Blockchain Cities

With numerous cities around the world launching blockchain initiatives, urban policy makers are slowly getting the signal that one of the most disruptive technologies of our time is here to stay. The prototypes of the blockchain system illustrate new relationships between the four pillars of urban sustainability: economic, governmental, social and environmental, and demonstrate the applicability of blockchain to address cross-sector challenges that the cities currently face.

Urban centers being under tremendous pressure associated with rapid urbanization, resource depletion, infrastructural congestion and social unrest are on a way to collapse. Normally, to solve these problems would fall onto the urban management and representatives on a city level, but relying on that has been repeatedly proven ineffective or even damaging. „Mayors rule the world“ [1], but do they? There have been so many concepts of sustainability frameworks proposed over the last decade and yet, we appear to be stepping even further from our sustainable future.

What should we then advocate for? Clearly, making changes within the existing framework does not work. Obviously, the solutions, even those well-intentioned, are not falling on fertile ground to create any forward progress. Advocating for changes within a system that is not flexible enough to accommodate any changes will not bring desired results. Advocating for changing the system of accommodation of said changes, however, can bring results. As mentioned, blockchain is a disruptive technology. In what sense is disruptive? To global financial management, established structures of power and really, management of all systems. It directly targets the system context instead of system components, which is why at this point it has the most potential to bring fundamental change. And as we can see, it does.

Blockchain Predecessors

Transforming the context of urban system management has already begun. The wave of urban context transformation has been initiated and may be compared to the General Purpose Technology [2] that is „complementary to human and organizational capital and whose usage is shaped by political choice and by the urban ecosystem of the citizens, technology vendors and local authorities, depending on the city's needs and habits'' [3].

Features of blockchain technology such as decentralized shared databases provides a transparent and immutable system of transaction records. What most people recognize in the applied distributed system of Bitcoin cryptocurrency, is applicable to any system, especially those that require stepping into their next evolutionary phase. Innovation in the form of blockchain applications are conceptually related to the technologies behind smart city networks and ambient intelligence systems — they share the aspect of distribution. They can be seen as a predecessor to the distributed networks for cities as a reference. These frameworks provide an anchoring point for the blockchain technology and can be used as a prior experience with distributed technological components.

Who Governs?

A fruitful discussion about blockchain, sustainability and smartness starts at the very core — the governance. And although I wrote about the subject before, there are more relevant assessment frameworks coming up with every launch of digital technology for urban sectors.

Decentralized digital governance can crucially contribute to the development of a sustainable agenda of governing. I specifically mention a decentralized governance in addition to digital, because centralized digital governance is certainly not the right way to improve ways of governing. Instead, it is the biggest threat to democracy or to any moral leftovers that today’s governance may still have. Blockchain acts as a connective network of all units possessing value (tokens). It firstly reduces administrative costs, corruption, ensures integrity of documents and averts displacement. It is likely to have a significant impact on decision-making, collaboration and administration in every sense, which increases radical progressiveness and uproots long-standing traditional ways of governance.

Coming back to the smart city concept, many cities implement “smart decision-making“, „smart collaboration“ and “smart administration“. What is often hiding behind these terms is using centrally collected big data, which are coming from the IoT sensor networks. It is still processed by an institutional entity that then “leads“ the communities to “better collaboration“ — or in a real sense, integrate big data into traditional functions of governance and business and sell it as a transformational approach.

Smart city is a predecessor of a blockchain-based city, in a sense of working with the data from the networks collected by distributed sensors. But because the data does not stay in the network while being evaluated independently from a centralized entity, it can never be considered as decentralized or distributed and thus blockchain-based. Smart city does not fulfill the criteria of a distributed concept, it does, however, fulfill the criteria for the concept of a non-transparent centralized governance.

Smart Urban Collaboration vs. Distributed Token Networks

The model of a smart urban collaboration claims to be a transformative collaborative organization. It requires participation of “both internal and external government organizations, while emphasizing truly citizen-centric operations and services based on collaboration across departments and communities“ [4]. Based on a pro-active, open-minded governance structure, it should provide an opportunity for all actors to work together to maximize urban sustainability while minimizing “negative externalities“. In theory, this brings together citizens and stakeholders together to amplify the collective intelligence and tap into innovative solutions. In practice, the stakeholders, even though mostly lesser in number, represent the majority of the actual power while holding their own interests in how the urban organism operates. Citizens are at best given room to express themselves, but rarely this results in any coherent conceptualization of problems, let alone solutions. Sometimes, both parties are represented by professional urban planners who lobby for the interests of each side. The end game is the prevalent force of the power held by one of the sides. This is also a collaborative network, but it is not based on equally distributed power. The dynamics is not self-supportive. It involves two or several parties that have to “reconcile“ the push-pull dynamics of wanting to exert power, even if it hides behind collaborative endeavors.

Distributed networks are, too, based on collaboration. The individual components are collaborative and interconnected, building a system dynamics that is self-sufficient and self-supportive. If we call the component tokens, we can call it a collaborative token network. In such a network there is no distinct prevalence of decision making power clustered and hoarded into one nod in the network. The collective intelligence is a sum of intelligence held by individual tokens. In the context of a blockchain city, citizens as tokens become the regulators of the city and derive decisions directly. This is an advanced stage of a progressive digital governance spectrum. The blockchain city is the very edge of this spectrum.

References:

[1] Barber B. (2014) If Mayors Ruled the World. New Haven, CT, USA: Yale Univ. Press.

[2] Bresnahan, T. F.; Trajtenberg M. (1995) General purpose technologies Engines of growth’?, J. Econometrics, vol. 65, no. 1, pp. 83.

[3] P. Neirotti, A. De Marco, A. C. Cagliano, G. Mangano, and F. Scorrano, ‚ (2014) Current trends in Smart City initiatives: Some stylised facts,’' Cities, vol. 38, pp. 25.

[4] Batagan, L. (2012) Methodologies for local development in smart society,’ Oeconomics Knowl., vol. 4, no. 3, pp. 23.