There are a few fundamental flaws with your reasoning vis-a-vis Cryptocurrencies.
First: The top two Crypto Tokens - Bitcoin and Ether still suffer from issues related to scalability and transaction times. Of course, this is where sharding and lightning networks come in, but these are still at Proof of Concept stage and are note widely used yet.
Second: the top few Cryptocurrencies are no longer decentralized. There was a time when I could mine bitcoin on my Pentium 3 computer with 256 MB RAM. Now, the majority of mining in both Bitcoin and Ether are controlled by massive corporatised mining pools. This is no longer the decentralised ideal that Satoshi envisioned in his white paper.
Third: The latest surge in Crypto assets has come when the big banks came out to play. Once regulatory approvals are in place and Asset Managers start formally allocating risk to Crypto assets, Crypto will become a part of the abomination it was designed to oppose.
There is still hope. Can we come out with a cryptocurrency that can be mined from a smartphone and cannot be cornered by mining pools?
There are technical barriers to this because the Cloud has taken over physical storage it appears that Device storage has topped out at about 1 TB for phones and 2 TB for personal computers. How efficient will your ledger encryption have to be?
The Private Cities that you mention will be arks of privilege. India has a city called Gurgaon that was completely privatised - all utilities and infrastructure were maintained by private for profit enterprises. This resulted in staggering inequality in standards of living and in recent years, the government had to seize control of basic services to protect the public.