Many cities are curious about the benefits that blockchain could offer for citizens and public services, but they’re understandably wary of taking the plunge. Ernst & Young’s Paul Brody shares how to move beyond the status quo.
There’s a lot of hope – and hype – about how blockchain could help cities deliver better services and improve efficiencies. However, adoption is still relatively low.
Recent research from Gartner found that only eight per cent of CIOs are in short-term planning or active experimentation with blockchain – government CIOs were the second largest segment surveyed.
We are seeing a similar trend in the early results of our own research into blockchain for smarter cities. The majority of cities are telling us they’re really interested in the potential, but that blockchain technology and its proven use cases are still not clear enough.
We are, though, now starting to see a handful of cities moving ahead with blockchain trials.
“The smart strategy is always to crawl before you walk before you run,” says Paul Brody, Principal & Global Innovation Leader, Blockchain Technology, Ernst & Young (EY).
He cites the work the City of Vienna is doing as an example of this. EY is working with the City of Vienna on public blockchains to validate and secure the city’s Open Government Data (OGD), which includes information on public transport routes, train schedules and communities’ voting results.
The project is part of the city’s DigitalCity.Wien digitalisation initiative and the Austrian capital is using blockchain to simplify and automate administrative processes, especially for OGD. These include energy reports and valid business registrations, which must be updated frequently. In addition, the blockchain networks are helping to improve the data security of this information.
Since the solution went live in December 2017, approximately 350 datasets have been secured on the blockchain networks. Among the first to be launched in Europe, the networks secure official documents by storing hashes of the datasets on public blockchains, allowing city employees as well as citizens to review the documents’ authenticity, when they were created, and when and if the data was modified.
Since the solution went live in December 2017, approximately 350 of Vienna’s datasets have been secured on the blockchain networks.
“Publishing public documents on a blockchain, and publishing the hash of those documents, is a way that’s proving beyond the shadow of a doubt that the documents that you’re seeing are the absolute copies of the originals, and that no tampering was possible. That’s a powerful tool for public accountability, but it’s really just the beginning,” Brody said.
He said this notarisation mechanism is one of the simplest use cases of blockchain for smarter cities but there’s plenty more potential.
Procurement, for example, is an area where blockchain could help cities generate significant return on investment (ROI) and prove the case, according to Brody.
Cities are large, complex organisations that buy lots of products and services. Typically, they try to negotiate discounts, etc. in order to ensure they’re spending public money as efficiently as possible. However, because many city departments operate in silos, it can be tricky to track the volume purchased overall in order to get the best deals.
“With a blockchain [you] can put all city procurement on a single blockchain,” Brody explained. “Every department can do its own procurement … but the smart contract on the system can make sure that every purchase order always calculates exactly the correct price, and gets exactly the right volume discount.”
Asset management is another powerful use case for smarter cities, Brody says. Cities own lots of large physical assets, including trucks, parks, public spaces etc. Blockchain could help them avoid ‘double spending’ or double booking, using a feature designed into early blockchains – originally to see that no one could try to spend the same bitcoin twice.
“If I have a city asset and manage it on the blockchain, I can make sure that no department can use that twice, and I also have an absolutely reliable record of who used those [assets].”
Many cities are using blockchain as part of a commitment to greater transparency.
For example, Ulrike Huemer, CIO, City of Vienna, said: “This project, realised with the support of EY, makes the city a pioneer in the implementation of blockchains in public administration and we are committed to an open and participatory city with reduced bureaucracy.
“With blockchain, government employees, residents or app developers can trace changes in data, so if someone changes the bus route – which is linked to mapping applications – an alert can be triggered.”
This project makes [Vienna] a pioneer in the implementation of blockchains in public administration and we are committed to an open and participatory city with reduced bureaucracy.
Elsewhere, the City of Moscow recently incorporated blockchain into its Active Citizen e-voting platform, saying it wanted to increase transparency. Active Citizen is a non-political e-voting system that allows citizens to have their say on a wide range of issues, such as new public transport routes and speed limits in the city centre.
Active Citizen has over 2.1 million users, and 100 million votes have been submitted via over 3,600 polls.
“Blockchain guarantees that data will never be lost or changed after it has been submitted to the system,” a statement from the City of Moscow says. “Nothing that goes into blockchain can be amended or deleted. A copy of this data is preserved and updated by all members of the system.
“The introduction of this technology will make voting more transparent and protect stored data.”
In this way, a commitment to public record-keeping could actually make blockchain even more advantageous to cities than private companies, Brody argues. It could also mean that cities end up moving faster than the private sector.
“One of the reasons why private companies are running around setting up private blockchains is, public blockchains don’t actually offer a lot of privacy,” he commented. “One of the reasons why you haven’t seen a lot of large companies put their stuff on public blockchains is because there is no way to keep that completely secret yet. If you’re a public entity, that’s not a problem. In fact, if you’re interested in preventing corruption and accounting to the public for how you use your assets, the lack of secrecy on a public blockchain is actually a feature.”
Brody acknowledges that blockchain isn’t suitable for every problem and we need to choose the right ones to avoid further disillusionment. He believes we’re close to a tipping point.
In terms of technology solutions: “We’re past the proof-of-concept stage,” Brody said. “We’re now into the production-ready stage. It’s doable but not in a cheap, off-the-shelf package kind of way.”
This means, for now, it’s mainly larger cities who are likely to be comfortable spending some of their budgets on experiments like this.
However, in 12 to 18 months’ time Brody expects to see more packaged blockchain solutions which are easy for cities to implement.
And for everyone else in the meantime?
“I would recommend starting like the City of Vienna did, which is a very simple activity, such as notarising public records,” Brody advises.
He said: “It could be as radically simple as just agreeing that you will accept the payment of taxes in Bitcoin. I’m not a huge Bitcoin fan, but the things you will need to do to let people pay their taxes in Bitcoin will give you a much deeper understanding of how this technology works.”
SmartCitiesWorld is undertaking a global survey which looks at the level of understanding around blockchain and the impact it can have on creating smarter cities. We would love to hear from you.
We’ll present the results at our blockchain event in London on September 12. There will also be a keynote presentation, panel debate and roundtable discussions.