Sampling blockchain-enabled smart city applications among South Korea, the United States and China

2.1.1.Central government of South Korea

The central government of South Korea focuses on validating the effectiveness of blockchain, e.g., initiating blockchain-based pilot projects in public institutions. It expects that the projects will boost the productivity of various industries and solve social issues. Two observations are made as follows.

First, the central government focuses on applying blockchain-related technologies in public institutions. For example, in 2020, the Ministry of Science & ICT and Korea Internet Security Agency (KISA) nominated 24 companies to start ten blockchain-based pilot projects with an investment up to 5.3 million US dollars [27].

In addition, the emphasis has also been laid on developing blockchain-based financial technology. The Presidential Committee on the Fourth Industrial Revolution announced blockchain-related policies in 2018. The central government encouraged to integrate blockchain with financial technology. To be specific, the committee pointed out four significant limitations [36].

2.1.2.Government ministries of South Korea

In 2020, ten projects were initiated as pilots applying blockchain to public sectors [27]. The key features of the 10 projects are summarized in Table 1.

As the cases of cybercrime surged, digital evidence and digital forensic are critical. In each step of litigation and investigation, maintaining the source integrity is vital to validate the admissibility of evidence. In other words, the steps of an investigation (confiscating digital evidence > sorting > analyzing > reporting > sending > discarding) need to be transparent and credible. This project aims to utilize blockchain technology to protect the reliability and the integrity of digital evidence in each step. The execution team of the project also believes that this blockchain-based platform will ensure transparency of the investigation process.

As more people are concerned about food safety, they would like to have the information of agricultural products along each link of the supply chain. The Rural Development Administration plans to track all crops’ distribution processes and record the data on a blockchain-based platform to ensure the credibility of products’ information.

The number of people receiving welfare benefits is larger than ever. The amount of welfare benefits that they received has also steadily increased. Along with this, the cases of fraudulent claims, e.g., people who are not eligible to receive the welfare benefits or people who receive the benefits twice, consistently happened. The Ministry of Health and Welfare will launch a platform that manages essential information for identifying eligible beneficiaries. The project’s execution team expects a significant cost reduction of the administrative process for managing information for welfare beneficiaries and minimizing intermediary intervention.

Korea Expressway Corporation detected an inefficient process to check toll fee reports of drivers. In response to its issue, the corporation plans to adopt a blockchain-based toll fee management system to automatically and transparently audit drivers’ records.

In order to maintain elections as transparent and credible as possible, the National Election Commission plans to launch a blockchain-based online voting platform, through which every voter or candidate of the election can directly access the results. The voting platform is currently open to and being tested by a number of approved organizations.

According to food supervision regulations, the entire meat production process should be recorded in the livestock log system. However, there are risks of server failure or cyber-attacks on the centralized log system, resulting in a total loss of the recorded data. For instance, when contaminated meat was sold and spread to various provinces, it would be very time-consuming for regulators to identify the possible culprits through tracking the whole supply chain. By utilizing blockchain, the Ministry aims to secure the recorded log data and trace the possible contaminated sources within a few minutes.

In order to get a mortgage for purchasing a house, citizens have to visit various offices and go through relevant procedures. By utilizing online blockchain-based documentation and certification services, citizens do not have to go through such cumbersome bureaucratic processes.

Before submitting official documents to other countries’ institutions, citizens need to bring the documents to be apostilled by the Ministry of Foreign Affairs. The current apostille process takes up to 14 days. The Ministry of Foreign Affairs plans to build a blockchain-based platform to check the documents’ authenticity and issue immutable electronic documents, which can improve the efficiency of the apostille process.

With the increase in cross-border shipping, the time delays at customs have also amplified. Goods may stay at customs for several days. The Korea Customs Service is piloting a blockchain-based declaration system that will coordinate with global online shopping platforms. The system will automatically register South Korea-bound products into the blockchain-based declaration system. The introduction of the blockchain declaration system is expected to simplify the current procedures and shorten the waiting time of goods at customs.

Each container requires a different trans-shipping service. However, most parts of the shipment processes is still offline-based. Therefore, managing those tasks requires intensive manual paperwork operations. The Ministry of Oceans and Fisheries aims to manage the shipping or trans-shipping paperwork through a unified blockchain platform to streamline the entire shipping process.

2.1.3.Provincial governments of South Korea

Reckoning the limitations of the 3rd industrial revolution in South Korea, the central government realized the importance of relaxing regulatory hurdles. However, the government cannot just deregulate blockchain without concerns of blockchain’s misuses being properly addressed. Thus, the central government supports provincial governments to test blockchain-based smart city projects. Some projects are currently under construction and their key features are summarized in Table 2.

Seoul-si Seoul, the capital city of South Korea, is constructing several pilot projects with an investment of 108 million US dollars to establish a blockchain-enabled smart city in five years. Seoul focuses on the government transparency and citizen convenience. Here are the current blockchain projects that Seoul has initiated [50].

Some employers tend to avoid official work contracts with workers to evade taxes. For example, employers offer private contracts while paying slightly more to the workers. Without official work contracts, the workers are not entitled to receive unemployment benefits and the other four primary insurances, i.e., National Pension, National Health Insurance, Worker’s Compensation, and Welfare Service. Seoul city tackles this issue through blockchain, which requires all labor contracts to be signed in the blockchain system that enables the city administration to check whether the employers have issued official contracts quickly.

Janganpyeong is a local hub that clusters many used-car sales companies. Over the past years, many customers complained for overpaying low-quality used cars due to the lack of transparent information or a unified sales platform. In response to that, a blockchain-based Janganpyeong Automotive Centre was built, which aimed at providing customers with transparent and immutable information of used cars to boost trust among customers and merchants.

In the past, Seoul cooperated with construction companies and job agencies for regulating laborers’ wages. In the model: first, the Seoul city releases labor-wage funds to construction companies; the companies then pass the money to job agencies; the job agencies then transfer wages to workers. This process has been problematic because either construction companies or job agencies might pay the workers less than what they should get. To ensure transparency of paying the workers’ wages, Seoul has initiated a “Money-electronic-direct-system”. By using blockchain, the regulatory department of Seoul city can check whether workers are paid with the right amount of wages or not.

The Seoul city encourages citizens to participate in its policy-making process. Online voting can be one of the most valuable tools to attract the citizens’ active participation. However, online voting systems are vulnerable to the fabrication of the voting results. The city government of Seoul created a blockchain-based voting platform called mVoting. Since its roll-out in 2014, mVoting has been used to collect people’s ideas without any risk of being manipulated. mVoting is collecting ideas regarding city-operated projects, education policies, and other policies. According to the report of ‘2020 mVoting performance and its current status’, about 1.12 million users have participated in 3.01 million online voting activities, cumulatively. Out of 8,294 voting issues, 2,642 voting issues have been policy-related [40].

Citizens sometimes need verified identification to access public services, which means that citizens need to bring numerous documents and visit several public institutions. Seoul plans to provide a blockchain-based platform that citizens can securely store their documents online. The Seoul city expects this platform to mitigate the traditional verification process.

Seoul created a cryptocurrency payment platform for public transportation. Seoul plans to expand its use to other public services, e.g., citizens can pay tax through S-Coin, and Seoul can give low-income citizens subsidies [48].

Similar the documentation platform mentioned above, some public services can only be accessed before verifying the users’ identities. However, it is possible to forge the current identity card in South Korea. Therefore, the Seoul city initiated a blockchain-based identity card. It aims to faithfully verify the citizen identity, and also to shorten the verification process. The Seoul Citizen Card was firstly applied to the Seoul journalist community, through which, people or institutions who are to be interviewed can verify whether the interviewer is a true journalist or not.

Jeju-si Jeju Island’s government believes that experiencing blockchain services is the fastest way for citizens to get familiar with the concept of blockchain. Thus, Jeju Island focuses on providing blockchain-based public services [32]. The pilot projects in Jeju Island are reviewed below.

Thanks to Citizen Identity Verification, merchants can check whether a customer is eligible to purchase duty-free goods without any burdensome process. This service can help merchants sell duty-free goods to eligible customers and help tourists get tax refunds at customs conveniently.

Battery management of electric vehicles (EV) is essential for longer battery utilization and also battery reuses. However, the history of EV battery reuses face the possibility of forgery and alteration. Therefore, it is necessary to have credible data in the whole life cycle of EV batteries. For that reason, standards for used EV batteries are required. The EV battery management system is to build a blockchain-based platform for managing the distribution history of EV batteries, which aims to standardize the processing of used EV batteries and also integrate reliable data regarding the used EV batteries.

Jeju Island is highly committed to achieving the goal of reducing carbon emissions. It encourages citizens to lead an environment-friendly lifestyle that is conducive to achieving the carbon goal. Therefore, Jeju Island plans to launch a blockchain-based energy usage platform. The platform holds the records of citizens’ energy-saving activities, and those records can be used to exempt taxes.

Gangwon-do Gangwon plans to provide a blockchain and artificial intelligence (AI) enabled healthcare service. The users’ health records will be retrieved and analyzed using AI algorithms to assist doctors in diagnosing and treating patients, and the blockchain based platform will securely store users’ health data and doctors’ prescription.

Busan-si 

In 2020, Busan launched a blockchain-based smart card for identity verification – Decentralized Identifier (DID), which can help citizens to access public services, e.g., receiving government benefits or visiting certain buildings. DID-based services can be used both online and offline. Either way it is used, the blockchain based platform can secure users’ privacy and also prevent information leakage to unauthorized parties [31].

Despite the provisions put in place by the city administration to ensure the water quality, some citizens still do not trust it. To address this, in 2020, the Busan city created a blockchain-based IoT platform, which allows citizens to check the water quality directly [25].

Jeollabuk-do Within the Jeollabuk district, there is a famous Korean traditional village that attracts many tourists, called Jeonju. The district has established a cryptocurrency ecosystem, with which tourists can purchase food and souvenirs in Jeollabuk. Both tourists and merchants welcome the initiative due to fund safety and commissionless transactions.

2.2.1.Federal government of the United States

The US federal government has a decent level of interest in the adoption of blockchain technology [9]. However, the relevant regulatory department has expressed concerns that virtual currency, especially cryptocurrency, carries risks such as jeopardizing financial stability, tax evasion, or money laundering. To address these concerns, several ministries of the federal government are developing or enacting necessary regulations. The current status of laws and regulations regarding blockchain at the Federal Government level in the United States is presented below [5].

2.2.2.State governments of the United States

Many states in the US have enacted laws regarding the usage of blockchain and initiated blockchain-related pilot projects in their public services. Some of the high-profile projects are reviewed below and summarized in Table 3.

Delaware Among state governments, Delaware is considered as one of the first-movers to adopt blockchain. As over 66% of the Forbes 500 companies are headquartered in the state, Delaware always pays close attention to the latest technological developments, e.g., blockchain. Delaware envisions that blockchain technology can further facilitate the companies’ operations. The state rolled out Delaware Blockchain Initiative (DBI) and divided the initiative into three stages [41].

The first stage was to adopt the distributed ledger technology at the Delaware Public Archives, where documents would be recorded on a blockchain-based system that stored data without the risk of being tampered with.

The second stage was to adopt smart Uniform Commercial Code (UCC) based on blockchain. Because the traditional paper-based UCC filing process has been deemed inefficient and prone to errors.

The third stage was to make distributed ledger systems completely transparent. By integrating blockchain with distributed ledger systems, the state government, institutions, and citizens can access the distributed ledger without limitations of place or time. The state government of Delaware aims to eradicate the risks of accidental and intentional data tampering.

However, as a first-mover, Delaware faced the technological limitation of blockchain – a low speed of processing simultaneous transactions, which is a known problem for current blockchain-based systems. In 2018, the state government of Delaware decided to end the DBI project. The reason was that the state government’s expectations to streamline operations of both state administration and companies were not fully realized [15].

Illinois Illinois is among the states that showed a significant interest in utilizing blockchain technology to their governance systems. In 2017, the state government of Illinois initiated several blockchain-based pilots. Studies undertaken by the government of Illinois showed positive results of the introduced blockchain services, although the government also concluded that the Proof-of-Work (PoW) – a method of blockchain – is inefficient [24].

Vermont In 2018, an act regarding blockchain business became legal, and two pilot projects were launched in Vermont [37]. The Act created a new type of business – Personal Information Protection Company (PIPC), which manages personal data for business purposes. The Act stresses that PIPC must protect personal information from being leaked.

Moreover, Vermont initiated two blockchain pilot projects: an insurance document management platform and a blockchain-based land registration system. The blockchain-based insurance project aims to reduce insurance costs by reducing the risk of insurance fraud (i.e., using credible and immutable data) and shortening the insurance claim time (i.e., using condition-controlled smart contracts).

Burlington, Vermont initiated a blockchain-based property title registration system to streamline the property title registration process. The traditional system for title registration was a long and tedious process: the deed rendered to the property registry office; then, the documents copied, stamped and returned to the agent; finally, the agent recorded a copy of the documents and then passed the documents to the buyer. In the proposed new system, the deed’s copies can be saved on blockchain, which will be done in cooperation with the Burlington government for scanning, hashing and storing all documents. All people or corporate representatives who are involved in property transactions can access relevant documents [2].

Wyoming In 2019, Wyoming enacted a law, referred to as SF0125: digital assets-existing law [21]. The law received wide attention, which is because, according to its proposition, digital assets (e.g., cryptocurrency) are given super-negotiability protection in Wyoming. In other words, digital assets are being considered as valued assets equal to cash. As UCC filings are considered as “uniformed federal law”, Wyoming needs to figure out how to maintain the standard code, which will eventually succeed in matching the digital assets with UCC categories.

SF0125 actually covers the entire spectrum of digital assets and divides them into digital consumer assets, digital securities, and virtual currencies [6].

New York In the context of the COVID-19 pandemic, the New York City of the New York state initiated a pilot service that can track individuals’ health status, especially aiming at protecting people in gathering places, such as theatres or stadiums. This service manages users’ COVID-19 test results, as well as vaccination history, which can be used to facilitate users’ access to theatres or stadiums. New York City expects this service can help to prevent the virus spread and boost the city economy [3].

California Berkeley, California, is the first administrative region that issued its municipal bond through cryptocurrency [12]. Berkeley expects that this will solve fundamental issues of traditional municipal bonds: poor liquidity, and complicated conditions. Moreover, Berkeley expects people to become more interested in municipal projects and directly invest in government-funded projects using government-backed cryptocurrency. Burlington of Vermont, Lawrence of Kansas and Cambridge of Massachusetts also have started to adopt similar municipal bonds [28].

2.3.1.Central government and ministries of China

In 2016, blockchain was noted as one of the strategic frontier technologies in the “The 13th five-year plan for national informatization”, which shed light on the direction for informatization in the next five years [44]. It is the first time that blockchain appeared in a key informatization guideline document at the central government level. As prices of Bitcoin and other digital currencies rose rapidly, the Chinese central government always took a clear restraint attitude on cryptocurrencies. In 2017, seven Chinese government agencies including the Central Bank of China jointly issued “Announcement on Preventing the Risk of Financing of Token Issuance” to warn the investment risk brought by the issuance of cryptocurrencies [17]. In 2018, Ministry of Industry and Information Technology released a white paper “China blockchain technology and application development”, which indicated the technology path of blockchain and the future direction of blockchain standardization [33].

In October 2019, China’s top leadership attended a group study focusing on blockchain. A statement was released after the meeting, which stressed that China’s financial sector will uptake blockchain as an important tool to catch up and compete with the leading international financial peers. It added that blockchain-enabled applications shall also be extended to digital assets trading, digital economy, digital finance, supply chain finance, inclusive finance, Internet of things and intelligent manufacturing [45].

Unfortunately, it has always been a fact that the regulatory supervision would fail to keep up with the pace of innovation. Especially in the case of blockchain, a lack of suitable regulations is one of the main factors hindering its large-scale rollouts in China. In order to take benefits of blockchain (e.g., transparency and immutability), the Central Bank of China supported the expansion of blockchain-enabled financial projects. At the end of December 2019, the city of Beijing started to test pilot projects within the supervision sandbox, or the Chinese version of regulatory sandbox, which is a kind of closed testing environment for developing new business models that are not supervised by existing regulations. In August 2020, Beijing, Shanghai and Shenzhen announced the pilot applications to be tested in the regulatory sandbox. The Yangtze River Delta also established a regional regulatory sandbox for enterprises to trial pilot implementations.

A number of blockchain based smart city projects have been initiated since the release of the national smart city policies [46].

2.3.2.Provinces and cities of China

Beijing Beijing aims to equip the city with “new infrastructure” and trial the blockchain technology in digital government services. In 2020, Beijing released a blue book on “Innovative Applications of Blockchain in the Municipal Government Services”, which asserts the necessity, feasibility and significance of introducing blockchain into the field of government services [4]. Twelve pilot applications are showcased in the blue book, some of which are explained below.

Xiong’an, Hebei Following the government’s blueprint, the project “digital Xiong’an, smart new district” was initiated in Xiong’an, which is now a leading smart city in Hebei. Xiong’an branch of Industrial and Commercial Bank of China formulated a blockchain plan to integrate governmental and financial services, which can augment the collaborative advantages. For example, Xiong’an and the Industrial and Commercial Bank of China jointly released a blockchain platform for managing requisition and demolition funds of old buildings in Xiong’an. This is the first such kind of blockchain application for the requisition and demolition management in China. Utilizing the blockchain features of traceability and immutability, the platform empowers Xiong’an to innovate the government services to ensure the transparency and fairness of the demolition funds [42].

Nanjing, Jiangsu In order to respond to the challenges of an aging society, Nanjing put forward a blockchain-based time bank of elderly-care service. The concept of time bank is to encourage volunteers to provide services, e.g., the elderly care, and store the service time according to certain standards. When volunteers themselves need it, they can withdraw the accumulated service time and exchange them for the services they need. The essence of the time bank concept is “time for time” which can be colloquially summarized as “all for one, one for all”. The first time bank pilot was launched in Zhaoyuan residential community in Nanjing, which stores the volunteering time on blockchain and also facilitates exchange of time coins in Alipay’s time bank. The government of Nanjing plans to integrate the “time bank” into its service portfolio following a full trial of the pilot [47].

Shanghai 

Zhejiang Zhejiang implemented a blockchain application for government affairs, with emphasis on electronic bills, judicial certificates and market supervision. Entrusted by the State Administration for Market Regulation, the Market Supervision Bureau of Zhejiang has been testing an online transaction monitoring platform, which is expected to be rolled out in other provinces after the trial. The platform adopts the alliance chain technology, takes various judicial agencies as information nodes, and preserves electronic evidence for suspected commodities. The platform is designed to achieve almost real-time compliance supervision for market transactions [18].

The city of Ningbo strives to become a blockchain powerhouse in Zhejiang. For example, Ningbo Power Supply created a blockchain platform for insurance. It is the first such application that assists customers to claim the power failure insurance in Zhejiang. The Ningbo blockchain centre and the digital currency research institute of People’s Bank of China are jointly undertaking a national key project on blockchain-based platform for trade finance. Ningbo also cooperated with Huawei and the Zhejiang Provincial Bureau of Cultural Relics to carry out a research program for social-cultural relics based on blockchain [43].

Chengdu, Sichuan Chengdu, a central city of China, has the ambition to build a “full coverage, full information, and full services” digital infrastructure to support the deep integration of big data, artificial intelligence and blockchain to provide one-stop services, such as business incubation, business docking, corporate investment, and financing.

In January 2019, the blockchain special committee of Chengdu issued a report on blockchain, calling for acceleration of the development of blockchain technology. Driven by a series of policies, Chengdu has been cultivating blockchain applications in various fields [19], which are reviewed as follows.

Shenzhen, Guangdong In response to the call for “one-stop” services, Shenzhen launched an application called “i-Shenzhen” that integrates the government affairs and services on a blockchain platform focusing on electronic certificates and licenses [7]. “i-Shenzhen” has now launched 24 types of commonly used electronic certificates and licenses, such as identity, social security, business license and driver license, which provide great convenience for citizens to do business online. Those electronic certificates and licenses not only conveniently help in ascertaining “who is who”, but also solve the trust problems. This is materialized by building a series of new credit-related ecosystem for identity proof including credit generation, credit authorization, and credit economy.

Shenzhen Taxation Bureau is committed to building the country’s first blockchain electronic invoice system [29]. The blockchain based electronic invoice fulfils the encryption processing of invoices as well as transactions synchronization. It also combines invoicing and reimbursement processes by integrating fund flow and invoice flow. Due to its advantages of immutability, transparency, traceability and privacy, it was soon applied to other fields including rail transit, financial insurance and real-estate sales. In particular, during the recent pandemic, the blockchain electronic invoices gained more attention and successfully entered the healthcare system with its contactless advantage.