How blockchain can empower smart cities - and why interoperability will be crucial
This article is part of the Global Technology Governance Summit
Advanced technology can play a significant role in managing efficient urban development and population growth.
Interoperability needs to be considered from three perspectives: business model, platform and infrastructure.
Independent smart cities will not be enough, but it is essential to ensure openness and co-ordination among multiple smart cities.
The emergence of societal issues associated with expanding urbanization at the same time as the growing need to reduce public budgets are two of the primary reasons why smart cities are gaining so much attention. According to the United Nations, the number of cities with a population of 10 million or more is expected to increase from 33 to 43 between 2018 and 2030. While urbanization is said to bring strong economic power due to the concentration of population and industry, it also has its risks – including the potential for increased congestion and environmental problems.
Expectations are rising for smarter cities and with the economic downturn caused by COVID-19, there is a need for more efficient urban management than ever before. Between 2020 and 2024, the smart city market, including the segments of energy, healthcare and security, is expected to grow at an annualized rate of 23%, amounting to approximately $2.1 trillion.
Advanced technology, including blockchain can play a key role in solving these societal issues and achieving efficient urban management. Blockchain enables network participants to exchange data with a high degree of reliability and transparency without the need for a centralized administrator. Cities have a variety of stakeholders and the exchange of data among stakeholders is essential for highly convenient urban services.
Blockchain is expected to be used for this data exchange. For example, Smart Dubai, with a mission to make Dubai the happiest and smartest city in the world, is developing use cases for blockchain across multiple sectors such as finance, education and transportation. For example, a project to facilitate enrollment procedures for students moving between emirates using blockchain is under way.
One important point to remember is that for smart cities to contribute to solving societal issues and to operate efficiently while improving the quality of services, it is not enough to have independent smart cities. Rather, it is essential to ensure interoperability and co-ordination among multiple smart cities. Some efforts are already under way to achieve this aim. In Japan, the cabinet office released a white paper on reference architecture for smart cities in March 2020, which cited interoperability as one of four fundamental concepts that are important in promoting smart cities.
What is the World Economic Forum doing to ensure smart cities?
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The G20 Global Smart Cities Alliance, for which the World Economic Forum serves as the secretariat, unites municipal, regional and national governments, private-sector partners and cities’ residents around a shared set of core guiding principles for the implementation of smart city technologies, including openness and interoperability.
Smart cities can learn from a recently published framework for interoperability, which presents a three-layer model for blockchain utilization:
1. The business model layer includes an aspect of governance models, data standardization, legal frameworks and commercial models
2. The platform layer includes that of consensus mechanisms, smart contracts, authentication and authorization
3. The infrastructure layer includes that of hybrid cloud, managed blockchain and proprietary components. It is important to note that achieving interoperability requires more than solving a technical problem; it also requires solving an issue in terms of governance, data ownership and commercial business models that incentivize ecosystem stakeholders to collaborate with each other.