Zanzibar bets on crypto to build a digital-first city

A plot of empty land on Zanzibar’s coast will soon become home to a new kind of settlement, according to entrepreneurs who secured government approval to build what they’re calling a Cyber City.

The project sits on 71 hectares near the Fumba Peninsula on the western shore of Zanzibar Island. Florian Fournier, who started OurWorld with partner Kristof De Spiegeleer, walked potential investors through the dirt and brush in early July, describing plans for a community designed to house between 5,000 and 7,000 residents. But the city aims to reach far beyond those physical inhabitants. Fournier and De Spiegeleer want to create a home base for digital nomads who work remotely around the world, offering them a place to register as residents without actually living there full-time.

Building on a new model for governance

“They want it to become for East Africa what Singapore became for South-East Asia,” Fournier said about Zanzibar’s ambitions.

The development draws inspiration from something called a “network state,” a term that entered tech circles through a 2022 book by cryptocurrency businessman Balaji Srinivasan. His book argued that people with shared beliefs and interests should band together online and eventually purchase land to form their own societies, separate from traditional governments. Srinivasan suggested these groups should rely on cryptocurrency rather than regular banks and could eventually gain recognition similar to actual countries.

“I was like, wow, that’s exactly what we’re doing,” Fournier said after reading the book. He reached out to Srinivasan, who later put money into OurWorld’s computing business called Threefold and invited Fournier to speak at his Network State conference in 2024.

The Zanzibar project received official backing when the president approved OurWorld’s partnership with ZICTIA, a government telecommunications agency, in November 2024. This came after years of work by Fournier and De Spiegeleer to persuade officials to create Digital Free Zones, which became law in early 2024.

“I said, ‘What if we bring millions of digital people – not physical – to your island?'” De Spiegeleer remembered telling government officials during a 2022 meeting.

The city offers attractive tax terms. People who register as remote residents will pay 5% income tax, while those who actually live there pay 15%. Companies operating in the zone won’t pay any taxes for their first ten years. There’s no capital gains or wealth tax. The government keeps the tax money, while profits from selling real estate will go toward funding local startups.

About 100 people have already signed up as e-residents, and 30 businesses have registered there, though partners said marketing efforts only just started in January. De Spiegeleer aims to grow the city’s total worth to $1 billion within two years, up from the land’s current value of $70 million. The government gave OurWorld and partners a 30-year lease to use the property.

People buying property in the city will receive title deeds as digital tokens similar to NFTs that can be traded on cryptocurrency markets. The value of these tokens would rise or fall based on how well the city performs economically.

Most city services will run through automated software that OurWorld built with a company called Tools for the Commons. Hugo Mathecowitsch, who founded Tools for the Commons, described the system as handling everything from business disputes to payments, taxes and invoices. His company has offices in Delaware, Brazil and Prospera, a special economic zone in Honduras. Criminal issues will still fall under Zanzibar’s legal system.

ZICTIA said in an email that the city “can be pioneer of innovation or invention of technology” while protecting “Zanzibar’s social, cultural and natural environment.”

Similar experiments taking shape worldwide

Similar projects have popped up worldwide since Srinivasan’s book came out. Srinivasan himself runs Network School in a Malaysian special economic zone, where participants eat meals based on longevity expert Bryan Johnson’s diet and earn “Burn NFTs” for attending fitness classes.

Prospera in Honduras houses about 300 actual residents but has attracted roughly 2,000 e-residents. The zone sits on more than 1,000 acres on Roatan Island. Investors include funds backed by tech figures Marc Andreessen and Peter Thiel, plus Srinivasan. However, Prospera existed before Srinivasan’s book and doesn’t use the network state label.

Vitalik Buterin, who created the Ethereum cryptocurrency, started Zuzalu in 2023 as a test of Srinivasan’s ideas. He brought several hundred people from cryptocurrency, longevity research and online discussion groups to a resort in Montenegro for two months. Fournier attended, as did musician Grimes. Since then, dozens of similar gatherings have happened on every continent. Some are planning permanent locations with Buterin’s support, though whether these will look more like cities or research facilities remains unclear.

Mathecowitsch said his company is working on zones in Qatar and Rio de Janeiro’s Mata Maravilha port that would share the same software and rules. The plan calls for each host country to recognize the zone as having diplomatic status. “The big vision is to enable a network of connected cities and that would share the same charter almost like a decentralized United States,” he said, predicting 10 to 20 such zones within ten years.

Harry Halpin, who studies socio-technical systems at Vrije Universiteit Brussel and founded privacy startup Nym, said network state ideas reflect frustration with traditional governments. “These people see the nation state as an operating system like Windows or Linux and want to opt out of it and build a better alternative,” Halpin said. He warned that many network state supporters lack political experience, which could lead them to repeat historical mistakes.

Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program