Could the Bitcoin blockchain one day run your entire city?

The smart city is not a pipe dream, but it is a big, intimidating problem. We’ve become very good at networking together devices and their people. But modern cities are uniquely monstrous entities, often with millions of individuals creating billions of variables each and every day. It’s not just about tracking and coordinating all these variables in an efficient way; it’s also about doing so safely and securely. If you think cyber war is a threat today, wait until it could shut off power to whole areas or individual homes, bring all transportation to a grinding halt, and even mess with the city gardeners! As we inherit the advantages of automation in civil planning, we gain the disadvantages as well.

But there’s one up and coming software technology that was specifically designed to coordinate lots of things safely and securely: the blockchain, which was first brought to the public’s attention through its use in the Bitcoin cryptocurrency. Also known as a cryptographically secured distributed ledger, a blockchain keeps a cloud-based copy of organized information (basically a spreadsheet) and continually performs the tough computational work of encrypting it all in close to real time. That sounds like exactly what we need, and in fact cities in China, the United Arab Emerates (UAE), and elsewhere have been eyeing the technology to deal with their smart-city needs.

The idea is that by using a cryptographically secured and totally decentralized authority that can work at the speed of a computer, we should be able to keep power distribution, water treatment, self-driving transportation, and much more from ballooning beyond all practical limits as cities continue to grow. With a robust public blockchain in place, cities could provide payment options for every business — why use your old plastic card, losing a fraction of the payment to an intermediary like a bank or credit card company and driving up the price, when you can transfer money quickly and securely, directly to a business owner?

However, in many ways the true promise of the smart city is what it could do to shrink the communities of modern urban environments, bringing people together with well designed enhancements to the city’s level of interactivity. Smart coordination could let people intentionally organize much more easily by providing geolocated digital services, or easy event promotion to local citizens. It could also, under a more aggressive model, intentionally funnel people through their day so they end up being exposed to more social interaction, or more community culture.

At this point, it seems more likely that personal objections to the invasiveness of the programs will do more to block smart city functionality than technological barriers.

There are basically three reasons to turn to the blockchain for a smart city: You’re an insurgent power in search of distinguishing features and the capacity to somehow continue your current, enormous rate of growth indefinitely (China); you’re a holiday destination with an economic incentive to stay ostentatiously futuristic (Dubai, in the UAE); you’re becoming so unwieldy that the concept of continuing to organize via old-world systems is just absurd (Los Angeles, maybe?).

blockchain linus headIt’s a risk, certainly, since any new technology can fail or, at least, fail to live up to long term projections. There are many in the blockchain world who think it may not be able to live up to its incredible disruptive potential, and that it could be incapable of expanding much beyond its current scope. It takes an incredible amount of computing power to secure all those transactions and, more importantly, running all that computation requires an ungodly amount of electricity — by one estimate, running Bitcoin could soon take as much energy as Denmark.

Not just for smart cities, there are multiple pushes to avoid this fate — from the enormous open source collaboration of the Open Ledger Project to the more closed academic approach of, there are plenty of bids to fix the blockchain before it breaks, potentially tanking it. Their main goals are to figure out how to achieve all the blockchain’s core functionality, with no downgrade to security, much, much more quickly and efficiently.

Even with a hypothetical Blockchain 2.0, however, one efficient enough to allow millions of transactions per day, we’re going to need a method of power, both computing and electrical. The city could just provide all this and run the blockchain as a pure social service, of course, but that would be extremely expensive. It would also centralize power, undoing some of the distributed nature of the service and potentially undoing one of the blockchain’s core appeals to security.

blockchain linux 2

The basic trade-off of all current blockchain designs is that someone has to donate the time and money necessary to process changes and secure them cryptographically. Classically, that has been achieved by coupling the blockchain to a cryptocurrency — in a sense, the blockchain needed Bitcoin just as much as Bitcoin needed the blockchain. This means that if you’re going to make and maintain a blockchain, you’ll need to provide some equivalent incentive. It could be simpler when dealing with a government and non-anonymous transactions, and could in principle come in regular US dollars, rather than fancy crypto-bucks like Bitcoin or Ether. It could also come in the form of tax breaks or similar economic advantages, perhaps offloading the burden to corporations with the most to gain by exploiting such schemes.

In any case, the blockchain is simultaneously one of the only software technologies that could possibly provide for the needs of a truly smart city, and a potential dead-end that accomplishes little while breaking the municipal bank. But regardless of the tech behind it, we need to move to more efficient and successful models of living: As is often pointed out by smart city advocates, about half the world’s population currently lives in cities, but by 2050 that number is projected to increase to 66%.

How will cities — both existing ones growing to all new sizes and new ones springing up in developing nations — manage their ballooning organizational problems and stay competitive in the global market? The answer might just be the blockchain. And if not, the answer might be nothing at all.

We’re covering the birth of smart cities all this week; read the rest of our Smart Cities Week stories for more. Or read: What is blockchain, and can IBM, Intel, and big banks use it to remake the Internet?

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