Blockchain in Action: AI, IoT Make Cities Run Better, Faster, Cheaper

Welcome to the eighth article in PYMNTS’ Blockchain in Action Series.

Most people at least know that blockchain is the technology that bitcoin and other cryptocurrencies are built on, but a digital ledger that timestamps and orders transactions in an easily trackable and immutable way has many more uses.

See also: Crypto Basics Series: What’s a Blockchain and How Does It Work?

In this Blockchain in Action Series article, we’ll look at the ways smart cities are using blockchain and Internet of Things (IoT) technology to make cities run better, faster and cheaper.

Blockchain in Action: How to Track Anything in Real Time

Blockchain in Action: Combined With IoT, Blockchain Can Fight COVID

Blockchain in Action: Creating a Private, Unhackable and Trusted Digital Identity

Blockchain in Action: TradeLens Connects Shipping, Customs, Trade Financing

Blockchain in Action: Healthcare and Pharma Blockchains Are a Matter of Life and Death

Blockchain in Action: Taming Complexity, Costs in the Insurance Business

Blockchain in Action: Government Records That Can Lift People Out of Poverty

It’s an oversimplification to say that a smart city is a scaled-up version of a smart home, but it does give most people a general idea of the concept.

Instead of connecting your thermostat, lights, locks and TV onto one system where you can control everything by speaking to Alexa and teach the thermostat to lower the temperature when all the lights are out, smart cities can conserve energy, make services more accessible and even reduce costs and paperwork.

Smart cities use blockchain technology as the backbone of an interconnected and interoperable system that can run a network of IoT air quality meters and use artificial intelligence (AI) to do things like monitor bus drivers for signs of fatigue and stress in real time.

That latter one is in the smartest of smart cities, Dubai, where the Smart Dubai Strategy has built a blockchain-powered system that aims to have more than 1,000 smart services available by 2028.

Ahead of the Game

Other aspects of its systems include four automated police stations where residents can pay fines, report accidents and even file quality-of life-violation complaints. It aims to remove paperwork form all municipal transactions — something the government believes will save it $245 million alone.

However, the smart city system is not limited to the government. It can be used to buy event tickets, pay bills and track packages.

Some projects are more complex. In a city where water is a precious enough commodity that waste is more than an environmental or financial concern, the Dubai Electricity and Water Authority (DEWA) has built a smart leak detection system built on small, floating IoT spheres that travel through pipes, sewers and other systems listening for leaks. Those are reported to the system, where smart contracts forward the data to the appropriate person or department of DEWA, or the companies its system interacts with.

The system saved almost 70 million gallons of water and $750,000 in nine months, WaterWorld reported in February. It also cut water network losses to 5% — about a third of the U.S. average.

With the system, DEWA uses some 8,500 IoT smart devices to “monitor the water transmission network in Dubai remotely, [and] collect data round the clock” while running the water pipelines, pumping stations and storage facilities, said Saeed Mohammed Al Tayer, managing director and CEO of DEWA.

More broadly, Digital Dubai projects that it saves $1.5 billion annually through its various smart city projects.

Follow the Trail

The thing about smart cities is that they combine a lot of the capabilities of blockchain systems together: This starts with tracking everything from paperwork to supplies, and putting them on an immutable record of when something was done and who did it. Digital files can’t really get lost, because if you’ve got one stop — one transaction on the blockchain — it can be tracked forward and backward. And it never forgets or loses data.

In that, it isn’t unlike the techniques used to track and identify hackers and ransomware thieves who are trying to off-ramp crypto while obscuring their identities — you can track any new transactions in real time, but also look back at previous transactions linked to the wallet the stolen digital assets are stored in.

In February, the people who allegedly stole $4.5 billion in crypto (at current prices) from Bitfinex in 2016 were tracked to the purchase — years later — of a Walmart gift card, which required know your customer (KYC) data.

See also: Crypto Crime Series: Bitfinex Using $3.6B Seized in Hacking Arrests to Cover Shadow Banking Losses

All Together Now

According to the World Economic Forum (WEF), which serves as secretariat for the G20 Global Smart Cities Alliance, blockchain technology is crucial to smart city projects, which it says require openness and interoperability — two things blockchain excels at.

There are three “layers” of organization for a smart city, the WEF said.

The top layer is a business layer, which covers things from legal and governance issues to data standardization. The bottom is the infrastructure, which includes a managed, or enterprise, blockchain and hybrid cloud technology.

The glue holding them together, it said, is the layer of self-executing smart contracts, authorization and authentication rights maintained on the blockchain that links the various departments’ and services’ systems together.

One key to the success of a smart city is interoperability, experts have said.

“In smart cities, all devices connected to an internet-of-things network can receive and relay data and execute commands,” industry news outlet IoT For All said. “Data from city sensors can be converted into tradable tokens.”

That allows a privately-owned parking lot with sensors at every space to relay information to a parking spot search service on where parking is available — allowing business owners to recoup the sensor investments.

It could also be connected to a municipal system that uses parking meters that monitor and report empty parking spaces on that same map while also automatically charging registered drivers.

And that can be hooked into a system that not only finds free electric vehicle parking stations, but lets drivers know if they are compatible with their model and even — in Birmingham, England — if the charger uses green energy.