There were 308 projects from 58 countries competing for the prestigious City Project Award at the Smart Cities Expo and World Congress in Barcelona, Spain, in 2017. The award, which recognises the most 'innovative and successful' projects in an urban area, went to Smart Dubai Office for its Dubai Blockchain Strategy.
It is a telling moment both for blockchain – a technology that many business people still viewed as emerging – and for Dubai, which has set a goal of being the first government in the world to conduct all of its transactions in blockchain by 2020.
The early adopters
Dubai is not the first country to promote blockchain. Estonia uses blockchain for many of its state services, according to Avani Desai, executive vice-president at Schellman & Co, a security, privacy and standards compliance assessor. Estonia reports it has already saved 2% of GDP in 2016 through using blockchain, she says.
Dubai, and Estonia before it, illustrate that blockchain technology is gaining momentum, not only in the private sector but in the public one as well. A survey by the World Economic Forum recently found that a majority of IT experts believe 10% of the world’s GDP would be stored on blockchain by 2027, according to Ms Desai, much of it driven by government usage.
Blockchain advocates speculate which location will get there first to become the de facto blockchain capital of the world. Cities such as London or Singapore, both currently making progress, are certainly contenders, as well as Dubai.
A friendly environment
It is worthwhile examining what causes such a pocket of expertise to develop and then transform into a leader. “Certainly a supportive and encouraging government plays a role, but that is only part of the puzzle,” says Areiel Wolanow, managing director of Finserv Experts. “An existing base of software development expertise plays another part. Blockchain is not hard to learn if one already knows the technologies on which it is built.”
In Mr Wolanow’s view, the most important factor is the presence of customers who are willing to use blockchain solutions. “The UK government is reasonably friendly to blockchain, and Singapore’s government is famously so, having made huge direct investments in blockchain capability,” he says. “Both cities have thriving communities of technologists. Most critically, both cities have a large financial services presence – both fintechs and traditional firms – who are ready customers for blockchain solutions.”
Ms Desai says Dubai also has advantages, even before it snagged the Smart Cities award. The country has good cash flow and a government that recognises the value of the technology, she says. But more importantly, the government and the Smart Dubai initiative have cleared one of the biggest obstacles to blockchain implementation: getting the public to understand and support it.
“[Dubai has] done campaigns on education so people know what the technology is and how it will help [the emirate]. Businesses see how the technology may increase their activities and open them up even more to a borderless world, and consumers see the efficiency of the use,” says Ms Desai. And everyone sees the value in more security and privacy, she adds.