Integrating Blockchain into the Smart City
What is Blockchain?
Bitcoin was launched in 2009 and introduced the blockchain technology to the world. Blockchain is a technology to record data, duplicate, distribute and share information with other users on the system known as nodes. Whenever new data appears on the chain, new record will be added to all ledgers in the network. Since information on the chain is distributed to many different users, that makes it difficult for anyone to change the data or hack the entire system. Blockchain is a type of Distribution Ledger Technology (DLT) in which data or transaction is recorded and hashed into a block with an immutable cryptographic signature.
What is a Smart City?
A smart city utilizes new technology, including sensing technology, Internet-of-Things (IoT), high speed communication network and artificial intelligence (AI), to improve its standard in manufacturing, automotive, transportation, public services, home security, housing development and utility. Environments are monitored by sensor chips which process the data stream. Data processor will collect data and analyse data. Data patterns will be studied by AI to predict the future outcome in the smart system to trigger an alert or action. Equipped with a smart management system, urban planners will be able to retrieve accurate information continuously and optimize city infrastructures to satisfy citizens’ needs.
How do Blockchain and Smart Cities affect our personal life?
Banking and financial industry has been adopting blockchain technology to increase their efficiency and to reduce transaction and operation cost for some years. Transaction speed has been reduced from a few days to seconds. Much settlement work has already been eliminated. Since blockchain technology has solved the double spending problem in a decentralised manner and gained the trust from users, people have confidence to proceed peer-to-peer transactions without a centralised authority or any intermediary involved. Users can transfer money to anyone or even overseas via mobile app without having a bank account.
Many assets have been digitised. Loyalty points which are given to reward a customer spending with the merchant, air mileage which are given to reward travelers flying with the airline company, credit points of ecommerce gift cards and in-game assets of an online games can all be recorded onto blockchain and converted into digital assets. An individual, who has extra air miles, can convert his/her air miles to credit points of gift cards then purchase goods at the online shop.
Most of the global top universities have established credential records on blockchain for students and employers to verify academic history in order to prevent scamming with a fake certificate. Graduates can show their digital credentials without carrying the physical paper anywhere. Employers can verify the candidate information from the university official websites.
Identification card, driving licence and passport information can also be uploaded onto the person’s mobile device with a blockchain application for personal data verification. Whenever a company requires personal information, the company can request access for a particular data through the mobile app. The person then can grant permission for the company to read certain information without disclosing everything. For instance, a person can fulfil the age verification only in order to access a porno web site.
When the identification data and bank account information have been stored on blockchain, people can find freelance work online. Employers can pay the freelancers via blockchain after the work has completed and their job histories will be confirmed by the employers and recorded on blockchain as working experience of the freelancers. People can buy air tickets and grant access to the airline company to verify personal information. Counter check-in process at airports can be made more efficient.
Nowadays, the most advanced refrigerator has vision sensors installed to monitor your food inventory. It will learn what food and beverages are consumed daily, such as milk and eggs. When the processors notice the bottle of milk is missing in the refrigerator and your coffee machine has run out of beans, they will send reminders to your mobile device. Eventually, your application will search for the same brand of milk and same type of coffee bean from online shops and order the cheapest available to refill automatically. Currently, electronic equipment with voice sensors, such as Alexa speakers, can listen to your talk to make online purchases.
A smart home monitoring system installed at home has vision sensors to study your daily activities, such as the time of getting out of bed in the morning as well as the time of going to bed at night. Studying your daily pattern of movement, it can predict your next move and analyse your health condition. For instance, when you get out of bed, the vision sensor will connect to the coffee machine to make a cup of coffee. When you sit on the sofa in the living room, the television will turn on. When you go to bed, the entrance door will lock and all the lights will switch off automatically. When you do not get out of bed as usual and walk slower than normal, the smart system will connect to your mobile device and open your clinic application for you to answer a few diagnostic questions. Once it identifies your disease, it will order medicine for autonomous delivery. Of course, when you fall on the floor, the smart system will call an ambulance to rescue you.
Medical history and health records are uploaded by healthcare workers onto blockchain. Once the customer submits a claiming form through the network, the insurance company can retrieve the patient’s file from the chain immediately without asking anyone at the hospital to fill in a questionnaire form. The review process of insurance claims will be much simpler, so the patient can receive the compensation quicker than before.
Ultimately, if you suffer from hyperglycemia, you will be restricted from making any purchase of candy, cake, soft drink and sugar, as those payments will be banned by blockchain. When your medicine is finished soon, your local pharmacy shop with your medical record will prepare medicine for you in advance and remind you to collect it. Information will be sent to your car which has internet-of-vehicle installed, so it will navigate you to the pharmacy shop to pick up the medicine before driving you home.
How do Blockchain and Smart city affect businesses?
Retailers, supermarkets and merchants have already connected their check-out system to their inventory management system for many years. With the surveillance cameras, vision sensors and motion sensors, the shop can identify which shelf has the most customers, which products can attract customers and which products are rejected by customers. Analysing those data, the retailers can improve their product range and optimize their sales by rearranging their products.
Now, retailers connect their payment systems and customer information on blockchain together. When their inventory is running out soon, the system will analyse the market demand of the product in the coming month and adjust the amount in order to refill the inventory automatically. The retailers will also keep contact with the customers for after sale services and provide services in multiple phases by utilizing the smart contract technology. For example, additional warranty services charge can be offered in a 3 years team or 3 sequential annual term. Together with facial recognition technology, customers go into the shop, grab the goods and walk out without checking out at the counter. These sensors can identify the customer and direct debit his/her bank account immediately and automatically. Shoplifting will not succeed.
Property rights and legal documents can be digitalized and filed onto blockchain, especially for expensive real assets like master art pieces and real estates. Ownership record on the chain becomes transparent and immutable. In addition, high-end real estate can be divided into many small fragments and purchased by small investors via token sales in blockchain. Each token represents a small portion of ownership of the property. Furthermore, staying at a luxury villa by the beach on a particular day, can be tokenized as a non-fungible token (NFT) and sold through an online auction platform. People can bid to win a special event on the NFT marketplace.
The most crucial task of an auction house is to identify the counterfeit product. The producer can now insert a tiny IoT device into his/her art piece and mint it as a NFT as a digital signature, then the location of product can be traced on a website and its ownership can also be identified on blockchain. As a result, counterfeiting becomes very difficult.
How do Blockchain and Smart City affect industries?
Once a purchase order is received by the computer system of a factory, the factory will collect and prepare all the necessary material for production. Incoming material will be identified by vision sensors and transferred via assembly line for robotic manufacturing. When the production is completed, the computer system will send delivery notice to the buyer and the product will be shipped or delivered by autonomous truck.
Blockchain improves the trade finance process of import-export business. Once the buying order is received and recorded on blockchain as a Letter of Credit, a commercial bank which provides trade financing can access the trade agreement and lend money to the manufacturer accordingly. Since commercial banks will attach the Term of Credit onto the blockchain, it can ensure the buying order will not be financed by multiple lenders. With the smart contract technology, the bank can monitor the process of exports, receive notification of shipment arrival and access the approval letter from customs in real time. When the importer confirms delivery, digitally acknowledges the receipt of goods and triggers the payment, the smart contract will settle the loan and transfer the balance to the manufacturer automatically. Trade finance on the chain can enforce anti-money laundering (AML) activity and reduce transaction fees, as it is more transparent and more efficient with less paperwork.
Utilizing the blockchain infrastructure, the manufacturers can retrieve the information of end users and send relevant information to them. When a part of a product needs to be replaced, the manufacturers will obtain the exact part numbers and the geographical location, prepare and deliver the product accordingly. For example, a vehicle connecting to the internet will receive updated software from the manufacturer and it will send driving data back to the manufacturer for analysis. Manufacturer will have the data of the driver’s personal information, his/her driving practice, the road condition and the addresses of destination. With all that data, the car can eventually drive you to work, park itself somewhere near your office and come to pick you home after work. Alternatively, while you are working in the office, the car can become an autonomous Uber drive to make rides for customers and earn money.
One day, when your car breaks down, it will run a diagnostic test itself and send data back to the chain of manufacturers. The manufacturers can either fix it remotely or analyse data for further process.
How do Blockchain and Smart city affect agriculture, food and beverage industries?
Blockchain has become important in the food manufacturing sector, bringing transparency throughout the supply chain. It can prevent food scandals and enhance food safety. Deteriorated ingredients, perished food and contamination can affect human lives. In the old days, labels stuck on the food package was the only information available for customers. If the information was wrong, customers would not know until foodborne diseases threaten public health. Customers now demand more information from farmers, processors, food manufacturers, wholesalers and distributors to protect themselves.
Nowadays, a farmer can receive a digital organic food certificate from an authorised organisation, and he can display his certificate to the food manufacturers via the blockchain network. Food retailers will be able to read the type of fertilizer and the harvesting time of the fruits and vegetables.
For a winery, the information about the source of grape seeds, the location of planting and the type of soil can be uploaded onto the blockchain. The customers can access the information including the list of ingredients and the type of containers. Furthermore, by inserting a tiny IoT chip and minting a bottle of wine as an NFT, wine producers can sell their wines on the internet and customers can easily authenticate the products on the chain.
Similarly, milk producers can adopt blockchain to record the source of milk, the type of supplement feeding the cows and the day of pumping milk. The milk powder producers can further provide their manufacturing date, location of factory and relevant detail onto the chain to ensure the quality of their products.
Fishermen can record the information of fish and shrimp onto blockchain, sharing the data of location and day of fishing, the hatching period and the breeding conditions. All relevant information can be retrieved from a QR code printed on the food packages for customers to trace.
Some perishable food and medicine are required to keep in a certain degree of temperature. Their delivery trucks, which have been installed with temperature sensors and are connected to the internet, will control temperature inside the truck and transmit information to the blockchain for customers to monitor in real time. Alert will be triggered by the sensor when the truck temperature does not reach the required standard. Customers will be notified by the smart contract, so they can reject any delivery that is damaged on the journey in order to ensure the quality of food and medicine.
Livestock farmers in China are now using AI, IoT and blockchain to raise pigs organically. Each pig wears a wireless radio frequency identification (RFID) tag which is used for identification and transmitting data to a computer for analysis. The data of breed, age, weight, eating, exercising, temperature, movement and acoustic character of each pig are collected for herd behaviour and health analysis. Utilizing those advanced technologies, the farm has increased annual production significantly and lowered the death rate by 3%.
On the blockchain, the data of breeding, feeding, weighing and vaccination are provided by livestock farmers and veterinarians. The certificate of slaughterhouses and processors are also recorded and traceable, too. Customers can obtain much more information than before.
How do Blockchain, AI and IoT transform the cyber world?
Blockchain, AI and IoT are converging. Developers and engineers are building a cyber world of Internet-of-Everything (IoE), converting everything digitals and merging them into blockchain and sharing on cloud servers. So, a high speed and stable cyber network is of utmost importance for our future development.
Blockchain helps businesses to increase operational efficiency, eliminate human error and reduce human work. Governments find it easier to share data with the public via blockchain. Therefore, when everyone needs to go into a platform to gather data, blockchain is the best place to interact with each other now. Individuals, businesses, governments, non-government organisations and academic organisations are embracing those advanced technologies to share information and enhance efficiency.
When every node with assigned tasks is recorded on blockchain and connected with IoT, the application devices on the network will be able to identify and authenticate each other to work automatically. However, although data on blockchain is hard to be tampered with, the IoT network is vulnerable to malicious cyberattack. So, cybersecurity cannot be neglected or the whole development will be destroyed.
New business models in the new technological era
We are living in a digital world where technology is improving daily. Those advanced technologies have been disrupting many industries and affecting our way of living directly as well as indirectly. The combination of blockchain, IoT and AI has been creating many new innovative products for customers and providing unprecedented opportunities for companies.
Those advanced technologies not only make a city smarter but also provide a lot of convenience to everyone and every organisation. People can retrieve massive amounts of information in real time. Organisations are operating at the optimal level. Communities can utilize all available resources to increase cost efficiency and reduce waste to sustain the whole ecosystem. Eventually, the goal will be connecting all blockchains into one entire chain to share all information with all nations inclusive.
Written by Ms. Florence Ip. Edited by: Dr. Kyle Wong
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