Blockchain's Role in Smart City Transformation: Exploring Urban Innovation
Blockchain: A Catalyst for Smart City Transformation and Urban Innovation photo
By: Natali

Blockchain: A Catalyst for Smart City Transformation and Urban Innovation

Table of Contents

In the XXI century, our lives are gradually becoming more tech-savvy. It all started with small smart computers in the ’00s and continued with smartphones, watches, TVs, air conditioners, etc. And now we as a society have grown up to the smart city concept. What is this, how can it change the current city landscape, and is it possible to launch a truly smart city from scratch?

You’ll find the answers to all their questions in our new article. Also, you’ll see the crucial role of DeFi and blockchain in smart city development. Spoilers: it’s almost impossible to build a true smart city without a pinch of blockchain and crypto technologies. Want to find more? Check out this article!

What is a Smart City?

Most people refer to the smart city as the concept of full integration of technologies into the urban infrastructure. But I count this description as too vague. The true conception of a smart city consists of the fact that every iteration of the city or its infrastructure becomes automated. Do you need to park your car? In the blockchain city, you no longer need to look for a valet to provide you with a ticket for some time. You just park your car, and smart cameras track your vehicle number and automatically list it in the parking system. Once you are done, you simply go to your car and drive where you need to be. The parking fee will automatically be written off from your account linked to the system.

And it applies to every aspect of daily life: from utilities to education and entertainment. Simply saying, you don’t need to carry a wallet or call utility technicians to fix something. For instance, a system automatically tracks a broken water pipe in your district. Water utility technicians will get a notification about this issue, and they will go to you to solve it. You don’t even need to call them!

And this concept can become true by using Internet of Things devices, Information, and Communication Technologies, and data analysis tools to collect, analyze, and utilize this data.

It’s hard to imagine this level of automation with traditional centralized technologies. There will be thousands of simultaneous operations with gigabytes of data per second. Even the most advanced centralized servers won’t bear this amount of traffic.

Role of Blockchain in Smart City Transformation

And this will become the time when we will require blockchain. It could easily link and associate scattered data, storing it on multiple independent devices simultaneously. There is no technical possibility to modify or delete this data, which makes this system immune to corruption. And it makes the blockchain city secure for every citizen.

Smart systems automatically calculate bills and charge you from a wallet linked to the smart city system. And the easiest way to implement this is by using cryptocurrencies chosen by citizens and town administration. It could be some stablecoin or token that will be used exclusively in this city. And each service can be tokenized – you will get some predefined token in your wallet as the digital proof of provided service.

People will be free to choose between those payment options. And all they need to do is to fill up their wallets with the cryptocurrency that will work in this town. It would account for all bills and activities in the city: from water and parking to fun activities like cinemas or restaurants. All service providers in a smart city are linked to one big system that eases the lives of every citizen and enhances the efficiency and sustainability of the whole town.

It also improves the quality of life because services can analyze massive amounts of anonymous data to get a better understanding of public health, traffic, and utilities issues. City administration could build a public transportation network that perfectly fits all citizens’ needs, as well as demand-based traffic lights to reduce jams. Developers could build new blocks that suit public demand, so they will sell all apartments. People could vote for initiatives and local laws right from their phones. There will be no “dead souls” that some unfair politicians could use to gain more voices. So, smart cities could become places of true democracy.

Sounds like utopia, am I right? But is it possible to upgrade our current towns to that perfect picture-like world? Yes, we can start building smart cities even with modern technologies and blockchain will help us with it.

But we need to create a suitable infrastructure, including deploying sensors, connectivity networks, and IoT systems around the town. It would be hard to implement it in established metropolitan areas like New York or London. So, most smart cities will start their journey as experimental new districts where developers could build the whole infrastructure from scratch.

Other concerns are data management and security. It should be anonymous , but to a certain point. Those cities should provide an acceptable level of privacy, yet some systems still may need your personal data to issue a bill or accept your vote in an election. Managing and analyzing big data will be a complex, yet bearable challenge for developers.

All those concerns lead to legitimacy and citizen trust concerns. Every interaction in the smart blockchain city should be regulated by laws on one side and smart contracts on another. Citizens should trust the local government and blockchain systems. They need to know that new tech-savvy towns are designed to facilitate their lives.

Case Studies: Successful Blockchain Integration in Smart Cities

If you think that it’s still just the concept, I am going to shock you. There are already dozens of blockchain districts gradually evolving into tech-savvy towns. I have gathered the three most interesting examples in this section.

Dubai is known as the most tech-advanced city in the Middle East. And its blockchain-based land registry system proves it. It enhances transparency, security, and efficiency in property transactions. The Dubai Land Department collaborates with various blockchain platform providers to create a decentralized ledger that records all real estate transactions. This system eliminates intermediaries, ensures the immutability of records, and reduces the time and costs associated with property transfers.

Another great example of a partially smart city is Zug (Switzerland) with its blockchain-based identity and voting systems. Switzerland is already a decentralized country where each district and city can implement its own rules if they don’t contradict federal laws. Thus, Zug governors implemented a blockchain-based identity and voting system called "uPort."

The system enables citizens to create a self-sovereign digital identity that provides secure access to various town services. It’s pretty close to the utopian case that I mentioned above. Additionally, it allows residents to participate in referendums and voting using blockchain technology, ensuring transparency, integrity, and immutability of the voting process.

Singapore is a fine example of a big city that gradually started to implement smart blockchain initiatives. The city-state has deployed a comprehensive network of sensors and smart infrastructure to monitor and manage traffic congestion, parking availability, and energy consumption. It helps create new traffic initiatives to reduce jams and optimize waste management, water distribution, and public transportation systems.

Potential Challenges and Solutions

As I said before, the biggest challenge for smart cities will be the lack of infrastructure and regulations. Towns will need a thousand IoT devices linked into a single network, while at the same time, they need guidelines on how to place and run those devices. On the other hand, software developers should create a scalable system that works equally great with small test districts as well as with big towns.

Eco activists won’t pass traditional proof-of-work blockchain mechanisms due to their high energy consumption. Smart cities will be obligated to use modern green blockchain consensus like Proof-of-Stake, Proof-of-History, etc.

Future developers of tech-savvy cities will be tied by those challenges plus interoperability issues. They need to build a user-friendly system that will be clear even to elderly citizens. And only after developers overcome those challenges, they will get desired user adoption.

The Future of Blockchain in Smart City Development

The future of blockchain cities looks promising in the long run. But from a close perspective, it would be challenging years. Many people are still scared of any technology, especially blockchain. The general public still perceives everything blockchain and crypto-related as some grayish scam. Blockchain enthusiasts will have a lot of work in educating people about the technology and how it can improve their quality of life. Initially, there will be relatively small projects that improve minor aspects of daily life. They will showcase that blockchain is a safe technology that can be used even for governance purposes.

After a few years pass and people will get to know the true power of crypto, we will see how smart city projects become more and more common. A fully automated utopia may be unattainable for the next 10-15 years, but we will see a skyrocket in tech-savvy local initiatives. They will improve traffic, energy management, utilities, public health, and other crucial aspects of daily life.

Wrapping Up

A smart city is a dream that can become true in the next few decades. Just 20 years ago it was just a fantasy of sci-fi writers, but now it slowly yet surely becomes a part of our lifestyle. Modern smart city initiatives use the most widely known blockchain feature aka data storage. It cannot be modified or deleted which makes it a perfect solution for local governance.

And we will see hundreds of local blockchain-based governance initiatives in the future. Citizens will get authority in their hands. They will be able to vote for initiatives and politicians that they adore. No one can hack this system to prevent multiple voting, “dead souls” and other corrupted voting schemes.

With the growth of public tech and blockchain-related education, more people will see the true benefits of smart cities. So, as described above, blockchain city utopia could become true even in our lifetime. Want to stay tuned to all crypto innovations? Subscribe to Defiway socials, so you won’t miss any crypto news!