Despite years of attempts to build "crypto cities"—special zones operating on blockchain technology—most experiments have failed, and crypto executives believe they know why.
Recently, a highly publicized project was Akon City, a concept by Senegalese-American singer Akon. Announced in 2018, the project aimed to create a $6 billion smart city powered by a cryptocurrency-driven economy, but it was officially abandoned in July.
Satoshi Island is a project that involves acquiring an entire island near Vanuatu, launched in 2021, aimed at creating a home for crypto professionals in a blockchain-based economy. Its last update was in July, and the project is still working to establish basic services and secure licensing agreements with island stakeholders.
There were also grand plans to build a blockchain-driven city named Puertopia at the Roosevelt Road Naval Base in Ceiba, announced in 2018. However, there have been no meaningful updates for years.
Ari Redbord, head of global policy and government affairs at blockchain intelligence firm TRM Labs, told Cointelegraph in an interview that many crypto city experiments fail because they focus on impossible goals.
Many crypto city projects envision building a complete city from scratch, leveraging a blockchain-based economy, funded by tokens, and being entirely independent from the broader society in other respects.
However, Redbord believes better opportunities lie in modernizing existing economies—embedding artificial intelligence to help analyze risks, detect fraud, drive smarter decision-making, and using blockchain to provide a trust layer that ensures transparency and accountability.
"For me, the idea of crypto cities is already happening. It's about upgrading the systems we already rely on. As institutional adoption grows and governments create clearer rules, the world's financial infrastructure is going on-chain," he said.
Kadan Stadelmann, CTO of blockchain platform Komodo, told Cointelegraph that autonomous cities driven by cryptography and decentralized systems are possible in ungoverned spaces, such as international waters.
He believes that for success, blockchain must ensure transparency, security, and adaptability across a wide range of areas, including energy and food.
This also requires extreme dedication and a concentrated vision from the population, who must be willing to sacrifice modern conveniences until full implementation.
However, this also brings other threats, such as the risk from governments wanting to tax and enforce local laws, and it may be defenseless against attacks.
"Even if individuals buy an island, what can they do if some pirates attack? There are no police or military on the island. There are no hospitals. A sovereign city would amplify these risks many times over," Stadelmann said.
Vladislav Ginzburg, founder and CEO of blockchain infrastructure platform OneSource, told Cointelegraph that modern city-states like Dubai, with government support, would be more feasible than starting from scratch.
"Certain cities have already done well in digitizing government services, with Kyiv and Dubai being examples, so the first key step is indeed possible," he said.
Maja Vujinovic, co-founder and CEO of Ethereum treasury company FG Nexus, also expressed skepticism about the ability of crypto cities to succeed without national support, as they would face challenges in property law and governance.
"The realistic path is not a new sovereign city; rather, it is a crypto-native community within a nationally supported area, where licensing, anti-money laundering, and immigration issues have been resolved," he said.
Sean Ren, co-founder of AI-native blockchain platform Sahara AI, believes that if crypto cities hope to escape government control and regulation, they are doomed to fail.
However, building dedicated areas within established cities specifically for testing new technologies (such as tokenized property rights or AI data governance) has a greater chance of success.
"The real opportunity is not in creating walled gardens for tech elites, but in creating regulatory sandboxes that feed lessons back into national policy," he said.
Related: Kraken CEO counters "harmful" stablecoin yield claims, says building a financial system accessible to all
Original article: “Why Most ‘Crypto Cities’ Have Failed—Industry Executives Reveal Viable Blueprints”
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