years, but practical implementation remains difficult. High-profile projects such as Akon City, announced in 2018 as a $6 billion smart city powered by cryptocurrency, have since been abandoned. Meanwhile, Satoshi Island, which launched near Vanuatu in 2021 to serve as a hub for cryptocurrency experts, continues to work on infrastructure and licensing but has not yet realized its full vision.
Ambitious plans for blockchain-based cities like Puertopia in Ceiba and elsewhere in the region have seen little progress or updates in recent years, underscoring the ongoing difficulties of establishing fully autonomous cryptocurrency zones.
Crypto Cities Are Solving the Wrong Problem
Ari Redbord, director of policy and government affairs at blockchain intelligence firm TRM Labs, explains that many of these projects fail because they set goals that are nearly impossible to achieve. The vision of a self-contained city using blockchain for a completely independent economy funded through tokens and operating autonomously is too lofty.
Instead, Redbord advocates modernizing existing city centers. By implementing blockchain for transparency and trust, along with incorporating artificial intelligence for risk analysis, fraud prevention, and enhanced decision-making, cities can enjoy the benefits of blockchain technology without the need to create an entirely new sovereignty.
“The idea of a cryptocurrency city is already happening: upgrading the systems we already rely on. As institutional adoption increases and governments build clearer frameworks, the entire financial infrastructure is moving on-chain.”
A pure cryptocurrency city remains challenging
Kadan Stadelmann, CTO of blockchain platform Komodo, points out that autonomous cities that are completely independent from the government could theoretically exist in ungoverned areas such as the high seas. This will heavily rely on blockchain for transparency, security and adaptability in sectors such as energy and food supply.
But such efforts require significant sacrifice from residents and require a unified, committed community willing to temporarily give up modern conveniences. States and authorities pose threats through taxes and law enforcement, and these unregulated spaces can be vulnerable to attack or piracy, especially without police or military protection.
“Even if someone buys the island, what happens if pirates come in? Without law enforcement or military, the risk increases exponentially,” Stadelmann explained.
“Crypto’s vast resources could be better used to improve the world we already live in rather than trying to carve out isolated sovereign territories,” he added.
A better approach: encrypted zones within existing cities
Vladislav Ginzburg, CEO of blockchain infrastructure company OneSource, emphasizes that integrating blockchain in a well-supported city-state like Dubai offers a more practical route than starting from scratch. Cities that have digitized government services show that modernization is achievable with the right support.
Maja Vujinovic, CEO of FG Nexus, reflected skepticism about cryptocurrency cities without government support, citing legal and property law issues. She advocates for cryptocurrency-based zones within government-approved zones where business regulations on licensing, AML, and immigration are already in place.
Sean Ren, co-founder of Sahara AI, warns that fully unregulated cryptocurrency cities will likely be doomed if they try to operate without government oversight. However, establishing regulatory sandboxes within existing cities to test new blockchain and AI solutions offers real promise by providing valuable insights for broader policy development.
“Creating a controlled environment for testing AI, token economics and data governance within cities can provide essential lessons for national policy,” Ren said.