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What Role Blockchain can play Smart Cities?

Updated: Jan 26, 2020

Smart City - Wikipedia defines it as an urban area that uses different types of electronic data collection sensors to supply information which is used to manage assets and resources efficiently. This includes data collected from citizens, devices, and assets that is processed and analyzed to monitor and manage traffic and transportation systems, power plants, water supply networks, waste management, law enforcement, information systems, schools, libraries, hospitals, and other community services. The smart city concept integrates information and communication technology (ICT), and various physical devices connected to the network (the Internet of things or IoT) to optimize the efficiency of city operations and services and connect to citizens. Smart city technology allows city officials to interact directly with both community and city infrastructure and to monitor what is happening in the city and how the city is evolving.

According IoT Agenda - A smart city is a municipality that uses information and communication technologies to increase operational efficiency, share information with the public and improve both the quality of government services and citizen welfare.

Picture courtesy of IoT Agenda

While the exact definition varies depending on whom you talk to, the overarching mission of a smart city is to optimize city functions and drive economic growth while improving quality of life for its citizens using smart technology and data analysis.

Blockchain - A blockchain originally block chain, is a growing list of records, called blocks, which are linked using cryptography. Blockchain was invented by Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin. The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. The bitcoin design has inspired other applications.

Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a blockchain is resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way". For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority.

Though blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been claimed with a blockchain.

What Role Blockchain can play Smart Cities?

Photo by Launchpresso on Unsplash

Smart Cities provides connected communications and enhances security. Blockchain provides data reliability/security hence a marriage made in heaven?

McKinsey analysts predict that by 2020 the number of smart cities will reach 600 worldwide, and 5 years later will produce almost 60 percent of the world’s GDP. Digital technologies could become the engine of economic progress, and blockchain, without a doubt, could be one of them.

Let’s imagine how far we can progress if the innovative inventions are united. Imagine in 10 years, a smart city run by IoT and blockchain. Unmanned cars and trains can run in the cities and control over airspace no longer requires dispatchers.

It could be surprising to know that somewhere, this ‘smart future’ is being built right now. And it's not just about cryptocurrencies or payment services, but about whole cities with all processes controlled by blockchain. These are the cities of the future, and they are already being created.

Some of the current projects benefitting block chain technology;

Today, Dubai is considered one of the most digitally progressive cities in the world. With unmanned trains, automated sensors, flying taxis, solar panels, and Wi-Fi benches, it has morphed into a futurist dream. The Government are not stopping at what has already been reached and are actively implementing the most innovative ideas in order to turn the city into the first blockchain-based smart megapolis by 2020.

In terms of the number of blockchain projects being implemented by Google, Uber, Amazon, IBM and other corporate giants, Dubai ranks first in the world, in the government-supported Smart City program. The Smart City program, launched in 2014, involves the phased implementation of more than 545 projects that will change the way residents and visitors of Dubai interact with the city. The local authorities plan to create a paperless digital space in the private and public sectors. All document circulation will be conducted in electronic form and launching a business will become more simplified for citizens.

The implementation of a blockchain system into the urban structure is projected to save about $1.5 billion and 25.1 million man-hours due to increased efficiency in the processing of documents, which is supposed to set government institutions free from queues.

Another country that has taken Smart City concept and Blockchain to a new level is Estonia. It is interesting to note that they started using blockchain before it became mainstream, and even before Satoshi Nakamoto invented Bitcoin. The origin for such progress is rumored to be the cyber attack of 2007, when — at one point — the websites of state services and the government went offline because of heavy DDoS attacks. This caused Estonia Government to reconsider its attitude toward data security and reach out to what we are now calling blockchain.

Since 2012, distributed ledgers have been used in Estonia’s national health, judicial, legislative, security and commercial systems. The technology has already gone beyond the scope of experimentation and has reached mass adoption. The Estonian government has introduced blockchain to provide its citizens access to control their personal data. Estonians can control, view and, if necessary, challenge illegal access to their information.

Courtesy of Cointelegraph

China, as usual is taking a lead in Smart Cities and Blockchain adoption. According to Deloitte, Chinese authorities plan to create 1000 smart cities, where technologies and data collection and analytics should improve the lives of every resident. In January 2013, the Ministry of Housing and Urban-Rural Development formally announced the first list of national pilot Smart Cities, referring to this technology as a “sector that should be strengthened and encouraged.”

Despite the negative attitude of the authorities toward cryptocurrency, they still believe in the technology.

The country’s digitization strategy states;

The Internet, cloud computing, large data, artificial intelligence, machine learning, blockchain… will drive the evolution of everything — digital, network and intelligent services will be everywhere.

Courtesy of Gatecoin blog

Chinese authorities are actively studying blockchain in terms of more orderly data storage. Recently, the National Audit Office of China discussed the use of the technology to solve problems inherent in centralized storage infrastructure.

And The US

Blockchain technology in the US is not just a tool for operating cryptocurrencies or managing databases. Local authorities have recognized/are recognizing the potential of blockchain in the provision of public services and launched a number of projects currently in different stages of implementation.

Various states such as DE, WY, CO, IL, and CA are leading the way. Even midwestern states such as NE are recognizing the value of blockchain and let's not forget about New York, with its Microgrid project being developed specifically for households who want to buy and sell electricity produced by solar panels. Ethereum-based contracts are supposed to solve citizens' old problems — they finally use electricity exactly where it is produced, and, within a day, can exchange solar energy with neighbors, depending on which side of the street is currently better illuminated.

There are other countries such as Australia and Japan where the Australian government announced a grant of $8 million for a blockchain project to create ‘smart utilities’, and the Tokyo Electric Power Company (TEPCO) plans to use the technology to prevent a recurrence of the disaster in 2011, when a leak at the Fukushima Daiichi nuclear power plant caused significant and widespread disruption.

The launch of any innovative technology takes time. It may take years before blockchain, which will interact with IoT, artificial intelligence and big data, will be integrated to manage urban services and public infrastructures.

However, many countries in the world have already embarked on the path of a digital economy and very soon we could see qualitative changes in social, economic and environmental aspects of life, without piles of papers, giant traffic jams, documentation errors and double transactions. Look around you — maybe the city you live in is one of them.

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