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Poor design meets one need while creating a dozen others. Good design resolves problems without negatively affecting anything else in its ecosystem. We call this lens of thinking "systems thinking." It tends to separate the genuinely great designers from the pretty-great ones. The designers who do tremendous work know that what they're creating does not exist within a bubble. They understand that the context of what they're making plays a vital role in how the team should build it. They know how what they create affects everything it touches, particularly the people. The design is intentional. Trade-offs are known, weighted, and decided on. Not only in the immediate problem space but in the surrounding spaces too.

Given all that, here’s what made me gasp on day 1 and what I’m still thinking about. Peeping through passthrough. The way it works is that you “draw” (in VR) a box on the floor. Within that box, you are immersed in 3D virtual reality. Near the edge, you see the box around you outlined as a grid. As you touch the edge, a hole appears… you can poke your head through, and you see the real world beyond, in black and white fuzzy passthrough. I found myself leaning out to have a chat or to grab a drink. Delightful. A Godzilla’s eye’s view. Playing mini golf, I found a button that let me zoom out. Suddenly I was standing in the middle of this golf course arranged on a mountain, the mountain halfway up my chest. Walking just a foot or two, and bending down, and leaning close, I could examine bridges and trees and caves and courses. An incredible, examinable overview, in a way that would take multiple steps on any other device. Height, space, and scale. In the first room of Anne Frank’s house, there’s a steep staircase leading down, but it’s inaccessible from the tour. However I was able to kneel down, put my head through the bannisters, and peer over the edge, down the stairwell, and into the next room. I know this is what VR is all about, but the sense of being located continues to astound. What do we do now the gamut of interaction can include vertigo and awe? It’s like suddenly being given an extra colour. Objects that cross the threshold. When I pick up the real-life controls, they appear in VR space. Headset on, everything black and gone – except the controls in my hands are still there. And now they have extra green lights and details on them! Janus objects that face both ways into physical and fictive reality. The controls are real… but realer in VR. So many opportunities for play.

Many national governments around the world are showing themselves to be inefficient and slow-moving in response to long-running problems and rapid changes in people's underlying needs.

Now consider local governments. Cities and states, as we've seen from the examples at the start of this post, are at least in theory capable of genuine dynamism. There are large and very real differences of culture between cities, so it's easier to find a single city where there is public interest in adopting any particular radical idea than it is to convince an entire country to accept it. There are very real challenges and opportunities in local public goods, urban planning, transportation and many other sectors in the governance of cities that could be addressed. Cities have tightly cohesive internal economies where things like widespread cryptocurrency adoption could realistically independently happen. Furthermore, it's less likely that experiments within cities will lead to terrible outcomes both because cities are regulated by higher-level governments and because cities have an easier escape valve: people who are unhappy with what's going on can more easily exit.

I would argue that there are two distinct categories of blockchain ideas that make sense: Using blockchains to create more trusted, transparent and verifiable versions of existing processes. Using blockchains to implement new and experimental forms of ownership for land and other scarce assets, as well as new and experimental forms of democratic governance.

One simple idea that plenty of people, including government officials around the world, have brought up to me on many occasions is the idea of governments creating a whitelisted internal-use-only stablecoin for tracking internal government payments. Every tax payment from an individual or organization could be tied to a publicly visible on-chain record minting that number of coins (if we want individual tax payment quantities to be private, there are zero-knowledge ways to make only the total public but still convince everyone that it was computed correctly). Transfers between departments could be done "in the clear", and the coins would be redeemed only by individual contractors or employees claiming their payments and salaries.

Many more processes could be made more trustworthy with blockchains: Fair random number generators (eg. for lotteries) - VDFs, such as the one Ethereum is expected to include, could serve as a fair random number generator that could be used to make government-run lotteries more trustworthy. Fair randomness could also be used for many other use cases, such as sortition as a form of government. Certificates, for example cryptographic proofs that some particular individual is a resident of the city, could be done on-chain for added verifiability and security (eg. if such certificates are issued on-chain, it would become obvious if a large number of false certificates are issued). This can be used by all kinds of local-government-issued certificates. Asset registries, for land and other assets, as well as more complicated forms of property ownership such as development rights. Due to the need for courts to be able to make assignments in exceptional situations, these registries will likely never be fully decentralized bearer instruments in the same way that cryptocurrencies are, but putting records on-chain can still make it easier to see what happened in what order in a dispute.

There is an inevitable political tension between a home as a place to live and a home as an investment asset, and the pressure to satisfy communities who care about the latter often ends up severely harming the affordability of the former. A resident in a city either owns a home, making them massively over-exposed to land prices and introducing perverse incentives to fight against construction of new homes, or they rent a home, making them negatively exposed to the real estate market and thus putting them economically at odds with the goal of making a city a nice place to live.

What if we could create a divisible and fungible city token, that residents could hold as many units of as they can afford or feel comfortable with, and whose value goes up as the city prospers?

Create economic alignment between residents and the city. This means first of all that the coin itself should clearly become more valuable as the city becomes more attractive. But it also means that the economics should actively encourage residents to hold the coin more than faraway hedge funds. Promote saving and wealth-building. Home ownership does this: as home owners make mortgage payments, they build up their net worth by default. City tokens could do this too, making it attractive to accumulate coins over time, and even gamifying the experience. Encourage more pro-social activity, such as positive actions that help the city and more sustainable use of resources. Be egalitarian. Don't unduly favor wealthy people over poor people (as badly designed economic mechanisms often do accidentally). A token's divisibility, avoiding a sharp binary divide between haves and have-nots, does a lot already, but we can go further, eg. by allocating a large portion of new issuance to residents as a UBI.

And 21st-century digital democracy through real-time online quadratic voting and funding could plausibly do a much better job than 20th-century democracy, which seems in practice to have been largely characterized by rigid building codes and obstruction at planning and permitting hearings.

The main trap that governments should avoid is too quickly sacrificing optionality. An existing city could fall into this trap by launching a bad city token instead of taking things more slowly and launching a good one. A new city could fall into this trap by selling off too much land, sacrificing the entire upside to a small group of early adopters. Starting with self-contained experiments, and taking things slowly on moves that are truly irreversible, is ideal.