Bitcoin Halving & Smart Cities

It’s quite interesting to me that 1 day after Bitcoin Pizza day, we’re exactly one year away from the Bitcoin Halving event. Here’s what Pomp said about it today:

 

“While many people understand the general concept of Bitcoin’s halving concept, the historical impact can not be overstated. This system shock theoretically reminds everyone of the digital currency’s scarcity, while in reality drastically reducing the amount of Bitcoin that becomes available on a daily basis.

 

We are about a year away from the next halving which suggests that a serious bull market is on the horizon. The legacy financial system (banks, investment firms, institutional investors, etc) has generally not been paying attention to Bitcoin during the previous halving milestones, so it shouldn’t surprise us that many of them will be caught off-guard. Obviously, the past is not necessarily a great predictor of the future, but supply and demand economics is still a valid concept.”

 

Understanding macro trends like this is crucial to knowing where the space is going and how to take advantage of that.

 

Another trend I see emerging, albeit more slowly, is the emergence of Smart Cities powered by blockchain and IoT.

 

With more than half of the world population now residing in cities and their sizes ever increasing, the concept of Smart Cities has recently emerged in order to better manage the challenges of dense urban living. Smart Cities use a variety of inputs and sensors to collect, process and interpret data in order to manage assets and resources efficiently. Data can be collected from citizens, devices, and assets to monitor and manage systems as diverse as traffic and transportation systems, power plants, water supply networks, waste management, law enforcement, information systems, schools, libraries, hospitals, emergency services and electrical grids.

 

Over 700 cities today aspire to be Smart Cities, including Singapore, Barcelona, Stockholm, and New York City. Each of these are exploring different approaches to find solutions that best serve their citizens.

 

Current projects within Smart Cities include:

 

Connecting waste bins that detect how full they are and communicate this to optimise waste management

Buses, trains, and shared bicycle networks that are connected. Their locations can then be visualized upon a digital map of the city to make public transport easier.

Connected CCTV cameras with the ability to search by objects throughout this city. For example, you could search for a misplaced red suitcase.

E-governance, or the application of information and communication technology (ICT) for delivering government services such as communications and transactions from government-to-citizen (G2C), government-to-business (G2B), government-to-government (G2G), government-to-employees (G2E) as well as processes within the government framework.

A trend towards “open data”. This refers to public policy that requires or encourages public agencies to release data sets and make them freely accessible. Typical examples are citywide crime statistics, city service levels, and infrastructure data.

 

The Problems that Smart Cities are Facing

 

Fragmentation

Smart Cities require integration of diverse hardware and software- from electric bikes to water meters, from traffic systems to connected rubbish bins. This can lead to a range of challenges, which are essentially symptoms of a common underlying problem- a lack of interoperability between data sharing systems.

 

As an aspiring Smart City, Barcelona has learnt this lesson the hard way. Antonio Conde, Cisco’s head of innovation in Spain has said in reference to Barcelona’s Smart City initiative,

 

“There are a lot of different silos, a lot of sensor vendors, a lot of different applications, and the first thing we need is a common layer,” says Conde. “The main lesson we have learnt in Barcelona is that the first thing you need to become a successful smart city is to start deploying a common platform.”

This lack of data standardisation for ease of interoperability equally affects enterprise as it does the Smart City and outsourcing the task to a third-party centralised company isn’t the answer either. As an example, for Barcelona,

 

“The aim is to create an open-source sensor network, with common standards, connected to a computer platform managed by the city itself. Barcelona wants to retain ownership of its own network, platform and data, and protect the data of its residents, yet ensure people and companies can access information that belongs in the public realm.”

While many enterprises currently offer out-of-the-box solutions to connect their service with the city, this leads to the city managing a portfolio of discrete systems. Barcelona’s chief technology officer and digital commissioner, Francesca Bria has described the problem by saying,

 

“City Hall ended up with a lot of data, with a lot of dashboards, and yet without any capacity to really use data and information to take better decisions for the public good, or give ownership of the data to citizens,” she says.

And there are a plethora of data provider types, including: public transport systems, electricity grids, water distribution systems, waste disposal services, weather data, traffic monitoring, locations of public services such as drinking fountains, public toilets, wifi networks, street webcam feeds, as well as warnings about power outages and emergencies such as earthquakes, traffic accidents, and fires.

 

That’s a lot of complexity to manage- and the point was to make urban life simpler!

Data Security and Sovereignty

Gathering the vast amounts of data associated with Smart Cities incurs another challenge. This is the potential dark side of losing control over this data concerning the city and its citizens. As Harvard University graduate student Ben Green says of the situation,

 

“And you have cities, which are caught in this devil’s bargain, where they feel they don’t have the resources to provide the services people need, and so they make these deals with tech companies that have money, but which in the long term might not be beneficial to either them or their residents.”

This data centralization has led to government firings over privacy losses in Toronto, hacking of public data and ransoms in Atlanta, and dismantling of city sensor networks in Seattle. Again, this is the dark side of data gathering. However, it is a data centralization problem. This is where a suitable blockchain offers an enlightened solution- by securing control of each data packet for its rightful owner. No more devil’s bargains!

From Fragmentation to Unification of Smart Cities

 

Smart Cities are complex enough already, so why would you want to throw a blockchain into the mix? Well, Smart City initiatives can benefit from the transparency, immutability, security, and sovereignty of data provided by a blockchain. Above all of these however, a blockchain can streamline the integrations between the diverse systems of municipalities and companies to resolve the fragmentation problem that they face. This leads to what could be called ‘Unified Smart Cities’.

 

Unified Smart City Benefits: Transparency for Democracy- Public Blockchains for Public Governance

 

Two clear features that can be ensured by blockchains are transparency and immutability. These offer multiple benefits for a city that aims to show accountable and fair decision-making and allocation of resources. Some examples of where blockchains can help this include minimising fraud, lowering the cost of trust, and ensuring transparent use of public funds.

 

Minimising Fraud

A recent study has estimated 1 in every 250 online payments as fraudulent, with a total cost to businesses that will exceed $25 Billion by 2020. The irrefutable and irreversible tracking of identities and transactions secured by a blockchain can powerfully lower the incidence of fraud and its costs. The benefits of this apply to both the public and private sectors which naturally overlap throughout commerce.

 

Lowering the Cost of Trust

Approximately 35% of global GDP is spent on trust through audits and verifications leads to 29 trillion dollars of economic opportunity being wasted at present. Given that a large portion of these pass through government audits, cross-referencing made possible by a standardized, interoperable ledger may drastically reduce these costs.

 

Transparent Use of Public Funds

The use of public funds is often criticized as at best lacking transparency, and at worst being corrupt. Moving a city’s finances to a public blockchain therefore offers several advantages.

 

Firstly, the transparent use of public funds can reduce the opportunity for corruption traditionally afforded by obfuscation. For example, patterns of awarding public contracts to particular contractors in a biased and unfair way may be made patently evident when exposed to the light of a public ledger.

 

Secondly, opening up the transparency of how funds are allocated both across departments and to the public can lead to more informed decisions on budgeting. Simply put, greater transparency offers greater democracy.

 

Thirdly and finally, running finances over a blockchain may improve efficiency of accounting. Unfortunately, the complex and occluded nature of record keeping causes appreciable friction. Using an immutable public ledger therefore offers a unified platform for streamlining the accounting of a Smart City.