As a former urban studies student, I lived and breathed urbanism for a good portion of my life. Now that I have been working in the crypto space for a few years, it's finally time to outline some of my thoughts about this and begin a deeper discussion about this comparison.

When I first joined the Ethereum community, I felt that I had an intuitive understanding of how it all worked because of my background in urban studies. I quickly realized how many parallels could be drawn between how cities and blockchains work. So, how are blockchains like cities exactly, and what is the importance of this?

TLDR: Blockchains are like cities in that they provide infrastructure for social, cultural, and economic activities. This means we can directly apply lessons from urban studies literature to grow blockchain ecosystems sustainably and effectively.

First, let's take a moment to begin to understand a blockchain as a city at a high level. We can think of blockchains like Ethereum as digital spaces. And just like with physical spaces, people congregate around them, form communities, build businesses, transact, and develop narratives around who or what the space is intended for (or infamous for).

The remarkable similarity between how cities and blockchains function isn't just something fun to note, though. There are so many striking similarities that it's clear that, as a community, we should look to urban studies literature more often to gain valuable insights into how blockchain communities and economies work.

When I think about how blockchains operate like cities, the book that comes to mind the most is The Warhol Economy by Elizabeth Currid (2007). In it, she writes about how the creative economy in New York City functions, how the city's social scene and nightlife are a driving force to its economic success, and how cultural gatekeepers play a part in reinforcing it all. These three themes of the book align directly with how we see blockchain ecosystems working today.

The Creative Economy

NYC has long been a global center of creativity where artists can be successful, and its creative economy has been self-sustaining for decades. But why has NYC been able to do this? What specific conditions allow for artistic communities to grow?

Currid argues that creative economies succeed within two types of macro-economies: a depressed economy and a booming economy.

A depressed economy allows artists to live and rent space cheaply. There is a low barrier to entry, so the only requirement for joining the community is being creative. This results in a saturation of artists in certain neighborhoods and a boom in creative work and collaborations.

On the flip side, in a booming economy, people working in the financial industry are willing to spend some of their big profits on art and culture to gain status. The artists in the cheap neighborhoods are finally able to cash in on their art and find success.

Currid says that in NYC, the cycling between these two economies is what historically allowed the city to sustain its social and cultural life. It's a cycle that keeps bringing in new people, rewards them with success, and starts the cycle all over again. Over many cycles, this resulted in a strong reputation that has locked in NYC as the city to be in for creative opportunities.

Does any of this sound familiar? Blockchain economies, in many ways, operate almost the same.

As the saying in crypto goes, "bear markets are for building." This is the time for newcomers to establish themselves and build up a project. Then, once the crypto economy booms, they can cash in on their project using the defi sector’s profits.

We can clearly see this later effect in the NFT boom of 2021. The massive rise in NFTs and their valuations exploded around the same time as the 2021 bull market. Financial investors were making a lot of money and willing to spend it on art in the form of NFTs in order to gain status in the community. In turn, the culture of high-status NFTs helped sustain some of the market gains. Ethereum gained a reputation as a "place" to buy and sell NFTs, and NFT marketplace tutorials were around every corner.

The Social Scene as a Driving Force

Currid's next point focuses on nightlife in NYC and how this also has a huge impact on creative economies. In essence, she argues that where there is good nightlife, creative people meet and collaborate, which produces economic value.

NYC's social scene and nightlife are often viewed as a by-product of its other successes, such as the financial industry. However, Currid argues that, instead, the social scene itself is a driving force of the economic success of the city's economy, and not at all a by-product.

In NYC, nightclubs have been a meeting ground for creatives for decades, from the Warhol era to now. According to Currid, nightclubs are "nodes of creative exchange." She says that when enough creative people meet, there is almost a certainty that two people will connect and eventually collaborate on a project. That project, in turn, has the potential to generate a significant amount of money for the city.

Creative people come to NYC to meet other people, but the city as a whole benefits from each collaborative connection made, as it brings in tax revenue. The entire city and its inhabitants benefit from these nightclubs in ways beyond the direct taxes they pay.

Being a finance hub is only one leg of NYC's success; it also relies on the creative economy and social scene. The same can be said for blockchains. In the case of blockchains, they also rely on having both a strong defi sector and a strong social and cultural sector (memecoins, NFTs, chat groups, etc.). Whether it's in-person at a nightclub, at a crypto conference, or online in a Telegram group, these spaces enable strangers to become collaborators and co-founders.

The main lesson here that crypto can take from Currid is that when you get creative people together and make them feel like they are in a fun, active, and social space, they will create economic value. Provide the "dance floor" for builders, and they will meet and collaborate, and inevitably, some will build projects that attract millions.

Cultural Gatekeepers & Critical Mass of Creativity

Finally, Currid outlines how cultural gatekeepers play an essential part in maintaining NYC's "critical mass of creativity" and reputation of having the most successful creative economy in the world.

Currid asks the question: why do successful artists often stay in NYC? She emphasizes how this works very differently from traditional businesses. Artists like Andy Warhol didn't stay in NYC because of any direct deal with the city, tax benefit, or subsidy; they were there because it was the place to be socially. In turn, NYC being the place to be meant more talent would move to the city. "The concentration of creativity leads to greater chances of more creativity happening."

Creative people want to be in the most creative spaces. They understand that they are better set up for success when they are in the right environment rather than getting a direct government subsidy to be there. (This may sound like I'm getting into crypto at this point, but Currid actually specifically calls this out, as a way to tell other cities they can't just "buy" powerhouse creative communities into existence.)

Projects themselves can be cultural gatekeepers within crypto. For example, if a certain popular project chooses to deploy on a certain chain, that act can grant some credibility to that chain.

In other words, NYC benefits uniquely from having both the "starving" artist community as well as the rich, famous, successful artists choosing to continue to live there. The diversity here is valuable on its own, but it also paints the picture that wherever you are in your journey, there is a place for you to (relatively) "succeed" or progress.

Why It Matters

Taking a step back, we can see that Currid's writing is just the tip of the iceberg when it comes to what resources are out there to better understand blockchain ecosystems.

We should be looking towards urban studies literature more to better understand how blockchain communities and economies work, and how we can better grow them in a sustainable way.

So enough with the shallow comparisons! Let's dig into urbanism and how it is evolving in its new blockchain form and apply those lessons to make more robust economies and cultures.