Op-ed

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Have we found the key to the smart city?

by Thomas Keenan

The Hill Times
July 4, 2016

CALGARY—The virtual currency Bitcoin has been in the news for all the wrong reasons recently. Hollywood Presbyterian Hospital was forced to pay a ransom to hackers who hijacked their patient files. The $17,000 U.S. was demanded in Bitcoin, because it is essentially untraceable. A Calgary wine merchant was forced to send his IT guy out, just before Christmas, to buy $500 U.S. worth of Bitcoin to free his customer files from ransom ware.

There have also been scandals involving Bitcoin exchanges, most famously the Tokyo-based Mt. Gox, which went bankrupt after reporting that $450-million U.S. worth of Bitcoins belonging to its customers had simply vanished from the company’s digital wallet.

It’s enough to make you lose faith in what people have been calling “the money of the future.” But that would be missing a very important point. The blockchain, which is the underlying technology behind Bitcoin and its crypto-currency cousins, also has fascinating non-financial applications. It will probably be the engine that drives innovation in Smart Communities and the fast-growing Internet of Things.

The blockchain is essentially a distributed ledger that can be viewed and verified by anyone, and is very difficult to tamper with. Just as it can confirm that a Bitcoin is valid and hasn’t already been spent, it can attest to the veracity of a wide variety of information.

Consider the land titles registry in Honduras. Plagued by fraud and corruption, that country set out last year to use blockchain technology to create a distributed, publicly verifiable land titles register that would be almost tamperproof.

That project was supposed to be completed by Austin-based Factom Inc., by the end of 2015, but is now reported to be stalled. What could possibly go wrong with a straightforward technical project?

The answer could well be “people.” At the start of the Honduras project, Factom CEO Peter Kirby told Reuters that “the country’s database was basically hacked. So bureaucrats could get in there and they could get themselves beachfront properties.” It’s not hard to imagine that folks who might benefit from loosey-goosey land titles might resist an ironclad solution. Indeed, Kirby used the words “political in nature” to describe the delay. He’s still hopeful the project will come to fruition this year, and anyway, his company has moved on to bigger projects like trying to secure Smart Cities infrastructure in places in China.

Blockchain technology is also being touted as a key enabler of the booming “Internet of Things” which will see everything from your milk carton to your washing machine chatting behind your back. They might even spend your money. In a blockchain proof of concept, IBM rigged a Samsung W9000 washer to automatically order supplies like detergent when it runs low, and, yes, the lawyers say, if it’s your washer you will have to pay for the soap powder. Better give the thing a monthly budget!

Start-ups are using blockchain methods to securely maintain medical records, insurance files, and even spread your DNA to thousands of computers around the world. Musicians are using the blockchain to control copying of their music. A company called Ascribe is finding a new way to issue limited edition art prints. Others are looking to put notaries, insurance agents, and paralegals out of business.

Self-executing smart contracts could automate many processes that now require human intervention. The blockchain might even help as you execute your final power down. In the view of one visionary, upon your death, your true “last will” will be auto-published, your “just debts” automatically paid, and the balance of your estate and life insurance proceeds immediately e-transferred to your heirs.

The technical side of all this will probably work just fine. The lesson from the early days of Bitcoin is that we will need to pay careful attention to the human side of the blockchain equation.

Dr. Thomas P. Keenan is a research fellow of the Canadian Global Affairs Institute, a professor at the University of Calgary, and author of the best-selling book Technocreep: The Surrender of Privacy and the Capitalization of Intimacy, which can be bought with Bitcoin.

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