As we discussed in our previous article (Blockchain: The Next Frontier of Smart Cities - Part 1), blockchain has the potential to transform our communities, making the places we call home more collaborative, democratic and sustainable places. It is no surprise then, that a whole bunch of cities - from Santiago de Chile, Toronto, Tel Aviv, Oslo, and Milan, to London, and Stockholm - are already developing blockchain-based projects. Dubai is going even further, aiming to become the world’s first fully ‘blockchain-powered city’ by 2020. Lofty ideals aside, as we examined in part 1, blockchain does actually seem to offer some concrete benefits for communities, as we shall see below.
Encourages Behavioral Change
With blockchain technologies, we can create token systems that incentivize behavioral change. Of course, a chinese-style social-rating system is not what we want, but companies like Social Coin (see Citibeats) and Swytch are paving the way for blockchain systems that encourage people to live differently in order to make the world a better place. SocialCoin focuses on encouraging social good through a reward system, where users gain tokens for doing good deeds. Swytch is more focused on sustainability, leveraging their Open “Oracle” blockchain technology, which acts as a distributed authority, to establish a reward-based system that gives users ‘Swytch tokens’ for generating renewable energy. As such, in their own words, Swytch “awards tokens to people, companies, and other organizations that make a meaningful and measurable difference in reducing the emissions that endanger our planet…and our future”. They hope to grow their network and, with time, offer consumers and businesses Swytch tokens for carrying out additional sustainability actions, such as reducing their energy consumption or driving an electric vehicle.
These token-based systems have huge potential to change urbanite lifestyles, which are often very fast-paced and convenience-based, and therefore less sustainable. With growing populations, this is key, as cities are quickly becoming the number one global energy-user and polluter, although it must be noted that urban centers are generally more energy-efficient than their rural counterparts. The city of Austin, for example, has used Digital Town’s integrated city platform to create its own local currency in order to encourage more sustainable lifestyles among its citizens. This platform essentially gives citizens credits to spend on local dining and entertainment as a reward for meeting certain conservation goals, such as reducing water and energy usage in the summer months. Like Swytch, this platform encourages its users to change their habits and be more sustainable, providing a successful example of a city authority-led blockchain project that is changing cultural attitudes.
Transparency and Trust
In cities, governments are responsible for not just governance but also the economy, social issues, mobility, security, culture, education, the environment, and more. As governments are traditionally bureaucratic, having to carry out a number of checks and permissions constantly in order to function, the transparency and security of their processes is clearly essential. Blockchain offers a technology to ensure this, as one of its main characteristics is a neutral, non-hierarchical, accessible and secure information database that is ideal for environments where trust among actors is lacking. This means that blockchain can help to eliminate governmental corruption. With Blockchain, everyone’s actions are transparent and recorded digitally: moreover, this digital record connects thousands of computers without running the risk of being hacked. This increases community social cohesion and also reduces suspicion between institutions and the population.
This transparency is particularly important when it comes to critical democratic processes such as voting. In the previous article we discussed how blockchain could be used to increase democratic participation, but it can also be used to end corruption and ensure democratic accountability during voting processes. Blockchain e-voting uses an encrypted algorithm to timestamp an individual’s vote with the information of the last vote available with it. With this, any illegitimate votes are flagged up immediately within the digital system. Moscow City intends to use this voting system in future: through it, Moscow residents, who form the nodes in the e-voting blockchain, will be able to verify the authenticity of voting in real-time. According to the Government of Moscow, every vote will turn into a smart contract and the e-voting will be publicly accessible and therefore totally transparent.
Safety and Security
Blockchain is super secure and as such consolidates the resilience and security of critical urban data and infrastructure. Tech and urbanism are increasingly meshing, as demonstrated by the growing popularity of the smart city concept, but more technology (particularly IoT and cloud-computing) in cities means more risk in terms of cyber security threats. IoT devices are particularly vulnerable to hacking: as such, the more IoT sensors that a city deploys, the greater its ‘attack surface-area’ for hackers. Unfortunately, so far, cities, and the rest of the IoT industry, don’t seem to have come up with a sufficient security solution to this problem. This is where blockchain comes in: it not only helps to protect cities from cyber-attacks because it has no critical points but it also helps agents to share information safely through secure, transparent digital IDs and smart contracts. Moreover, the added value of blockchain is that users can in the share only the information that the other person wishes to know at the same time as keeping everything else encrypted and inaccessible. Cryptography is important here: it is essential for preventing manipulation, modification of information, and privacy violations, and thus is essential to the increasingly technical city.
Thinking globally, acting locally
Blockchain removes municipal dependence on monopolies and oligopolies, while also facilitating collaboration and networking on a global scale. In some ways, blockchain encapsulates the phrase ‘think global, act local’. Blockchain is unsurprisingly a key feature of the sharing economy 2.0, signalling our shift away from platform capitalism to platform cooperatives.
As Boyd Cohen suggests, platform cooperatives take the idea of the traditional cooperative - historically local and membership-driven - and add technology. This means that these cooperatives remain local but now become digitally connected and collectively owned by a number of operators - think Stocksy United, En Spiral, and Fab Market.
This cooperative attitude is even encoded into some blockchain platforms that are not technically cooperatives. For example, Digital Town, mentioned above, offers services like Smart Search, Smart Wallet, and Smart Web, so that communities can make their own markets and economies for goods and services, without the fees from the multinational internet services. In the spirit of local cooperatives and local currencies, Digital Town is essentially trying to provide a platform for cities to be their own local Google, Expedia, Amazon, Airbnb, et al, for their citizens, and protecting everybody’s data in the process.
It comes as no surprise then that many Blockchain companies and associations - such as IoMob, the Blockchain cities alliance and the Fab Lab/Fab City in Barcelona - are encouraging cities to alter their economic ecosystems so that at least 50% of everything consumed in the city - food, energy, products and much more - will be produced in the city by 2054. This may seem like an unrealistic goal, but 18 cities in the world have already committed to it.
Blockchain: A Key Thread in the Smart City Tapestry
As we’ve seen in many examples in this article, blockchain will not be standalone as the only transformative technology in smart cities but instead will be combined with IoT, AI, cloud-computing - and others - to produce new urban ecosystems founded on collaboration, sharing, sustainability and innovation. The combination of Blockchain and IoT is particularly exciting and some suggest it will bring about a completely new set of services and businesses that will not only change our living conditions, but also how we work, shop, play, eat etc.
“The smart city ecosystem is gradually becoming a rich tapestry of innovative solutions that weaves together different technologies and ideas to produce more livable, sustainable and functionable cities for all. Blockchain will be a central thread in this network of technologies, and their human outcomes, hopefully fulfilling its promise of creating more inclusive, democratic and collaborative cities sometime in the near future.”, Bart Gorynski, Managing Partner at bee smart city concludes.
bee smart city is one of the co-founders of the Blockchain Cities Alliance, facilitating the adoption of blockchain-based solutions in smart cities around the globe. To add and explore blockchain-based solutions, join our free global smart city solution database. The database features hundreds of solutions that have been successfully implemented in more than 900 cities and communities around the globe.
Appendix: A basic explanation of what blockchain is:
As is standard with any article on blockchain, we will begin by giving a brief explanation of what it is and how it came about. The origins of blockchain can be traced back to the 1990’s, when a group of developers discovered that they could code a “block”, which carried any data they input into it. This block could then be confirmed by others on the node network, and another block could be added to it to approve the previous transaction and continue with the network. This formed a chain of blocks: literally, a “blockchain.” Blockchain enables peer-to-peer transactions as a distributed ledger technology that keeps track of transactions, contracts, agreements and sales without the need for a third, intermediary party (like a bank).
Basically, there are three important things to note about blockchain: once the chains of data blocks have been published, they cannot be modified, ensuring absolute transparency and an infinite record; it can be deployed in any kind of transaction without an intermediator; and it is completely secure as it is encrypted.
Image Source: iStock, Photo ID: 861409312, Credit: MF3d