Using Blockchain in Smart Cities

By Shekar Gupta

Shekhar Gupta is a COO of The Solution Groups. The company develops and funds blockchain companies. Shekhar has over 20 years of technology experience.

As global urbanization continues, resources will become strained. Healthcare won’t be able to keep up. Energy demands will outpace current capacity. Where will everyone work? How can governments facilitate an environment that’s conducive to economic growth?

It is estimated that by 2025, more than 1 billion Chinese people will live in urban settings. The Chinese government has been proactive and plans to create hundreds of smart cities to support urbanization.

According to McKinsey: “By 2020 the number of smart cities will reach 600 worldwide, and 5 years later almost 60 percent of the world’s GDP will be produced in them. Digital technologies could become the engine of economic progress, and blockchain, without a doubt, could be one of them.”

“Smart cities” are a framework for addressing the unique challenges of urbanization by combining new technology, advanced urban planning, energy and transportation management, and business planning.



Source: Internet of things agenda.


However, since there is no standard and the requirements are different in each city, the technology infrastructure is left up to each city and that has the potential to cause some challenges. That is where Blockchain can play a role. Blockchain can connect these technologies together.

The more technologies we connect using the blockchain as a framework, the more value we can derive. By linking together multiple technologies, this “smart city” could then begin to automate basic city services. For example, IoT sensors could instantly sense a problem and alert the appropriate city agency’s AI to dispatch a technician. The AI might help the technician assess the necessary repair through AR glasses, send templates for parts to the 3D printer in the technician’s truck, reimburse the parts designer through a smart contract, and guide the repair via the AR glasses before finally informing the city agency and property owner when the repair is complete.

Imagine that a city has a digital ledger in which every house or apartment has a presence containing all relevant information about the home, from property ownership and mortgage balance to transactional data like utility use, property tax assessment, and past and current contractor relationships. The city could access these to coordinate services and perform administrative tasks related to the property more efficiently and with greater accuracy. The property owner would have a verified, trustworthy way to perform transactions like renting a room, hiring contractors to do lawn work, or selling power generated by solar panels back to the grid.

Now imagine extending that to the city’s broader infrastructure. A traveler hops into an autonomous electric taxi at the airport and tells it to take her to a meeting in the city center. Knowing from traffic sensor data that there’s a traffic jam on the highway, the car automatically chooses an alternate route that ends closest to its destination with an available outlet for charging. While parked, the car can automatically connect to an outlet that bills the taxi company in real time for the electricity needed to top up the car battery. As the traveler connects to the city’s public wifi, s/he immediately receives a push notification with a discount at the nearby coffee shop via a social media account.

Meanwhile, city staff can monitor the taxi’s safe operation and ensure the taxi company bills accurately for the ride, check traffic status and push out notifications to all affected drivers, make sure parking is available, confirm the traveler’s opt-in agreement for city wi-fi, provide the coffee shop’s owner with information on the effectiveness of the day’s coupon, and confirm that the building’s elevators are functioning according to the latest safety codes. Every interaction is transparent, verifiable, and nearly impossible to fake or alter — and just as importantly, it adds to a vast store of data the city can then use machine learning to analyze for future improvements and efficiencies.

Estonia has been using distributed ledger technology since 2012 in areas such as healthcare, judicial/legislative services, personal data, ID management, and more.

Dubai’s created a Smart City Initiative, part of which aims to turn Dubai into the first blockchain-powered city by 2020. Dubai will apply blockchain to city-wide logistics and storage industries, as well as shift to a 100% paperless government and storage system.

India recently launched its Smart Cities Mission with the aim of developing 100 smart cities. Projects include affordable housing, integrated multi-modal transport, creation and preservation of open spaces, and waste and traffic management. The Indian government acknowledges that many smart-city initiatives will be implemented on a blockchain for enhanced security, immutability, resilience, and transparency.

There are many other countries around the world using blockchain to provide smart city experience to its citizens and visitors.

Below are some of the ways that blockchain could be used in smart cities:

  • Smart Payments – Facilitate all municipal payments on a blockchain based solution, including: city programs, assistance, welfare, payroll, etc.
  • Identity – Latest decentralized Identity Management systems use blockchain to provide a secure mechanism for storing and validating user identities, thereby reducing identity thefts and related frauds.
  • Transportation Management – Use of blockchain to remove the rent-seekers in the ridesharing economy (Uber, etc.). This enables a truly p2p platform for transportation.
  • Smart Energy – Create a more resilient power grid by using a blockchain powered p2p energy market. This removes sent seeking middle men and allows individuals to create, buy, sell, and trade energy while retaining value.
  • Government Services – Smart contracts can be used for digitizing citizen rights and identification, transparent voting, tax, track ownership of assets, remove paper, and automate bureaucratic processes.
  • Waste management – Improve efficiencies surrounded the entire waste management process by using IoT sensors and AI prediction modeling.

Blockchain has the potential to create countless smart networks and grids, altering how we do everything from vote and build credit to receive energy. In many ways, it could be a crucial component of what is needed to circumvent outdated systems and build long-lasting solutions for cities.

Take, for instance, electricity. With the help of blockchain, we can turn microgrids into a reality on a macro scale, enabling communities to more easily embrace solar power and other more sustainable sources, which in turn will result in fewer emissions and lower healthcare costs and rates of disease. But in the more immediate future, blockchain-enabled microgrids would allow consumers to join a power “exchange” in which they can sell their surplus energy. In many scenarios, the consumers’ bills would either significantly drop, or they’d earn money. It would also help reduce the need for energy storage, because such trading can move electricity locally from where it’s being produced in excess to where it’s needed.

And, of course, there is voting — an issue that, more than ever, is vital to a thriving democracy. The U.S. has lower voter turnout than just about every other developed country. In fact, just over half of voting-age Americans voted in 2016. Blockchain is proving to be a secure enough system to make this a reality. The result could be more youth, communities of color and disabled voters “showing up” to the polls. These online polls would be more “hack proof” — another contemporary concern — and votes could be counted in real time. once a vote is cast, citizens of many countries don’t always trust that the vote was recorded accurately or that the central election authority will respect the ballots. But because blockchain technology creates a transparent, immutable ledger, government can’t alter the results of an election without leaving totally transparent evidence of what has happened.

The city of Austin is currently piloting a program in which its 2,000 homeless residents will be given a unique identifier that’s safely and securely recorded on the blockchain. Three thousand homeless people in New York are about to receive a special holiday gift: a free smartphone that allows them to manage their digital identity, access shelters and food pantries, and make use of financial services. Both of these initiatives use blockchain technology and may be the first time a distributed computer ledger has been employed to help a homeless population.

Stateless Rohingya who fled Myanmar are set to receive digital identity cards using blockchain technology in a pilot project seeking to help them access services like banking and education. More than 650,000 Rohingya Muslims – who are denied citizenship in Buddhist-majority Myanmar – have fled to Bangladesh since August after attacks by insurgents triggered a response by Myanmar’s army and Buddhist vigilantes. With these identity cards, they can receive UN and other govt aid. The aid and the process would be transparent for anyone to know if and when the money was used to help.

Blockchain technology can ensure that money intended to be a reward for conservation, or a payment to a specific cause, does not disappear into unintended pockets through bureaucratic labyrinths. Blockchain-based money could even be released automatically to the correct parties in response to meeting specific environmental targets.

A recycling program on the blockchain could encourage participation by giving a financial reward in the form of a cryptographic token in exchange for depositing recyclables like plastic containers, cans, or bottles. Similar setups already exist in several places around the world, in particular in Northern Europe.

Blockchains can be used to track products from the manufacturer to the shelf and help prevent waste, inefficiency, fraud, and unethical practices by making supply chains more transparent. They can also help consumers be better informed of how each product was made and shipped so they can make more environmentally friendly choices.

Tracking the carbon footprint of each product using the blockchain would protect this data from tampering, and it can be used to determine the amount of carbon tax to be charged on at the point of sale. If a product with a large carbon footprint is more expensive to buy, this would encourage buyers to buy products that are more environmentally friendly and would therefore encourage companies to restructure their supply chains to meet the demand for such products.

However, Blockchain is not without its challenges. The lack of coherent regulation has states and nations over-legislating to limit the scope of cryptocurrencies and blockchain, which can slow down transaction speeds and limit its access. Moreover, despite efforts at maintaining blockchain’s decentralized allure, there are outstanding issues of consensus building and universal adoption by users across the global network.

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  1. I do think Blockchain can be a useful tool in addressing a number of issues for the transportation integration piece, as well as a number of other smart city domain issues.

    The issues I have are two-fold: Firstly, how does a citizen ensure that their identity is not being compromised by the use of blockchain such that all local and regional requirements (e.g. GDPR) are being met, as well as the ‘Right to be Forgotten’ – just how can you remove data from a public blockchain that could contain data that will identify an individual. Secondly the processing and power requirements i believe are still an issue we have not addressed fully. Just how can a blockchain system provide adequate support to a transit system that may have to process 15000 transactions per hour, and do so effectively and with near real time speed that does not require a massive compute power overhead?

    Lot’s of questions to solve, but I do think that blockchain (or a variant) could be an answer.

    • Hi @Andy, absolutely good points. There are definitely more questions. Blockchain is still getting evolved and as we continue to make a push, there will be more questions that blockchain will have to answer.
      Identity, however, is one that I think is ripe for blockchain. The questions are two folds, your identity as you have it and your identity as other will have it and that’s where GDPR plays a big role.

      Thank you for reading it.

  2. it would be good to read a blockchain article that doesn’t mention cryptocurrencies.

    • Hi @Kevin, I am with you that blockchain is different from crypcurrency. I stress that point all the time and preach about it as well. However, it was necessary in this context to mention it.
      Thank you for reading.

    • I belong to the Govt. Blockchain Association, a trade organization. To learn more about use cases across industries, or a local chapter, please visit gbaglobal dot .org

  3. Let us not forget that Blockchain will empower the individual to gain ownership of his/her information. This fact is quite relevant because it can help to better redistribute wealth and provide unimaginable monetization opportunities to the common citizen. Current data exploitation practices, by most information technology companies where data is sold as a commodity without consideration for the individual, only benefits a few. It is a fact that better wealth distribution can be accomplished by the utilization of smart contracts through the Blockchain. This type of smart contract payment can directly be deposited into the individual’s digital wallet when he/she decides to share relevant information to the public and/or private sector. Blockchain will help democratize access to wealth which will contribute to make cities even smarter because all interests will be aligned

  4. I’m Italian and Spanish, I’m leaving in the Netherlands, studying Water Management Aquatic Eco Technology. I would like to enter in one of the use cases of “Blockchain for smart cities”. Do you have a research internship program? Can I have information of the several projects?
    Waiting for your help and support,

    Kind regards,
    Leonardo Gemelli


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