Communities across the nation are struggling to provide enough affordable housing for their residents, high home prices and low inventory ensuring strongly competitive markets in many corners of the U.S. According to the California Department of Housing and Community Development (HCD), only 13 cities (2.4 percent of the total) met their full goals last year. Or, put another way, 97.6 percent of cities did not meet their full goals. Worse, 70 percent of California cities failed to meet their housing goals for any income level. In the face of this crisis, the city of Berkeley is turning to Bitcoin for inspiration.
Berkeley City Councilmember Ben Bartlett and Mayor Jesse Arreguin are teaming with UC Berkeley’s Blockchain Lab and finance startup Neighborly to look into creating a new cryptocurrency that would be backed municipal bonds. The funds raised by the cryptocurrency’s “initial coin offering” (ICO) would then be put toward affordable housing measures. Purchasers of the cryptocurrency could then use the digital “tokens” they receive in exchange to shop at local establishments, or even possibly pay their rent at local participating apartment complexes.
"We have a jobs explosion and a super-tight housing crunch," Bartlett said. "You're looking at a disaster. We thought we'd pull together the experts and find a way to finance [affordable housing] ourselves."
In a media statement, Neighborly Project Manager Garrett Brinker said, “Berkeley is struggling to build sufficient affordable housing, especially as federal funds dry up and the new tax bill restricts their financing capabilities. An initial community offering presents a unique opportunity to help raise the necessary funds through local investors to build low-cost housing while striving to improve social well-being and equity.”
Councilmember Bartlett said that “Cryptocurrencies enable the city to mitigate some … potentially detrimental effects and help localize the financing of crucial social policy initiatives. Blockchain's benefits, such as security, efficiency, transparency, and speed, are not only applicable, but much needed at the government level to deliver better and more streamlined services to the people who need it most.”
Pending proper approvals, Neighborly COO COO Kiran Jain said the city could launch its “initial community offering” of the Berkeley cryptocurrency by mid-May. “Unlike most of the ICOs which deliver coins for a future value or service, these coins will represent a real security issued for a specific purpose,” Jain said.
It might still be a while before people are regularly using cryptocurrencies to pay for their mortgages, but in the meantime people continue to find ways to innovate with the technology. To stay on the cutting edge of cryptocurrencies, blockchain, machine learning, and other technological concepts that are positioned to evolve and disrupt the mortgage and housing industry, be sure to register for the upcoming inaugural Five Star Fintech Summit, happening March 21-22 at the Renaissance Nashville Hotel in Nashville, Tennessee. Click the banner below for more info.