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Smart money for smart cities

(Image credit: Image Credit: Jamesteohart / Shutterstock)

In recent years, ‘Smart City’ has gone from a phrase that implied visions of science fiction and the far future, to a buzzword dropped into every other article and conversation, to - finally - something that is now starting to become reality for many people all over the world. With the development of more and more IoT devices and connected objects, even those of us who would not consider our towns to be ‘smart cities’ see our homes and cities becoming more intelligent and connected every day.

According to research, by 2025 the number of megacities is expected to reach 29. Smart cities are already being recognised globally and many are utilising blockchain as the foundation of plans to enhance urban living. 

In 2018 we saw smart city technology developing faster than ever before, and with the global smart cities market expected to grow to USD 757.74 Billion by 2020, it is clear that this trend is only going to continue. 

With technology revolutionising the way we live and work, what better time to also address some of the deeper issues with our current society. As well as being more connected and intelligent, the first smart cities will also be the sites of large-scale, bold regulatory reforms. These smart cities are expected to become the sites for far-reaching social experimentation and changes to society.

Blockchain and smart cities

It should come as no surprise that the other key technological revolution of our time will also bring about fundamental advantages and changes to the way smart cities operate. This technology is, of course, blockchain.

Blockchain is capable of revolutionising the way we do almost any kind of transaction, and even something as complex as a smart city is ultimately multiple simultaneous transactions.

The underlying platform on which all the interconnecting technologies of a smart city is run must be fundamentally reliable, trustworthy, transparent, and, critically, unhackable. Blockchain technology is all of these things, as it is able to process unimaginably vast amounts of data, in an efficient and secure way. 

Smart money

One example of an area of smart cities that blockchain can have an obvious impact on is currency and money. The concept of smart money for smart cities has gone largely under the radar until now, but let us consider it.

Traditional economic systems only award value by the exchange of money in a transaction. However, in a smart city, transactions serve the purpose of exchanging crypto tokens, which can then later be exchanged for digital currencies or real-world currencies. This is similar to any digital exchange of money, but it is completely secure, meaning no aspect of the transaction is hackable. 

Today, our economic transactions rely on banks as third-party facilitators and enablers - but using secure blockchain technology to facilitate smart money would ultimately eliminate the need for banks. Banks and paper money are brick and mortar institutions, while smart money using cryptocurrencies and smart contracts are digital realities. By obviating the need for banks and paper money to enact transactions that relay value, the resulting digital currencies are, effectively, smart money.

Benefiting society

Consider the benefits that could be brought to society through the use of smart money in smart cities. The smart city central computer could have the power to award crypto tokens in return for actions and behaviours that are deemed of benefit to society - something that is made possible through the decentralised system, with just the consent of the people participating in the system.

In a smart city such as this, where a central computer distributes digital tokens in return for actions, whatever value has been assigned in the computer for an action with result in an award of tokens for that value. This amounts to the monetisation of service by virtue of consensus, allowing us to completely overhaul many injustices currently suffered in today’s society.

For example, in this smart city, there would be no such thing as a gender wage gap resulting from human bias. There would be nothing subjective about the assignment of value to different actions, so no question about the value of crypto tokens awarded for certain actions. Everyone doing the same actions and job would earn the same number of crypto tokens. Thus, any resulting wage differentials could only be the result of self-selection bias.

Going one step further, the very concept of poverty will be challenged in the smart city of tomorrow. Poverty, as we know it, is built into brick and mortar economic institutions that rely on exchanges of physical currencies and the perpetual existence of hierarchies of trust, power, and authority to approve everything. 

In every hierarchy, someone is at the top and someone is at the bottom. Yet, in a decentralised economy where tokens are awarded for actions and transactions, there would be no reason to imagine that people would be abandoned or set apart because they do not have great jobs, access to abundant resources, or enough money to survive. The decentralised economy could be less authority-based and more inclusive, less hierarchical and more of a sharing economy.

No good deed goes unrewarded

If everyone in the smart city has a certain baseline access to resources, then people’s behaviour and actions will determine how much they earn. When actions and positive behaviours are rewarded with crypto tokens, then an unlimited scenario of new revenue streams will open up in the smart city.

As a crude example, a person who took it upon themselves to clear the pavement and driveways on their street when it snows would be awarded a certain number of crypto tokens because the central computer would register this as a prosocial action. This would entice more people to do good works in their community to earn crypto tokens.

To take the idea further still, in this smart city parents who elect to stay at home taking care of a baby or child would no longer earn nothing for the invisible work done. A parent who engages ongoing caregiving would be rewarded tokens for the actions they undertake. No longer would the people doing what many consider to be the hardest, most important job in society, to work for no pay.

Every positive, useful and necessary action will have value in the smart city of tomorrow - and the person doing this will be rewarded fairly.

Bruce Khavar, CEO, A-Nex (opens in new tab)
Image Credit: Jamesteohart / Shutterstock

Bruce is an entrepreneur in business and inventor of ground-breaking technologies and is currently working to launch a redesigned architecture of blockchain alongside the role as CEO of A-Nex.