What's the Real Deal on Web3? Examining the revenue potential and potential risks of blockchain and cryptocurrencies for local governments.

• Author: Cox, Theo
• Position: SPECIAL SECTION

Cryptocurrency and blockchain are part of the latest iteration of Internet technologies, broadly referred to as "Web3." Web3 includes cryptocurrency but also other technologies that are characterized by decentralized, blockchain-based architectures. Non-fungible tokens (NFTs) are another example of a Web3 technology that has gotten widespread attention. A brief Internet search on "Bored Ape Yacht Club" gives an idea of the fervor NFTs have created.

Web3 and cryptocurrency have led to much excitement and investment beyond what we see in popular culture. Many sectors are experimenting with these technologies, including some local governments. Initiatives such as CityCoins have made headlines but are not without controversy. Questions persist about the potential of these technologies for public finance.

This series aims to help local governments think about the revenue potential of Web3, as well as potential risks. Web3 technologies are complex, and their implications are not well understood. Though we would not expect local governments to invest directly in cryptocurrencies, and GFOA has an advisory that recommends governments abstain from using and investing in cryptocurrency, their wild swings in value illustrate the uncertainty surrounding Web3 technologies.

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