What Does Blockchain Mean for Urban Systems? : Part 3 of 3

Blockchain technology is a culmination of many different digital concepts, as discussed in our introductory post. But what makes it groundbreaking is the idea of radical decentralization that this technology offers. Decentralization at a large scale is very powerful and can transform how a city functions and how people interact with each other.

For example, LO3, A New York based startup, piloted a blockchain based energy microgrid in Brooklyn. Through this, residents of a neighbourhood can buy and sell renewable energy from each other directly. Residents with solar panels can sell excess energy to their neighbours. LO3 believes energy being locally distributed is far more reliable, efficient, and cryptographically secure.

A three year EU-funded project, called Decentralised Citizen Owned Data Ecosystem (DECODE), launched in Barcelona and Amsterdam in 2017 as an experiment. This project uses blockchain technology to collect data from citizens to get insights of people behavior, like how public spaces and transport is being used. The system gives the citizens privacy protection and the freedom to choose how their information will be used and by whom.

Blockchain also enables the sharing of various kinds of assets with trust and security. It can be widely used to buy, sell, rent assets and services like cars, equipment, real estate and land, peer-to-peer in a secure manner. The barriers put in place for regulation become redundant in the context of blockchain transactions.

Blockchain technology therefore gives us the potential to achieve great strides in moving cities along in their aim to become ‘smarter’, by adding the concept of trust through radical decentralization. It however also has the potential to address some of the most entrenched challenges in cities today such as the problems of equity and resilience – and while these applications are not as straightforward to implement as some of the ideas above, they provide powerful tools to intentionally shape the urban systems of the future.

One such challenge is in informal communities within global cities that are perpetually on the back foot in terms of resilience and development. They suffer from negligence and bureaucracy. The inhabitants of informal settlements are often stuck in a vicious cycle of poverty and the lack of education, where lack of finances hinder education and the absence of education becomes a barrier in financial stability. These settlements lack legal documents and residents often don’t have bank accounts, preferring to operate outside the formal economy. This makes it difficult for financial institutions to provide support.

Blockchain applications could be a medium to enable equitable development in these communities through the idea of decentralized transactions that can engage with the systemic issues of trust arising from informality.  For example financial platforms built on blockchain can enable easier transactions without the dependence on third party institutions. This helps people transact directly with each other, mimicking the structures in informal communities while creating accountability, without the struggle of layered processes and bureaucracy arising from centralized, ‘formal’ operations.

Bitland, an African blockchain based initiative, is working towards legalizing informal lands and putting them on the ledger. For it’s pilot project it chose 28 communities from south Ghana to help legalize the land. Owing to rampant land disputes, corruption and nepotism, land displacement and insecurity is prevalent. Bitland attempts to authorize the land and record the title on an open ledger that is immutable.

Land stability coupled with accurate tracking methods, can also make it more convenient for micro-finance institutions to extend their loans to residents of informal settlements. Blockchain can make data collection and monitoring less cumbersome, thus enabling banks and investors to be more involved with reliance. This kind of support at a foundational level will lead to stronger enterprises, better standard of living and progress in education.

Even government institutions can be held accountable through the means of transparent blockchain platforms. The platform can track the actions and expenditure earmarked for different sections, especially for informal settlements.

The agricultural sector can also see a great step ahead with this technology being applied to the occupation. Farmers can sell their produce directly to the market without the need of a haggling middle man. All these transactions can be transparent, fair, immutable, and with real-time payment, thus further empowering individuals.

Decentralization unfreezes the hold of authority among a few and distributes it equally among all the stakeholders. But the idea of blockchain facilitating equity and resilience in informal settlements is a Utopian one. There is a long way to go with plenty to be explored. Services and technology have a tendency to spread through trickle down effect from the developed to the developing. Thus for blockchain to make a real difference in development, NGOs, social entrepreneurs and other  external bodies will need to actively work towards bringing this system to the people.