Why We Need Crypto for the Rise of the Smart City
In March 2011, Japan was rocked by a devastating earthquake that caused havoc in the island country. Aside from the catastrophic meltdown in the Fukushima Daiichi Nuclear Power Plant complex that the quake caused, one of the big impacts was the failure of the Japanese power grid, leaving many homes without power during rolling blackouts that lasted for days. The Japanese, always at the forefront of technological innovation, studied how these conditions might be prevented in future. One of the silver linings of the disaster was Nissan’s innovation in Smart City technology, in particular the creation of the Nissan Leaf – an electric car that can be powered from home-generated sources of power (mainly solar), but that can also store energy in its battery during excess production periods for use later, insulating each home from energy shortages like those during the Japanese earthquake.
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This development is a revolutionary paradigm for how cities run. Homeowners can in the near future generate, store, and trade their own electricity with their neighbours. In a world where every home has a car like a Nissan Leaf, an array of smart devices all linked together, solar paneling, and mobile technology, almost everything can be tracked and analysed in a decentralised way.
But as another community pursuing the dream of smart cities has realised, blockchain/crypto technology has a big role to play. A community of environmentally-minded residents of Brooklyn, NYC have set up their own energy ecosystem with the aid of blockchain technology and solar panels. They use ledger tech to manage, trade, and track energy generated between themselves, in a decentralised and transparent way.
In this way, crypto and ledger technology are going to play a big role in the future of smart cities for some very important reasons.
Ledgers: The bricks and mortar of the Smart City
At its most fundamental level, crypto is programmable money that doesn’t require a central authority. With this in mind, it is easier to see how crypto and ledger tech will underpin the future of censored cities. The thousands of apps you use to monitor your apartment and energy use, to pay for complex sensor-based transactions, and for groups of people to make collective transactions between themselves will require value transfers that have built-in rules and that don’t require a central authority to constantly enforce ownership.
One of the major ways that conventional money and data transfer will fail in the future is when a whole ecosystem of private companies with siloed systems need to interact in complex ways. Crypto platforms can act as middleware for these business interests.
On a more serious level, ledger technology can ensure that Smart Cities work for the inhabitants and not to their detriment. In a future where everything is trackable and all your moves can be detected by technology, the sheer amount of data generated will be extremely dangerous if it fell into the wrong hands. Crypto researchers have worked for years on how to selectively reveal certain information in decentralised contexts, preventing the wrong actors from having access to the complete dataset. Blockchains and ledgers can have in-built rules that prevent unwanted surveillance and data access. And on the flip side, they can ensure that information that should be publicly available remains so. Decentralised ledger technology can be designed to ensure both privacy and transparency when needed.
Making ledgers ready for the Smart City
Of course, the pace at which crypto is progressing is raising these issues faster than it can find solutions for them. But promisingly, there are a whole category of projects that are seeking to make technology ready for the new urban paradigm.
Aside from the Brooklyn community project mentioned above, there are some other projects targeting more fundamental issues in the space to enable new use cases. One such concern is the capacity for ledger technology to underpin the thousands of data transactions that will occur per second in the Smart City of the future. A promising development is the rethinking of blockchains and their design. Instead of linking every new block of transactions together as happens in Bitcoin, data structures known as Decentralised Acyclic Graphs (DAGs), as brought to popular awareness by the IOTA project, allow for vastly improved throughput and speed of data transfer by developing a network where not every transaction needs to be registered immediately on a new block held by each full node.
In essence this means that “mining” as happens with Bitcoin is all but eliminated. Transaction fees are drastically lower and the whole network moves faster. This capability is essential for a city with millions of sensors and many smart contracts built on top of them.
Another project seeking to bring the DAG concept even further is CyberVein. Their platform has retooled the DAG concept to leverage a new form of consensus algorithm which is call Proof of Contribution. The goal of this system is to make large data transfers feasible through a DAG network, while providing means to manage and process databases in a distributed and secure system. Smart Cities will require a lot of data capacity but also high security thresholds, which is what CyberVein are trying to contribute.
Smart Cities done right
The challenge in the near future will be to encourage governments and corporations to realise the potential of networked urban areas, while also protecting citizens. In every sense crypto will play a role.
Images via CyberVein
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