Smart Cities Embrace Digital Currencies

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By Dominique Bonte | 2Q 2019 | IN-5513

Two cities have recently announced their foray into digital currencies.

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Belfast and Tel Aviv Explore Digital Currencies

NEWS


Two cities have recently announced their foray into digital currencies:

  • Tel Aviv (Israel) Colu-powered Digital Currency: The one-month digital city currency pilot, which started on May 5, 2019, is aimed at examining the feasibility of boosting the local economy, reducing the cost of living, encouraging healthy city living, protecting the environment, and ramping up community engagement and involvement. Powered by Colu, the currency is already used by around a quarter of the population in Tel Aviv, who can spend it in thousands of local businesses and get rewards in currency. Responsible behavior like using public transportation and reporting hazards to the city hotline are examples of how currency rewards can be used as incentives.
  • Belfast (Northern Ireland) - Belfast Coin and CivicDollars social cryptocurrency platform: Belfast Coin will be launched in 2019, powered by Israel-based Colu, and aimed at boosting the economy, improving citizen health, protecting the environment, and, more generally, using a reward system to encourage citizens to engage in beneficial and impactful daily activities. Citizens will receive Belfast Coins for shopping at local businesses, volunteering, and civic activity, thereby strengthening their connection to and engagement with the city.Local businesses, shops, cafes, and restaurants will accept the currency through the Colu mobile payment app connected with a payment card linking residents, businesses, Non-Governmental Organizations (NGOs), community groups, educational institutions, and city partners to drive inclusive growth. Belfast Coin is linked to the 100 Resilient Cities organization’s challenge encouraging its members to adopt city-wide currencies. Belfast Coin is not based on blockchain. Another blockchain-based community currency pilot in Belfast, starting on June 1, 2019, is aimed at encouraging citizens to visit parks and use open spaces to improve their health, as well as picking up litter and engaging in other volunteering activities in order to earn app-based “CivicDollars,” which can be used to obtain lifestyle and health  rewards such as free swim or gym passes, public transportation and bike hire vouchers, or discounts at local shops. For example, users earn CivicDollars for every 30 minutes they spend in Connswater Community Greenway park.They can also be donated to local community groups​. Savings obtained on healthcare costs for chronic illnesses will allow the financing of additional parks and green areas. Belfast aims to extend its digital currency to corporate social responsibility initiatives, too.

Other cities already deploying cryptocurrencies include:

  • London (UK): Camden Pound, launched in East London in 2017.
  • Calgary (Canada): In December 2018, Calgary unveiled plans to launch its own digital currency to pay for goods and services at local shops.
  • Dubai (UAE): Dubai’s digital asset payment system will allow consumers to use the currency to pay for goods and services.
  • Liberstad (Norway):Officially established June 1, 2017, the Liberstad projecthas adopted the City Coin cryptocurrency, based on the City Chain platform, as the only payment method for city services and salaries and for funding civic projects allows building and offering services on a private, peer-to-peer, internal, and voluntary basis as opposed to public services offered by governments.
  • Seoul (Korea): Seoul’s mayor announced interest to launch a cryptocurrency called S-Coin.
  • Liverpool (UK): Liverpool Local Pound (LLP) was launched in 2017.

Digital Currencies Are Part of a Wider Range of Blockchain-Enabled Smart Cities Tools

IMPACT


Blockchain and Distributed Ledger Technology (DLT) have been touted as key tools to enable the new digital, networked, meshed, “all-in” smart urban economy of the future. Proposed applications and use cases include digital voting and ad hoc referenda; real estate transaction tracking and electronic transfer of ownership; smart micro mobility payments for shared transportation, Electric Vehicle (EV) charging, and tolling; citizen identification; renewable energy and micro-grid peer-to-peer investments and exchange; smart logistics and supply chain; eGovernment; telemedicine, and many more. Overall, the immutable nature of distributed ledgers is a natural fit for city government requirements linked to transparency, efficiency, and the cost control of public services.

However, the use of digital currencies, whether they are based on blockchain or not, offers new opportunities for citizens to directly engage with the smart city context. The currency can also be used as community-based investment vehicles.

Are Smart Cities Offering a Lifeline for Digital Currencies?

RECOMMENDATIONS


With bitcoin and other digital currencies having suffered from speculation-fueled volatility and security issues, the innate smart nature of digital currencies still offers a wide range of opportunities. Cities are now discovering how they can use smart digital currencies to loop citizens into their wider smart city efforts through payment-based rewards, incentives, and other behavior-influencing smart money features. As one financial analyst in London recently put it, “old” and “new” money can be compared, respectively, as, "money that is a static creation of the nation state" versus "money that is the dynamic property of communities."

With cities increasingly becoming the engines of future economic growth, soon to represent more than 60% of the population of the world and more than 80% of its economic output, the financial community, and the cryptocurrency ecosystem in particular, must pay attention (pun intended) to the opportunities offered therein. Most importantly, cities offer the potential to take full advantage of the unique features of digital money, adding real value, not just using it as a replacement of “old” money.

As with so many other technology-driven paradigms—think 5G, smart mobility, electrification—urban environments are the natural incubators of next generation systems and solutions. Moving forward, dealing with (city) governments will be a critical success factor for all technology vendors, and early movers will acquire key competitive advantages in the global urban environment of the future.