Everything that can be represented digitally, will be digitized. This is the takeaway from the current global situation that caused a digital revolution in every sector possible. Developing digital assets, although still highly speculative, contribute to the evolution of instruments that will hold great significance in terms of global finance and systems of governance. Crypto is becoming increasingly accepted as a legitimate store of value. Despite high day-to-day volatility and challenges regarding regulatory measures, it is a matter of time until these will be taken to the next level and it becomes a part of a fully functioning and globally accepted system. The main allure are the three aspects: decentralization, democracy and distribution with no governing central authority or intermediary executing validation in order to complete transactions.

Firstly described by cryptographer Stuart Haber and physicist W. Scott Stornetta in the early 1990s, blockchain technology constitutes a network containing a decentralized distributed database of connected blocks organized chronologically into a digital chain. They are signed and stamped in order to avoid their manipulation without prior consent authorized by those in the network. It was brought to life in 2008 in a White Paper published by a group with pseudonym Yatoshi Nakamoto, and in 2009 it was used as a public ledger for Bitcoin and its transactions of digital token of value for network contributors. Though the potential of blockchain goes far beyond cryptocurrency. In the early 2010s, experts argued about its long-term impact being potentially as profound as the dawn of the internet.

Blockchain, Governance and Built Environment

Being a topic of the moment, blockchain offers a better system of security than currently used, which by virtue can be applied to various areas including urban management. It opens an entire new horizon of potential use and transformative potential for all professions involved. The blockchain ecosystem can soon be revolutionary in problem-solving that is needed in a system at large. This is why all professionals in urban governance are advised to get educated in the workings of this technology.

It is not a novelty to predict that the future will be fundamentally urban. These are the consistent trends observed over decades (on the margin — there are legitimate arguments suggesting the opposite as well). Urban living, being the engine of the global economy, is also the greatest source of unsustainability. The problems that appeared on the horizon recently, are now rapidly progressing and making their way into our daily lives. Innovation is therefore a pressing issue. 

We can agree that the issues in cities and in the world globally are the results of long-running acceleration of crisis which has not been met by a proper response by governing entities. The current organization of the structures of power are showing themselves as being extremely inefficient and slow-paced. It is more difficult for the tightly cohesive urban economies to respond to an issue in a timely manner without letting problems worsen by not attending to them immediately. To meet the current requirements for problem solving seems to be outside of the possibilities of national governments. Most governments today, including urban governments, function as vertically structured centralized systems. Criticism of the current model of governance concentrates around issues stemming from its centralization. They are not capable and well equipped to be attentive to problems in the operative territory, nor do they have resources to properly decentralize power. It leads to ineffective and inadequate distribution of public services to the citizens. In order to carry out all the functions, horizontal extensions of the vertical power structure must be empowered to act on all things related to the city administration, requiring adequate funds and skilled professionals. This kind of devolution of power, however, has never taken place in most developing or even developed countries despite having constitutional support.

The classic city-hall model of vertical governance has become outdated when cities moved beyond the character of problems they had to solve in the past. The vertical model relies on hierarchical arrangement of these happenings and their accumulation into one layer that is subordinate to the governance. The variety and interconnectedness of daily happenings ‘compute’ multi-dimensionally and in all directions, making the scheme disproportionately and overwhelmingly more horizontal compared to the vertical system that is supposed to govern it. So, to speak about good (future) governance is to analyze proceedings of how the alternatives of current formats transform and improve into the future formats of governance. No good governance counts on the system remaining the same. Therefore it can be defined as good if it’s actively responding to the issues that makes it ineffective and thus evolving, not just in relation to the subject of governance, but also the system of the governing entity itself.

So what does good governance mean? It should cover these aspects:

— participation

— convergence in terms of consensus

— accountability

— transparency

— responsiveness

— efficiency and effectiveness

— inclusivity and equity

Vertical systems deal with significant challenges when it comes to securing most of these. In the past they may have been efficient, but for current system complexity, their operative model does not suffice. Blockchain can set a foundation for an adequate interoperable mode. The three key components — participation, transparency and democracy, go very well with civic life and urban planning, just as data privacy which is becoming increasingly more important. Cryptographic technology may provide a solution to further developments in this sector.

Decentralized Frameworks of Interoperability

There is a reason why the concept of a smart city is gaining so much attention. The amount of social issues congregated in urban centers and at the same time the push for reduction of the public funds strongly underlie the emergence of future operative models. The push is for them to be designed to avoid all unnecessary parts of executive sequences and executing actors in order to shorten the operative circuit and reach higher responsiveness. The urbanization is at its fastest growing rate, with some global metropoles soon reaching the status of a megacity. Urbanization is strengthening and concentrating economic power, paid for by high levels of congestion, environmental imbalance and decrease of urban livability. The price of growth is accumulation of pathological phenomena in the system.

The core of the problem is this —  within the current system, there is only one to choose: growth or sustaining (urban) life. Despite sustainability being consistently one of the highest priorities and buzzwords in urban visions and strategies, it has not been implemented and it will not ever be implemented to a degree of global benefit, because it is not compatible with the governance and the structures of power in place.

Being at the peak of developments that will inevitably bring changes in governance, advanced technology will play a crucial role in setting up the new operating system. Infrastructures empowered by blockchain will take over the managing role introducing efficiency in interoperability. Openness and coordination must be ensured by securing a model with high level of interoperability in three layers: infrastructure, business model and the operational platform:

Business Model — outlining the new model of governance, data standardization, legal frameworks and commercial models

Operational Platform — grounding the consensus mechanism, smart contracts, authentication and authorization

Infrastructure — manages the components of blockchain, proprietary components and hybrid cloud

It is important to note that interoperability is not a subject of mere technical problem solving and maintenance. It is a matter of creating a new ecosystem which must include data management and ownership, business models and governance based on a network of collaborative stakeholders. Collection of data and subsequent application of what we learn from it can be applied through horizontal use in urban planning as a tool of government’s strategy. This is the foundation of urban intelligent systems that work based on interoperable platforms that constantly produce and recreate the ecosystem capable of predicting and responding to real-time events. Blockchain is an ally in building such operative platforms, ensuring crucial aspects of functionality, such as:

— multi-agent informational sharing

— continuous data updates and data verification

— complexity management via intermediaries

— system hyper-connection, hyper-interactivity and hyper-agility 

Using cryptographic technology to manage safety of data prevents manipulation, privacy violation and modification of information. It is only possible to share data allowed by individual agents. This is the reason why traditional structures of urban governance resist the implementation of such an operative model, because it would force them to relinquish their intermediary role ensuring control over information and processes. With blockchain-based projects already in development in cities such as London, Stockholm, Toronto or Santiago de Chile or Dubai’s high-priority objective to become the world’s first fully blockchain-powered city, the change of governance to decentralized will be gradual, but it is inevitable.

Title credits: Baran’s typology of communication networks, 1964