Why the Smart Cities of Tomorrow Are Looking At Blockchain Tools

KEY TAKEAWAYS

As cities become smarter, blockchain is emerging as the key enabling technology for data agility and security.

The drive for smart cities is starting to accelerate as municipal leaders look for ways to cut costs, streamline processes and bolster their green credentials.

The challenge, however, is managing all the data that is required to push intelligent algorithms into the workaday functions of modern urban living: everything from traffic management to criminal justice.

Much of this data is generic, but a good portion is private, which means it must be protected to a high degree even as it is shared among the numerous automated systems that contribute to smart city operations.

First of all, how and why are cities looking to become ‘smart’?

Blockchain Support

Many municipalities are exploring blockchain technology as a way to deliver their services.

In large part, the addition of the blockchain as a component of smart city operations is being driven by the technology’s adoption by the business community.

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A recent paper by a team of international researchers posted on the Multidisciplinary Digital Publishing Institute (MDPI) website noted that the blockchain is influencing virtually all aspects of the modern digital economy, bringing transparency and efficiency to financial transactions, trade agreements, contract management, and business administration.

As the world gravitates toward this new way of working, governments will have to upgrade their operations as well if they are to maintain critical functions like regulation, legal enforcement, and tax collection.

As a distributed ledger technology (DLT), blockchain offers several advantages when it comes to sharing and combining data without compromising trust or security.

For one thing, it is extremely difficult to tamper with data once it has been added to a blockchain ledger since this would require hacking into numerous hardened storage sites simultaneously. Sophisticated management software also provides data on a need-to-know basis, which prevents the widespread dissemination of personal and private information.

While blockchain has applications across a wide range of municipal activities, the MDPI team recommended five key areas where it can serve as an enabler:

  • Energy Trading – a decentralized, peer-to-peer system can ensure trading fairness and accurate billing, as well as reduce intermediary costs and protect user privacy;
  • Healthcare – blockchain can ensure patient privacy while still enabling robust authentication for data storage and sharing;
  • Electronic Voting – secure, transparent, and anonymous voting brings integrity to the entire electoral process;
  • Supply Chain – decentralization helps clamp down on corruption, tampering, and other forms of malfeasance, while also increasing efficiency and reducing costs;
  • Real Estate – faster, more secure transferal of property and other assets helps improve revenue and reduce legal disputes.

Smarts on the Edge

Blockchain is also seen as a key adjunct for emerging fog and edge networks that support a wide range of municipal functions. A recent article in the journal Frontiers in Sustainable Cities describes how blockchain can create a computing and data marketplace that streamlines interactions between consumers and providers of digital resources, data, and services.

Such a system offers greater support to intelligent agents that can fulfill essential requests from users and connected devices, many of which are intelligent themselves, that populate the ever-expanding Internet of Things.

Such a system can be used to improve traffic management, for example. Data from vehicles, stop lights, and sensors can be used to guide the interaction between these devices, while also being fed into an overarching management system that orchestrates the broader traffic environment.

Public health would also benefit from a robust but secure exchange of data between municipalities, insurance carriers, hospitals, pharmacists, and patients. In these and other applications, blockchain provides the scalability, authenticity, and confidentiality across the entire data pipeline.

Spreading Authority

Perhaps the key change that blockchain brings to smart cities is decentralization. Urban Next noted recently that centralized government usually acts as a bottleneck for crucial services, as well as for long-term urban renewal.

Blockchain disperses authority and the tools needed to make informed decisions among numerous stakeholders while still keeping key agencies and officials abreast of what is happening throughout the bureaucracy.

In this way, transportation, healthcare, education, and all the other services that enhance the quality of life become more responsive to changing demographics and other conditions, even as controls on costs, resource consumption, and legal/regulatory requirements become more effective.

This could prove particularly useful as cities try to improve things like sustainability without giving up their unique characteristics. Fast-paced, agile data connections coupled with tight encryption facilitate a precise balance between privacy and public expediency, essentially turning city government into a “de-intermediated agent” that no longer needs to spend significant time, money, and resources controlling the flow of data.

Data Fairness

Deploying blockchain on the municipal level is one thing, but doing it equitably is quite another, warns the Urban Institute. City services are supposed to be available to everyone, not just those who have the tools to connect digitally. At a minimum, implementation strategies should account for how blockchain will affect different communities and demographics so that any serious discrepancies can be addressed upfront.

It is also tempting to develop policies for the blockchain environment in conjunction with private companies, not citizens. This may be the quicker, cheaper way to go, but it won’t necessarily deliver an optimal outcome for the user base. Robust community input coupled with a competitive developer selection process is the best formula for overall success.

The Bottom Line

Without a doubt, blockchain will become as crucial a tool for governments as it is for business, and this will drive greater intelligence and greater automation to the multitude of processes that make cities work.

Just like people, a city can only be as smart as its knowledge base allows, and without blockchain, it will be difficult at best to implement smart technologies at the speed and scale needed to fulfill the needs of urban populations.

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Arthur Cole
Technology Writer

Arthur Cole is a freelance technology journalist who has been covering IT and enterprise developments for more than 20 years. He contributes to a wide variety of leading technology web sites, including IT Business Edge, Enterprise Networking Planet, Point B and Beyond and multiple vendor services.