Can blockchain help create the Arab cities of the future?
There can be no doubt that many Arab cities are pioneers of smart-city technologies, surpassing many of their Western counterparts and providing visions of future city living.
Dubai, for example, will have the world’s first unmanned aerial taxis to help people literally get up and over ground traffic and rush-hour gridlocks that have been the bane of many people’s existences. With such demonstrated desire to stay at the forefront of the technological revolution, it would seem logical that Arab cities would look towards the next evolutionary technology — blockchain.
The recent Blockchain Week convention in London featured trailblazing companies discussing developing the technology into applications that are directly usable by businesses and governments looking to keep a technological edge and increase efficiency. Those firms, including global risk management giants DNV GL and Singapore-founded VeChain, spoke about “Blockchain as a Service.”
“‘Blockchain as a Service’ is essentially about trying to get people and businesses to look beyond the current cryptocurrency craze and seeing the benefits blockchain can bring them,” said VeChain CEO Sunny Lu.
One cryptocurrency phenomenon is bitcoin, which last year broke market records and became one of the highest appreciating assets. Bitcoin started 2017 at a value of $800 but by mid-December it was valued at nearly $20,000. It has since settled at approximately $9,000.
However, it is not just the financial value of bitcoin that piqued people’s interest but the blockchain technology the cryptocurrency is based on and what it can do for businesses and metropolises of the future.
While much of the focus is on the currency aspect of bitcoin, the blockchain technology is fundamentally not a payments technology. Blockchain is a distributed open ledger that functions in a decentralised manner. Transactions and other data can be recorded with the agreement of other stakeholders on the blockchain and, once input, the data cannot be changed. Blockchain enables users to trust information from other parties, even if they do not necessarily trust the parties themselves.
This has direct applications for governments, which could accurately track corporate and personal taxation, with discrepancies easily verified through the blockchain.
VeChain has a national-level partnership with the Chinese government to develop the digital infrastructure of Guian City and integrate blockchain technology with the urban space.
“The good thing is that, with blockchain, this information can be easily stored, retrieved and verified, no matter what it is,” which could include contracts between service providers and local and even national governments,” Lu said.
Such blockchain-enabled deals are known as “smart contracts” and allow the terms of contracts to be executed rapidly, efficiently and more cost effectively. It could negate the need for expensive middlemen, such as lawyers and accountants.
The technology has audit applications. DNV GL Business Assurance CEO Luca Crisciotti said he is certain DNV GL’s partnership with VeChain will enhance core business functions.
“Our day-to-day business involves sending out auditors to ensure that businesses are compliant with international standards,” which involves painstakingly checking thousands of files and documents, he said. “With blockchain becoming more mainstream and being adopted [by more firms], it could mean that audit costs are significantly lowered, as well as increasing the speed with which companies can do business with each other in an atmosphere of trust.”
While other corporations, such as Maersk and IBM, are joining the blockchain fray, Crisciotti said he does not see this as a threat to his business.
“I’m actually happy that these other companies are joining in. Why not? It just means that blockchain is becoming more acceptable on a global basis and may set a new standard,” he said. “We’re happy to work with others and share best practice.”
The applicability of blockchain to technologically advanced cities, such as Dubai and Abu Dhabi, could give those cities a competitive edge, especially considering the global uncertainty that buffeted markets in the past several years.
By essentially being used as a technology to foster trust in the data being accessed, cities could show that they are not only open for business but that business practices are safe and efficient.
In the information age, there can be nothing more important than making sure information is accurate. With blockchain as a locomotive for change, wealthy Arab cities can stay ahead of the global competition.