Blockchain technology is boosting the bottom line of private and public sector
It’s touted as the “secret sauce” that will transform smart cities of the future, establishing trust and transparency in government through an immutable digital record — one that’s able to connect sky’s-the-limit endpoints while being virtually hack proof.
Blockchain technology took the digital world by storm in 2009, when it debuted as a digital ledger book for the cryptocurrency Bitcoin. Since then, it is being used to reshape the way business is done in industries ranging from finance and healthcare to manufacturing — and, of course, government.
In a nutshell, blockchain is a new kind of encrypted database that is decentralized, distributed, and unassailable. It creates a digital record that is amazingly secure and is easily accessible to the public.
Smart cities worldwide are using blockchain as the foundation of plans to enhance urban living. Headlines are filled with innovations from locations like Dubai, which aims to cement its status as a global leader in the smart economy as the first blockchain-powered government, and Moscow, which recently became the first city to use blockchain in an e-voting system designed to eliminate corruption and voter fraud.
But the public sector isn’t the only segment of a smart city that stands to benefit from blockchain technology. The private sector is also realizing its potential to reimagine key business processes and help companies of all sizes compete on a more level playing field and therefore advancing their ability to be strategic partners to smart city projects.
10 ways smart cities can benefit from blockchain led innovation.
1. A reliable registry of local businesses. A local business registration system on blockchain can illuminate the lifecycle of a company from start to finish, providing a trustworthy, 360-degree view to interested parties.
2. A virtual “storefront” for every business. Blockchain can help smart cities create integrated solutions for local commerce. Virtual storefronts — for retailers, service providers, restaurants, and lodging options — on a smart city platform can use blockchain as a secure, distributed method for peer-to-peer transactions, payments, and identification services. Even more ambitious, some smart cities have announced plans to use blockchain to build an engine for finding and purchasing local services.
3. Trade logistics and finance management. Blockchain-based trade logistics and finance management solutions at the city level can drive efficiency and create transparency by removing needless layers of verification.
4. A reliable registry for service jobs. An employment registry of workers can offer a trusted snapshot of employment history, creating more certainty among citizens when hiring for common services like plumbing or electrical work.
5. Payments and money transfers. The most well-known blockchain application is the ability to send and receive payments, and that becomes particularly useful for companies who have remote employees or are involved in the global marketplace. Small business owners can use blockchain to transfer funds directly and securely to anyone, anywhere, and almost instantly with very low fees. That’s because there aren’t any middlemen slowing down the transfer and charging large transaction fees.
6. Smart contracts. Smart contracts execute autonomously between several parties once certain pre-set conditions are met. They transform transactions and agreements into unbreakable deals without a mediating third party, making the process faster and less expensive.
Blockchain is ideal for storing smart contracts because of the technology’s security and immutability. It can also be used to help improve the cash flow of a small business, as smart contracts allow for the automatic, instant payment of invoices once a transaction is processed. Finally, smart contracts speed up blockchain, reducing the delay of “blockchain mining,” during which a distributed network worked to verify a transaction with a mathematical formula.
7. Notary services. Blockchain can provide cheap and convenient notary services. For instance, the web application Stampd.io uses blockchain to provide notarized proof of ownership for digital creations.
8. Fighting fraud. By 2020, $4 in every $1,000 of online payments is projected to be fraudulent — costing businesses more than $25.6 billion. Blockchain makes tracking and managing digital identities irrefutable and secure by using digital signatures based on public key cryptography instead of today’s vulnerable password-based systems.
9. Supply chain communications/proof-of-provenance. Most products aren’t made by a single company, rather by a chain of suppliers who sell their components to a brand that puts it all together and markets it to the public. But if one of the components fails, the brand bears the brunt of the backlash.
Blockchain technology offers a digitally permanent, auditable record to show stakeholders the state of the product at each step along the way. It can also help streamline the operation of the supply chain by making everything transparent. Immutable records can be used to ensure that all standards have been met, such as health and safety requirements.
10. Distributed cloud storage. Blockchain can be used to create a secure, encrypted, decentralized cloud storage solution. Every aspect of cloud storage — transport, processing, and storage of data — is entered into the blockchain, creating accountability and transparency.
Benefits for every sector
Smart city leaders are embracing blockchain technology as a cross-cutting platform that connects different services to track data, eliminate security breaches, provide seamless transactions, and offer reassuring transparency for public services.
At the same time, blockchain also offers exciting opportunities for a smart city’s private sector. From fighting fraud to smarter contractual agreements, small businesses are quickly catching on to the many ways they can leverage the technology to do business … better.
Sergio Fernandez de Cordova is an internationally recognized entrepreneur, investor & philanthropist working at the intersection of media, technology, data + policy, leveraging public private partnerships for social impact. Chairman + Founder, PVBLIC Foundation, an organization focused on using media & technology to drive impact & change in the world. Co-Founder & Executive Vice-Chair of the Blockchain Commission for Sustainable Development a multi-sectoral framework to support the United Nations system. Chairman & Founder of P3 Smart City Partners, a smart city & smart infrastructure, public private partnership government advisory company sparking positive social, environmental, and economic vitality in the urban landscape. Sergio is on the Board of Smart Cities NY as well as other smart city related organizations.