The Relevance of Blockchain for Smart Cities

The immutable nature of distributed ledgers gives them a natural fit with government requirements, especially as it relates to local governance in smart cities contexts in which transparency, efficiency, and cost control of public service delivery are critical. Opportunities to apply blockchain to urban use cases are now being discovered and explored by advanced cities like Dubai. Example application areas include:

• Digital Voting: Both for traditional elections (higher voter turnout and real-time counting) and ad hoc referenda and overall citizen engagement in public affairs (real-time representation)
• Real Estate: Transaction tracking and electronic transfer of ownership
• Transportation: Blockchain airspace for personal airborne mobility (Vimana), cooperative mobility, driverless vehicle sharing, micro-payments for wireless Electric Vehicle (EV) charging, tolling and road user charging, and smart contracts for logistics
• Energy: Renewable energy and microgrids, peer-to-peer investments and exchange
• Water Management
• Cryptocurrencies and Electronic Records: Used for the un(der)banked and identification of homeless (digital inclusion and social aspects of smart cities)
• Automated Documents Handling and eGovernment: Streamlined coordination across departments and between public and private entities, registration of new businesses
• Healthcare: Telemedicine, health records
• Law Enforcement: Use of blockchain for criminal background checks, vehicle registration/theft checks, and crime reporting/prevention
• Secure Smart Cities Internet of Things (IoT) Infrastructure: Blockchain will play an important role to guarantee the integrity of critical data captured via IoT smart cities platforms; for example, Nokia recently announced its blockchain-powered Sensing as a Service, an intelligent environmental analytics solution that operators can monetize by selling a Capital Expenditure (CAPEX)-free service to cities and other authorities; blockchain enables smart contracts through anonymized, private, and secure micro-transactions

DLT and blockchain provide local governments with the technological framework to manage daily operations in a more trusted, secure, transparent, and accountable way. Blockchain will play a key role in the fight against corruption, especially in certain developing countries, and the overall effectiveness of governance. In particular, it has the potential to increase the confidence of citizens in their democratically elected governments and boost overall participation in and commitment to public aspects, a key foundation of any advanced smart cities approach aimed at leveraging the power of communities through data and asset sharing, active feedback, and overall involvement of urban populations.

While the innate characteristics of Distributed Ledger Technology (DLT) in terms of immutability offer huge immediate benefits to cities, there is a bigger play for blockchain as an enabler and catalyst of new urban economic paradigms driving economic growth and generating wealth across all layers of society. Cities like Dubai already understand this very well, aggressively planning to adopt the blockchain economy by 2020.

These new economic dynamics include shared, on-demand services, crowdsourcing of data and assets, peer-to-peer exchanges and funding, and decentralized/distributed models, all of which are essentially leading to a digital, networked, meshed, “all-in” economy supporting new forms of (self-) employment and micro-businesses. These new economic paradigms are enabled by a range of technologies, including the IoT, Artificial Intelligence (AI), robotics and automation, and e-commerce, but require blockchain to facilitate micro-payments, organizing trusted interactions between an increasing number of actors in the new economies, and orchestrating frictionless cross-vertical collaboration and global transparent commerce.

On a more basic level, blockchain can dramatically simplify business operations, from the streamlined registration of new companies to smart supply chain contracts and innovative investment vehicles. Equally important, especially from a smart cities perspective, is blockchain’s potential to accelerate greater economic integration and participation, which generates economic growth.

However, obstacles like issues with regulation, speculation, and sustainability stand in the way of blockchain’s widespread adoption. Ironically, in a smart cities context, the local governments themselves can play a big role in removing these roadblocks, both for their own benefit and that of the wider economy. In this respect, smart cities and the blockchain industry are closely linked in what could be described as a win-win relationship.