Page 90 - U4SSC Blockchain for smart sustainable cities

(6) Acquiring knowledge and developing capabilities
There is a clear need for decision-makers, and those contributing to change in the public sector, to gain
a better understanding of the technology, in order to comply with regulations, define standards, protect
citizens’ rights and ensure adoption. There is also a need to acquire knowledge related to business models,
technical choices, and the governance of blockchain technology for its successful implementation. The
complexity, the integration with legacy systems, the cost effectiveness and resource efficiency are inherent
characteristics of blockchain-based smart city initiatives.

Decision- and policy-makers are often alert about these issues and particularly sensitive to the cost aspect.
One of the challenges of smart solutions is the need to finance its implementation and operation. Currently,
many smart city initiatives are funded from government sources, either at the local or national level; this is
often justified by the prospect of increasing revenues or decreasing costs associated with public services.
However, smart solutions present a great pressure for the public budget. Other smart projects are financed
by public-private partnerships, by the private sector or by donors. For cities to access a wider pool of funds,
business models need to be explored that encourage the private sector and other sources to be part of
these initiatives.
Beyond the cost, there are concerns about other parameters such as the capacity, the scalability, the
update and upgrade requirements of the technologies that increase costs, as well as the risks of lock-in
and the risk to security. For many cities and communities, the deep technical skills needed to benefit from
most of these smart technologies are not available, or are only available at a very high cost. Even the skills
needed to run low-level ICT infrastructure reliably could be lacking in many contexts. These concerns are
amplified with blockchain-based projects. Skills in designing and running blockchain projects, managing
changes and communicating effectively are also needed for successful smart city initiatives. Consequently,
there is a need for public service training and development programmes as local governments invest in
pilot projects and knowledge development to better comprehend the potential of the technology. Such
training and development can be facilitated through collaboration between the public and private sectors.
Skills and capabilities development will reduce the complexity associated with the technology, and when
combined with public private partnerships and cooperation initiatives, will solve some of the challenges
of blockchain adoption, such as immaturity, scalability, interoperability, and the cost of the technology.
Low- and middle-income countries face a greater challenge in creating the conditions appropriate for the
use of blockchain technologies. Here, there needs to be greater investment and development of basic
digital infrastructures (reliable power supply, connectivity, sufficient bandwidth, IoT and other technologies),
education and capabilities to support innovators and regulators by sharing and building skills through local
and regional partnerships. These efforts will enable the development of initiatives using blockchain that
could support cities, along with rural areas and communities, to face economic, social and environmental
challenges in line with the SDGs.

80 U4SSC: Blockchain for smart sustainable cities