Smart cities are more than just sensors ushering you to an available parking space, standby street lights, or drones monitoring air quality. Citizens are the most important component in the smart cities of the future. We need their participation in order to collect data, track movement, share knowledge, and most importantly, resources. All of this is possible in the next few decades, but an important first step is to figure out how to incentivize citizens to get on board.
Blockchain has the potential to be a trusted connector between citizens and their governments by incorporating incentives to motivate citizen behavior. From its roots, blockchain was designed to be incentivized, allowing crypto miners to reap rewards by “solving” a puzzle within the system. With blockchain, software applications no longer need to be deployed on a centralized server; They can be run on a peer-to-peer network that is not controlled by any single party. The decentralized nature provides a space for citizen involvement that could change the way we redistribute food, energy, and even cell phone minutes.
The energy sector is where we see the most developed adoption of blockchain and incentivization. A reported $300M was invested in blockchain energy startups in the past two years. But these solutions vary on how they incorporate the technology. Some, for example, are using the incentivization aspect to empower green energy companies and get more renewable projects off the ground, utilizing tokens and crowdfunding.
Others have focused directly on the renewable energy consumer. For example, IoT devices attached to renewable energy sources, such as solar PV panels, can be installed into consumer homes in order to track energy consumption. These hardware devices, paired with a blockchain-powered, P2P community, allow users to automatically trade their surplus energy, thanks to the power of AI. As a result, surplus energy gets to where it’s needed most, and consumers can potentially reap energy credits, or financial benefits, for participating in redistribution.
Although they come in different forms, the key here is that these blockchain-powered energy solutions all have the same DNA. They all involve around incentives for citizens who participate in the process, whether it be through an investment or placing their home devices into a virtual community.
Blockchain also creates a space for secure transactions through smart contracts with public transaction ledgers that help combat corruption and lack of transparency – issues which are presented whenever you need governments to comply and work together. The Kyoto carbon trading agreement, that led to modest reductions in greenhouse gas emissions, and recent disagreements between Germany and Brazil regarding the Paris Climate Agreement demonstrate how difficult it is to make these entities work together.
When we place the responsibility, rewards, and costs into smaller entities such as cities, communities, or individuals, the process becomes more nimble. Those who care to make it work and share resources can join in, all facilitated by blockchain.
What are we eating (and not eating) and where does it come from?
The rate at which we’re wasting food is costing cities millions — up to $400 billion annually. Food systems in smart cities that utilize blockchain could help track and redistribute that food to where it’s needed most. The WWF recently rolled out OpenSC, a program using QR codes to track where your seafood comes from and if it was produced sustainably. Users simply scan the code and can find out details such as exact fishery, and its journey along the supply chain. The technology can be transferred beyond seafood to other supermarket items such as chicken, citrus, and more.
When citizens know where their food is coming from, it builds a level of trust between supplier and consumer. With the level of transparency that comes from tracking food production on the blockchain, producers may also amass knowledge about their consumers, allowing for more efficient distribution of food and an increase in direct-to-consumer practices. This knowledge could also be shared with consumers (or their IoT devices), allowing them to re-allocate their extra resources to where it’s needed most, a concept that is already developing in the energy sector.
Select what you share
Incorporating blockchain into how we communicate also presents enormous potential to decentralize and participate with citizens. Our smartphones travel with us all the time, functioning as a data collection device for where we’ve been, what we like to eat, watch, and who we connect with. However, all this data is currently in the hands of a few tech giants who utilize and monetize it for their own purposes.
“…There’s something deeply wrong right now because people don’t own their digital identities; they don’t own their digital data; they don’t own their personal data. Whether it’s behavioral data, commercial data, health data, browsing data, or something else, all of that is owned by a handful of companies.” Phil Chen, decentralized chief officer at HTC, told Digital Trends.
With the release of blockchain phones and the rise of social platforms using blockchain which allow users to monetize their data, the seeds are planted for a reality where citizens communicate and control their data via the blockchain. Take for example, DataWallet, whose ICO sold out after promising that users would be able to share bits of data for a financial incentive. They’ve even made claims that this could bring down car insurance rates because companies can more accurately assess a driver’s risk.
Imagine a smart city where citizens have the option to control what data they share, motivated by incentives that allow them to reap rewards when they share extra information with the community. The possibilities continue to open up: What about cell phone minute rewards, where crypto users can win loyalty rewards on certain mobile networks? Or a signature piece of art, where individuals can purchase shares in various works of art?
Making it work
We’re moving toward a true collaborative economy. One that is not controlled by a few large intermediary operators, but that is governed by and for the people. Blockchain technology provides the framework to replace the model of top-down hierarchical organizations with a system of distributed, bottom-up cooperation. Therefore, blockchain is a key component in building functional smart cities.
Incentives can come in various forms, whether it be financial such as a monetary bonus, a prize, a credit, or non-financial, in the form of status or recognition. The incentives that future platforms choose must take into account non-monetary costs and benefits for the participant. How much time will they invest in weighing how to behave with the new system? The process must be low-friction in order to capitalize blockchain’s capacity for incentivization, creating participative and empowered smart cities of the future.