Page 83 - U4SSC Blockchain for smart sustainable cities

(6) Digital Native assets
Blockchain is considered as more valuable if it works with native digital assets that can be successfully
represented in a digital format. Some decision trees are even excluding the use of blockchain in case of
physical assets. In a smart city context, this condition might be problematic when blockchain is used to
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manage sensor records or other types of non-digital/physical assets. Most of the cases consider the use of
digital assets valuable. Only 30 per cent of the cases are not working with digital assets. Except for native
assets such as Bitcoin, a higher risk of security in the system is undeniable whether it concerns digital
assets or digitalized physical assets. Research has allowed potential solutions to bridge the gaps relating
to breach of security. Some examples of successful research endeavours include the careful designing of
the interface, particularly in the case of voting (Active Citizen use-case) or tickets (Stadjerpas use-case) or
health records (Healthy use-case). However, in general, more investigation is required in this field. Overall,
the applicability of blockchain for smart city initiatives that are not using native digital assets is not in
question. Under these circumstances, it could be more challenging in terms of security, and it could be
worth exploring other solutions within this domain.

(7) Permanent record of the information

Blockchain is recommended if it is necessary to have a permanent record of the information. All parties
involved in a new solution need to agree on how the state of the digital asset will be handled/managed
in the new business process prior to any development occurring. If an unalterable record is superfluous
or counterproductive, for example, in a situation in which the need to delete information is critical, then
blockchain is not recommended. Only 25 per cent of the use-cases reported the permanent record as not
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important. In those specific cases, it does not have a specific impact; however, in other situations, it might
be an issue. Nevertheless, whether or not it is possible to maintain a permanent record, the applicability of
blockchain will not be affected. It will show that blockchain is not the optimum solution for that use-case,
which could be critical criteria to consider in the context of cities with limited capabilities.

(8) Contractual relationship

Decision models consider that blockchain is more useful if the business problem is the management
of contractual relationships or value exchange. It is a use-case with a smart contract. Blockchain is
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recommended in this type of situation given the features of security, and the record of the transactions
process and states. Smart contract is widely used. However, 70 per cent of the cases consider that it is not
necessary to implement a contractual relationship. Indeed, smart contracts are relevant applications of
blockchain technology, however they are not essential. The most important question here is to determine
whether a contract on blockchain operates the same way as a legal contract. Studies highlighted that
technology does not have any legal effect. The suitability of blockchain here is not in question. However,
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the implementation of blockchain without a clear legal or regulatory framework could jeopardize the
application of the blockchain at great cost for the city.

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