ARTIFICIAL INTELLIGENCE AND BLOCKCHAIN
FOR SMART CITY
Sabina KAUF
Instytut Nauk o Zarządzaniu i Jakości, Uniwersytet Opolski, Poland; [email protected],
ORCID: 0000-0002-5978-4490
Introduction/background: In this article, we want to focus on two very important aspects of
a Smart City, which is the use of artificial intelligence and Blockchain in the functioning of
cities.
Aim of the paper: The aim of the article is to assess the possibilities of using those technologies
implementation of public tasks and in everyday contacts of the public sector with stakeholders.
Materials and methods: The article is theoretical and is based on a review of the literature and
examples in the implementation of Artificial Intelligence and Blockchain technology in a smart
city.
Results and conclusions: Artificial Intelligence and Blockchain have great potential to support
the development of smart city. The dissemination of these technologies is indicated by the
Gartner curve for Digital Government Technology. AI (Autonomus Vehicles) and Blockchain
are the most impact technologies on government organizations over the next 5 to 10 years
AI and Blockchain can provide significant benefits to many areas of the city's functioning:
it is a huge database for collecting and analyzing. Blockchain consensus methods allow greater
transparency and less susceptibility to manipulation, they increase the tendency of stakeholders
to participate and intensify social initiatives.
Keywords: smart city, artificial intelligence, blockchain.
1. Introduction
Smart city are technologically advanced cities where intelligent subsystems connect people
and organizations. These cities are able to use large data sets to offer stakeholders real-time
access to high-quality public services and thus improve the quality of life in the city. Economic
growth is supported by information and communication technologies. They not only improve
city management, but also (and maybe above all) stimulated social participation and the sharing
idea (Kitchin, 2015). Smart cities are often called digital cities based on new technologies,
where ICT solutions, internet of things, big data, cloud computing and Industry 4.0 become
reality (Washburn et al., 2010; Albino et al., 2015; Klein, Kaefer, 2008). Omnipresent sensors
are changing the way of movement in urban space, increase safety and allow the collection of
Scientific Quarterly “Organization and Management”, 2021, Vol. 3, No. 55; DOI: 10.29119/1899-6116.2021.55.4 www.oamquarterly.polsl.pl
50 S. Kauf
large data sets that can be analysed using Artificial Intelligence (AI) algorithms. They allow the
city to communicate with its own infrastructure, monitor the movement of its residents and
respond to it. As a result, the city's conditions can be optimized. AI has been designed to
efficiently collect, analyse and correctly interpret data and respond to it without any human
interaction. Although Artificial Intelligence is far from independence for now, but it can learn
and constantly improve its activities by collecting and analysing new data that requires
appropriate storage and transmission. Blockchain technology is helpful in this regard, as its
distributed registry architecture means that data is stored simultaneously on all network nodes.
This allows for complete decentralization of data, making access to them more efficient and
more "democratic".
Over the past 10 years, Artificial Intelligence and Blockchain have become technologies
that promise significant and even ground-breaking innovations. The idea of combining these
two technologies in creating a smart city is particularly intriguing. It engages intelligent human
capital (Shapiro, 2006; Giffinger et. al., 2007; Lombardi et al., 2012), because only people are
able to create and use intelligent solutions for the benefit of the general public. It also indicates
the need to develop smart governance, whose task is to create the environment of cooperation
and creation of conditions for participatory performance of public tasks.
According to forecasts, the potential benefits of combining Artificial Intelligence with
Blockchain can be counted in billions in the near future. These two technologies can develop
separately, but together they have bigger potential. As complementary technologies, they can
provide significant benefits for all areas of smart city, from Big Data analyzes, through health
care and financial services, to social participation and public-private partnership. Blockchain
offers artificial intelligence a huge database for collecting and analysing data that remains safe
and unchangeable even in case of failure. Blockchain consensus methods allow greater
transparency of relations between stakeholders. They also guarantee the confidentiality of data
transfers without compromising privacy and security, and less susceptible to manipulation.
Given the above, the purpose of this article is to present the role and significance of
Artificial Intelligence and Blockchain in creating of smart city (Fig. 1). The first part presents
the concept of smart city from the perspective of ICT technology development, which gave
impetus to the development of Artificial Intelligence and Blockchain. In the second part
AI functionalities supporting the creation of smart city will be presented. Subsequently,
the potential of Blockchain technology and its areas of application in smart city was pointed
out. The summary presents the problems that AI and Blockchain can solve and the challenges
that integration of both technologies face.
Artificial intelligence and blockchain for smart city 51
Artificial
Intelligence
Blockchain
support
Smart
city
Figure 1. AI and Blockchain as elements supporting Smart City development. Source: own work.
2. Literature review – smart city in the context of ICT Technologies
Although the concept of "smart city" is becoming more and more popular, thus a generally
accepted definition has not yet developed. Analysis of the literature in this area allows to
distinguish two description ways: 1. city based on ICT (Hollands, 2008; Komninos, 2008),
2. a new paradigm in the city's development, where the key role is played by human and social
capital, education and the environment (Neirotti, De Marco, 2014; Giffinger, Fertner et al.,
2007; Lombardi, Giordano et al., 2012; Caragliu, Del Bo, Nijkamp, 2009). The technological
smart city trend is reflected, among others in the definition of T. Bakici, E. Almirall and
J. Wareham (2013), according to which „smart city as a high-tech intensive and advanced city
that connects people, information and city elements using new technologies in order to create
a sustainable, greener city, competitive and innovative commerce, and an increased life
quality”. Similarly, IBM defines a smart city: „A city is an interconnected system of systems.
A dynamic work in progress, with progress as its watchword. A tripod [infrastructure,
operations, people] that relies on strong support for and among each of its pillars, to become
a smarter city for all” (IBM, 2015). This definition includes three key features of smart city:
1. instrumented i.e. the presence of ICT solutions in the city (sensors, mobile devices),
2. connected, i.e. the availability of connections between the real and virtual world, using
instrumentation and (3) intelligent, meaning the ability to use new technologies in the city's
development process (Harrison, Eckman, Hamilton, Hartswick, Kalagnanam, Paraszczak and
Williams, 2010).
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Proponents of this approach say that cities will be on the verge of a revolutionary
breakthrough and will become cities of dreams. Each sphere of life will be digitized, and
applications, algorithms and artificial intelligence will reduce congestion, prevent crime and
create free public services (Giffinger, Fertner et al., 2012). But will it really be like that?
Is the reconfiguration of the city into technological problems enough to make us feel good in
the city? Probably not.
The reconstruction of the basics of urban life and city management taking into account only
the technological perspective will rather lead to the fact that cities will be superficially
intelligent, and deeply full of injustices and inequalities. That is why in local government
practice and scientific discourse, the second trend of understanding smart city, which goes far
beyond its technocratic perception, increasingly dominates. In this approach, technological
solutions only support smart city. Thanks to them, it is easier to combine information and
political vision into a coherent program of improving the city and its services. New technologies
are an instrument for creating cities that are able to combine physical and social capital, provide
better services and good quality infrastructure. This approach is reflected in the definitions of
A. Caragliu, Ch. Del Bo and P. Nijkamp (2011), who write: “We believe a city to be smart
when investments in human and social capital and traditional (transport) and modern (ICT)
communication infrastructure fuel sustainable economic growth and a high quality of life, with
a wise management of natural resources, through participatory governance”. Also N. Komninos
(2008), who write „(Smart) cities as territories with high capacity for learning and innovation,
which is built-in the creativity of their population, their institutions of knowledge creation,
and their digital infrastructure for communication and knowledge management”1.
From the perspective of the considerations in this study, this approach to smart city seems the
most justified. It combines the social and economic dimension, takes into account the need to
develop the city while maintaining the principles of sustainable development.
In the context of using ICT, smart city can be defined as “information technology combined
with infrastructure, architecture, everyday objects, and even our bodies to address social,
economic, and environmental problems” (Towsend, 2013). A smart city is defined as a city in
which ICT is merged with classic infrastructures, coordinated and integrated using new digital
technologies (Batty, Axhausen et al., 2012). Mitchell M. defines smart city as “intelligence
based on the increasingly effective combination of digital telecommunication networks
(the nerves), ubiquitously embedded intelligence (the brains), sensors and tags (the sensory
organs), and software (the knowledge and cognitive competence)” (Mitchell, 2007). This does
not exist in isolation from other urban systems or connected to them only through human
intermediaries.
1
A wider review of the definition of smart city presents: (Albino, Berardi, Dangelico, 2015).
Artificial intelligence and blockchain for smart city 53
Thanks to the use of ICT, all elements of the city (economy, transport, living, management,
education, medicine) can become smarter; can improve the functioning of existing
infrastructure and change the approach to planning and urban design. Creating a smart city
using Artificial Intelligence and Blockchain will solve some of the city's problems, e.g., in terms
of energy efficiency, reducing the arduousness of production processes for the urban
environment, making better use of city resources, regulating congestion through an intelligent
transport network, increasing the scope of social participation and transparency between
stakeholders providing public services.
3. Artificial Intelligence of the future of smart city
Artificial intelligence is a field of computer science that deals with the creation of intelligent
devices and machines that will have the ability to respond just like human. Although its history
dates back to the 50s of the last centuries (McCarthy, Minsky, Rochester, Shannon , 2006;
Kar, Dash, 2018), it was only the progress in designing computing power to store and process
large data sets and the potential of the Internet allowed AI to become one of the most powerful
technologies of the century. In artificial intelligence, so-called machine learning plays
an important role, because it is the basis for the development of learning systems. It is thanks
to them that rational and logical reasoning of machines that are able to adapt to changing
situations is possible. Importantly, the development of artificial intelligence is parallel to the
development of cognitive science, i.e., research on intelligence and the functioning of the
human brain. This allows to explore the possibilities of computer-human cooperation.
Modern computers, like the human brain, rely on neural networks that deal with the enormity
of data, skillfully transforming it. For this reason, they use machine learning, image recognition
and natural language processing. Thus, machines equipped with the AI platform 2 are able to
collect information from the environment and using logic identify actions with the highest
probability of success (Mnih, Kavukcuoglu et al., 2015; Bughin, Hzan et al., 2017).
Artificial Intelligence finds application in many areas of life, including increasingly in smart
city, determining its development in all functional areas (smart economy, smart mobility,
smart environment, smart people, smart living, smart governance). Examples of smart city
support by artificial intelligence algorithms is presented in Table 1. The use of AI is key from
the point of view of striving for sustainable urban development. Thanks to AI applications it is
possible to optimize the city system, e.g., by monitoring energy consumption (Adio-Moses,
Asaolu, 2016) or creating efficient and intelligent transport systems (Agarwa et al., 2016).
Infrastructure solutions are already emerging that are capable of introducing automated
2
Examples are Netflix and Amazon, which use AI to personalize recommendations for millions of subscribers
around the world.
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operation of urban systems. Thanks to AI platforms it will be possible to introduce autonomous
cars to the streets, track the level of air pollution, as well as more efficient and easier
management of the urban lighting system. Argawa et al. (2015) emphasize that AI is not only
a solution that facilitates the design of urban systems, along with the scheduling of the city's
transport or energy system but can also be used to optimize flows. Artificial Intelligence will
allow the prediction of road conditions and congestions, generate reports in real time on
accidents and other road incidents. This makes it easier to take routine decisions in the field of
control and increase traffic flow, especially in those areas of the city that are in danger of
congestion.
Table 1.
Examples of smart city support by Artificial Intelligence Algorithms
Smart city dimensions Examples of AI possibilities
Smart economy Optimization of city infrastructure, energy and water saving, editing of building
maintenance costs, sharing economy
Smart mobility Autonomous vehicles, prediction of traffic parameters, traffic light control,
Information about free parking spaces, reduction of external transport costs,
reduction of congestion
Smart environment pollution reduction, reduction of water and energy consumption, smart bins
Smart people Create Artificia Intelligence, participation in the public life
Smart living Smart buildings, intelligent healthcare, prevention of hospitalization, virtual
assistance, crime prevention, increasing residents' safety
Smart governance Participate in decision making, public-private-partnership, Chatbots and automatic
replies, e-consultations, crowdfunding
Source: own work.
Thanks to AI, traffic management systems in the city will transform from static to dynamic
systems. They will allow to adapt to current conditions in real time, taking into account different
types of transport. The introduction of Artificial Intelligence to e.g., a traffic light control
system and building a platform for processing interactive data will allow monitoring and
predicting traffic behaviour. It will also develop communication plans for different scenarios,
allowing for a smooth adaptation to changing conditions. AI can also be a basis for the
development of new systems of cooperation for fleet operators and management of cities,
enabling e.g. sharing information in real time about traffic congestion or air pollution.
As a result, the system will prevent build-up of problems before they occur. A model of traffic
management using AI based on neural networks prepares decisions based on the received input
data and selects the most appropriate solution for the traffic situation (Fig. 2). Moreover, traffic
management systems based on AI can create time plans for intersections, reducing the
phenomenon of congestion problems and suggest alternative routes (De Oliviera, Neto, 2013).
They can even plan compulsory travel times (to work, school) by activating the alarm clock
early. The use of AI in vehicles will allow them to communicate directly with the infrastructure,
which will smooth out journeys in urban areas.
Artificial intelligence and blockchain for smart city 55
sensors at road Parking sensors Information from Traffic disruption Weather and
junctions the road information pollution …
administration monitoring
Input Data
Artificial Information about
prediction of Traffic
Intelligence traffic parameters via a
traffic parameters users
mobile application
Output Data
Variable content Information about Navigation
Traffic lights tables free parking systems Public transport …
spaces
Figure 2. Model of traffic management using Artificial Intelligence. Source: own work.
Artificial Intelligence's capabilities are not limited to traffic management and control.
They cover a wide range of applications, from medical diagnostics, through controlling robots
and chatbots, to virtual assistance. An example could be predicting places and periods of
increased crime, allowing for more efficient planning of city guard and police interventions.
Ongoing monitoring of the internet can be an instrument of prevention against attacks on the
safety of residents. Big Data analysis and AI predictive capabilities allow better management
of operations during emergencies. What's more, AI allows to prevent breakdowns and overloads
of energy, water supply, etc. infrastructure and optimize its maintenance. The use of AI in smart
buildings allows to implement hundreds of sensors that monitor our preferences and habits.
It combines several duties into one control centre - with one remote control or application,
which allows to control the operation of air conditioning, ventilation, central heating, lighting,
alarm, door locks and home monitoring. This makes it easier to manage and reduce energy
consumption. After installing the appropriate sensors (e.g., movement, humidity, light, gas),
the system can automatically lower the temperature inside the house, e.g., after opening the
window, turn off the light by itself or disconnect unused devices from the power supply, while
informing us of any adverse events (Skouby et. al., 2014).
Artificial Intelligence also supports the functioning of the public sector and smart
governance. Facilitates contacts with stakeholders and improves service for residents. Chatbots
and automatic replies allow to redirect matters to the appropriate departments and create
documents in repetitive matters. The issuing of official documents will be monitored.
To exclude racist aspects, origin, education, age, gender or beliefs AI can monitor the issuance
of decisions on issues of social welfare, as well as search for documents from municipal
databases and seem repetitive administrative decisions. It can also use the data provided by
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residents, increasing their readiness for social participation. From the perspective of smart
governance, citizen participation is key. AI by sharing administrative decisions,
e.g. in Blockchain, can significantly increase the transparency of relations between
stackeholders, and thus the involvement of citizens in city management.
4. Blockchain in the development of smart city
Blockchain is an innovative technology based on a distributed and widely available data
register, which is a collective book of accounts. It allows to save information about each
transaction in the form of data blocks that combine into an integral chain. Each block has
a unique signature, impossible to forge, and each action must be confirmed by a private key,
i.e. a string of characters known only to entities directly involved in the transaction. Only the
private key owner can initiate changes (Iansiti, Lakhani, 2017). Blockchain is considered the
safest technology for data recording and storage. It allows to associate transactions with
computational logic (users can configure it). It is used to record of information about economic
events and all financial operations carried out between transaction partners. Blockchain
technology uses cryptographic methods to prevent making corrections once entered information
without the knowledge of other participants in the system (Pilkington, 2016). That means (Kauf,
2019):
transaction transparency – every transaction and all its contents are visible to everyone
who has access to the domain of a network participant. Each node (user) has a unique
alphanumeric character that identifies it. Users can remain anonymous or if transactions
occur between block addresses – reveal their identity;
records irreversibility – once the transaction has been entered into the database,
no changes can be made, any modifications are visible to other network participants.
The data entered is chronologically and available to everyone.
Blockchain allows the development of relations between entities in a distributed manner,
without involving middlemen, coordinators or planners. It does not allow falsification of data
and is resistant to manipulation. Blockchain technology supports the functioning of smart city
in all its dimensions. Specific implementations of blockchain technology, such as smart
contract, smart assets or digital identity facilitate not only the contracts agreements with
contractors, but also control of task performance. Based on Smart Contracts and block chains,
decision making systems can optimize the activities of entities involved in creating public value,
and public e-procurement can prompt the public sector to use negotiated tendering procedures
more often. Transaction transparency is a source of benefits for the public sector; allows to
increase the efficiency and effectiveness of relationships with contractors and optimize the
distribution of Smart Assets. Smart Contracts and Blockchain-based voting, decision, and
Artificial intelligence and blockchain for smart city 57
negotiation support systems enhance and optimize the operation of the Smart Community
(Nasulea, Mic, 2018). Smart city benefits from increased productivity thanks to automated
interactions with e-Citizen and optimized distribution of Smart Assets. Fig. 3 presented
Blockchain Technology as an integrator of smart city entities. Blockchain allows access to the
registry for all members of the community. Everyone has its own synchronized copy of
a common book (Blockchain register).
public Smart
procurement Cotracts
Vote Smart City
Smart Smart
Group Identity Assets
Decisio
Blockchain Smart Entities
Partizipation
Figure 3. Blockchain Technology as an integrator of smart city entities. Source: own work.
Blockchain technology guarantees high resistance to data manipulation. It secures all
stakeholders' access to real and current information. By transforming resources into Smart
Assets, smart cities can track the origin and movement of goods (e.g., pharmaceuticals)
throughout the value chain for Citizens. This reduces fraud in the distribution of goods and the
reaction almost immediately after the detection of the irregularity. Blockchain allows the
measurement and recording parameters, which are stored and transported goods, and this is
particularly important in the case of sensitive goods (those pharmaceuticals). Stored values are
unmodifiable. Thus, Blockchain is an effective tool for supplier verification by smart
governance.
Because the choice of supplier in the implementation of public tasks is based on public
procurement, it is worth to point out the benefits that Blockchain technology can bring in this
area. This technology can contribute to: 1. increasing their efficiency and transparency,
2. reducing fragmentation, and thus the benefits of economies of scale, by implementing
a unified electronic platform. It can be assumed that online public procurement processing will
become a common practice in the next decade, not only on a local but also on a global scale.
The extension of the network will allow, among other banks located in various places around
the world to easily send certified electronic guarantees on behalf of the supplier. Blockchain
technology will change the conditions for participation in tender procedures. Everyone who
wants to participate in the implementation of public tasks will have to use electronic means of
communication3. This will allow faster and more transparent verification of submitted
3
From October 2018, all tender procedures from the so-called EU thresholds are implemented using electronic
means of communication.
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applications. It will create a significant barrier to submitting discounted offers, as once entered
data cannot be changed. Each modification will be visible and will require the approval of other
stakeholders.
Participation in public e-procurement will force suppliers to have a Digital Identity.
The one created using the Blockchain protocol can be used as an electronic signature. Currently,
the most interesting application is the Estonian e-Residency program, enabling the user to create
a digital identity. It can be used, among others to set up a business by citizens outside the
European Union. The combination of digital identity with intelligent assets also opens up the
possibility of authorizing resources that are owned by the individual. Those registered in the
Blockchain protocol can be used to initiate transactions on our behalf. In practice, this means,
for example, automatic planning of technical inspections by public transport vehicles.
Blockchain also agrees to authenticate the digital identity of citizens, and this creates the
opportunity to participate in local, regional or national elections, without leaving home.
Blockchain guarantees both voice secrecy and verifiability of the number and legality of voters.
The chain of blocks will allow every citizen to control the vote. In Blockchain, the citizen
remains anonymous, and his voice is public. Due to the dispersion of the database, it cannot be
hacked, and it is not threatened by any IT system failures. The voter can vote from any place
where he gains access to the network practically from any device that has the character of
a computer – which eliminates the risk of extortion of votes, adding them to polls, creating false
identities, etc. This way of voting ensures greater confidence in the electoral process, reduces
costs and enables decisions to be taken directly by the constituency.
Blockchain technology could also contribute to greater public involvement in the city's life
and functioning. In a smart city, decisions do not have to be made as a result of voting, because
the classic majority voting system can be replaced by decision systems that require the consent
of a larger part of the community. In this case, important social problems could be discussed
until the community reaches consensus (Nasulea, Medintu, 2015). In addition, it opens wide
opportunities for social initiatives (Crowdfunding).
Although Blockchain technology has a number of applications and allows for various
variants of direct democracy, the scope of its use is conditioned by the level of awareness of
Smart Governance, or rather policy makers. These relevant laws and ordinances may support
or inhibit the use of Blockchain technology. At the moment, it is crucial to create legal
regulations that will allow cities to create Smart Contracts that do not require a paper version
and a notary signature.
Artificial intelligence and blockchain for smart city 59
5. Conclusion
The considerations presented in the article show that Artificial Intelligence and Blockchain
have great potential to support the development of smart city. They are the most promising
innovative technologies, the use of which is almost limitless. The dissemination of these
technologies is also indicated by the Gartner curve for Digital Government Technology.
It follows, that AI (Autonomus Vehicles) and Blockchain are the most impact technologies on
government organizations over the next 5 to 10 years (Fig. 4).
Figure 4. Hype Cycle for the Internet of Things 2020. Source: https://lhpeurope.com/flexibility-in-the-
industrial-internet-of-things-iiot/, 14.01.2021.
As complementary technologies, AI and Blockchain can provide significant benefits to
many areas of the city's functioning. The earliest concepts of combining AI and blockchain
relate to data analysis. Blockchain offers artificial intelligence a huge database for collecting
and analysing, as well as centralized data sets. Those in Blockchain stay safe and unchangeable
even in the event of a failure. Blockchain consensus methods allow greater transparency and
less susceptibility to manipulation. Thus, they increase the tendency of stakeholders to
participate and intensify social initiatives. The solutions shown predispose these technologies
to the rank of breakthrough innovations, often referred to as destructive technologies.
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This is due to the fact that any technology that revolutionizes the current order is destructive.
In this case, however, we should refer it rather to the creative destruction that Schumpeter wrote
about (1942). Blockchain will transform public services by providing a transparent,
authoritative register of public sector transactions and reduce conflicts between public and
private sector entities. Artificial Intelligence will be used to serve residents, issue administrative
decisions or manage city traffic.
Though the capabilities of AI and Blockchain are huge, their integration still faces many
challenges. One of the sources of concern is the issue of privacy, especially when it comes to
potentially sensitive data and applicable laws.
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