While most of the buzz surrounding crypto surrounds digital coins like bitcoin, the real value of crypto is in combining the technology that supports these coins – the blockchain – with other existing infrastructures and systems.
One such combination that offers a number of exciting opportunities is the combination of blockchain and IoT to create Smart City Platforms. Blockchain and the Internet of Things enables local municipalities, governments and businesses to grow their local economies by combining the use of tokens with digital wallets and smart commerce.
Smart City Platforms offer cities, countries and organizations the ability to create a local economy that supports community participation, keeps money inside the community and provides a framework of interaction between people and services.
First, let’s look at the exact intersection of technologies that would power such an initiative:
- Blockchain – This technology offers an immutable ledger that provides a public and accessible database to all citizens. Blockchain allows citizens to create a digital identity that they have control over and it allows the organization or municipality the ability to create a token economy to support the community.
- City and Communities – Before discussing the internet of things, let’s discuss the internet of people. A single city, community or organization offers a network of people with the ability to stimulate a community economy that can become self-sustaining.
- Internet of Things – Using the IoT, the city or organization can collect information on how people interact to inform and maintain the Smart City Platform.
What is a Token Economy?
When we talk about a token economy, we aren’t talking about an ICO meant to raise funds for the city or creating crypto enabled microbonds as some cities have suggested. While the community will set a value for the digital token, the goal of these tokens should not be to exchange them for money. These tokens are meant to work inside the city, like an arcade token, to ensure exchanges stay within the community.
The token economy can be used as a way to reward community participation, offer municipal services and encourage peer-to-peer transactions. The exact value of your digital tokens will be determined by how you choose to use them and how they support your Smart City Platform as a whole. Here are a few of the uses for a Smart City Platform that can benefit a community:
Smart City Platform Keeps Money Within the Community
The main goal and challenge of any community is to keep exchanges and money inside the organization rather than letting it flow out of it. When people are buying everything from Amazon rather than local businesses, for example, the community as a whole suffers.
The token economy is just one example of how a Smart City Platform can create a system that enables local businesses and services to take precedence. Through a Smart City Platform, the city can make searches smarter and local, so local business searches show up first.
The goal of the entire platform is to attach citizens to services and community by highlighting these local options and offering a simple and incentivized way to facilitate these exchanges. With the creation of a smart wallet for every citizen, the city can remove the middleman and link each individual to their digital data and blockchain assets. This enables greater peer to peer transactions through a variety of currencies — including dollars, city tokens and other digital coins — which eliminates the need for third-parties like credit card companies.
Digital Wallets Allow Sovereign Identities and Control of Personal Information
Another major use case for these digital wallets is the ability for each person to control the personal information they share.
Currently, when someone sends information to a database, whether they are submitting medical information to a hospital or showing their I.D. at a bar, they lose the ability to retract or change that information later. They are giving up more information than needed and allowing the other party to do whatever they’d like with the information.
By creating a sovereign identity, individuals can control their personal information on a single, decentralized database. For example, instead of revealing all of the information on a driver’s license, users with a sovereign identity can choose to only share date-of-birth or whatever information is required for a given transaction. They can easily provide digital verification and share certain parts of identity while controlling others.
Digital Identities and Tokens Provide City Services to Homeless and Refuge
The ability to create digital identities, tokens and an IoT platform is particularly useful for providing assistance to homeless and low-income individuals.
Currently it is very difficult to offer services without an address, but digital identities offer a new solution that does not prevent people without addresses from leveraging city services. These digital identities can be used to create contact information, identification and can track the use of city services. This also makes it easy for the municipality to issue tokens as aid and restrict what these tokens can be used for, contact homeless individuals with shelter information and provide a number of other services that would have been limited by the lack of a home address or other contact information.
Cities, governments and other organizations have looked into blockchain and IoT for years now, but the idea of combining the two is only starting to become a reality. This integration and the creation of Smart City Platforms promises to create smart citizens, smart commerce and a community that works together to grow.