Discussion around the benefits of blockchain technology — security, transparency and efficiency — has pushed forward conversations about how additional sectors can benefit from this innovation. In addition to financial applications allowing the immediate, secure and transparent transfer of assets with no central administrator, blockchain technology can make cities more efficient and resilient — from giving homeless residents the ability to access critical services to making decentralized energy grids resistant to central power outages.
More than half of the global population live in cities, a number expected to rise to nearly 70% by 2050. In response, local governments are learning to become more bold, nimble and thoughtful to accommodate this rising urbanization along with other challenges like climate change. Examples of these efforts include Rockefeller Foundation’s 100 Resilient Cities and Bloomberg Philanthropies’ Mayors Challenge. Cities are changing old ways of doing business, leveraging greater technology to serve more residents.
To date, civic innovation has focused largely on the use of sensors, the internet of things (IoT) and open data to create a more seamless and productive urban experience. Blockchain is a more recent addition to this conversation that has enormous potential to address the critical challenges facing our cities during this time of greater unpredictability and limited resources.
Centralized systems like the traditional energy grid suffer from a central point of failure. When we look at what happens to these systems in the event of an earthquake or other natural disasters (increased frequency correlated to a changing climate), it’s clear cities need a paradigm shift to continue delivering essential services to their residents.
In 2017, extreme weather, aging infrastructure and other accidents left 36.7 million Americans without power; after Superstorm Sandy, 1.3 million paper securities were found soaked in an underground vault in a lower Manhattan skyscraper and the electronic records system also failed; the major blackout across the Northeast of 2003 was a full grid-collapse because of a software bug in a single control room. The outage impacted power generation, water supply, transportation networks, the ability of factories to function and effects on international air transport and financial markets were also widespread.
In comparison to this status quo, cities can use blockchain technology to build decentralized networks that are resilient.
Blockchain makes records transparent and accessible — moving away from paper records susceptible to flood and fires, and centralized electronic records susceptible to power outages and software bugs. Blockchain also makes records secure with cryptography which time-stamps and orders the “chain” of the record’s history that you can follow. With blockchain, critical city systems can remain functional and accessible in the face of external stresses and shocks.
City and state governments are already embracing blockchain solutions:
In New York City, blockchain-powered microgrids are giving communities energy independence and making them more resilient to central power outages. Residents install smart meters on the blockchain to track the energy they produce and use. The blockchain also records the “smart contracts” that track neighbor-to-neighbor transactions.
Austin, Texas is using blockchain technology to give homeless residents a unique ID that allows them to access the personal records required for critical services. With this project, the blockchain replaces lengthy paper records and gives social workers access to an individual’s information while in the field.
A pilot program conducted with the Cook County Recorder of Deeds in Illinois evaluated the legal issues and benefits of applying blockchain technology to the management of land records to improve accuracy, efficiency, security (physical records can be destroyed by water or fire/electronic records can be lost in cyberattacks or electricity outage), and reduce costs.
The State of Illinois also launched the Birth Registry Pilot to digitize birth certificates. With this system, government agencies can verify a person's information at birth, then cryptographically sign data related to a person's name, date of birth, blood type and other details. This information is then stored on the blockchain and is only accessible with consent from a legal guardian until the person becomes a legal adult.
In these cases, and others, blockchain improves accessibility and creates highly resilient records so localized shocks and stressors do not hinder residents or government agencies from accessing the records they need, when they may need them the most.
Blockchain is a powerful tool for cities to leverage in uncertain times where business as usual will not cut it. Blockchain can do more than move assets around; it can build more adaptable and resilient cities. This growing technology can help cities save time and money, which can then be reinvested into better infrastructure and other critical community projects necessary to manage our riskier future.