Page 87 - U4SSC Blockchain for smart sustainable cities

Moreover, regional programmes and collaboration between cities such as the Intereg BLING programme,
composed of 13 partners in the North Sea Region, are good examples of blockchain ecosystems that create
value and increase success. Cities from industrialized countries could support the efforts of cities from
developing countries to capitalize on blockchain technology through aid programmes, technology and
knowledge transfer, and support to policy-makers.

The city must play a key role in promoting the ecosystem prosperity and new business opportunities, to
orient initiatives toward generating sustainability, inclusiveness and public value for all stakeholders, and to
avoid producing or reinforcing urban inequalities. Experts highlight the local government “leadership” role
in initiating consortia and in building an ecosystem to favour collaboration and partnership for successful
blockchain adoption and fostering innovation in cities. Implementing PPPs and cooperation between
blockchain actors, and envisioning a strong role for government as part of such consortia are critical drivers
of the blockchain development. However, these constitute a challenge for cities and municipalities that often
have never experienced this type of role. It is a significant paradigm shift and requires a complete change of
mindset, particularly when it comes to collaboration with the private sector and accommodating the varying
interests of a multitude of stakeholders. This type of model requires collaborative governance mechanisms,
in the face of the potentially disruptive characteristics of blockchain and the involvement of multiple actors
in PPPs, which is challenging for the public sector. There are favorable reasons for cooperation: the actions
proposed would strengthen the chances of success for blockchain applications to support a wider set of
socially and environment valuable outcomes.

(2) Defining a Governance Model

One of the main challenges in developing a smart city or community initiative is defining a common
vision between different stakeholders. There will be competing ideas of what matters in the city, which
challenges to prioritize and what goals to pursue. As long as different stakeholders are pursuing different
goals and have conflicting interests, they will face many barriers in the process. The governance model for
the solution to be implemented must be defined considering the smart and sustainable benefits with the
blockchain application. A wider understanding of the sustainable development goals and how other cities
or communities are working toward them will enable stakeholders to take a long-term view and execute
projects with more distant considerations.
Furthermore, governance and leadership readiness, a dominant challenge in itself within public sector
organizations and blockchain technology is adding a layer of complexity. Leadership, particularly in
championing innovations, is key to the successful adoption of disruptive technologies such as blockchain
technology. However, studies demonstrate that the lack of knowledge and understanding of the technology
at the top management level in general, and more especially in the public sector, are hindering blockchain-
based initiative and the realization of the potential strategic value of blockchain.
Smart city initiatives need to be governed. It is essential to develop and define an appropriate governance
framework that sets out the roles and liabilities of respective parties, the applicability of law in case of
disputes, decision-making limits and processes of authorized participants in the network, as well as steps
to mitigate market manipulation and unfair practices.

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