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Cryptocurrency as Incentive for Smart City Participation

Using Smart Contracts for Highly Automated Smart City App Loyalty Program

Photo of John Lindsay
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One issue for “Smart Cities” is enticing citizens to use city services, particularly those that are available via an app. Some of these services/apps can bring a return on investment to the city and value to the citizen. Many Smart City app deployments have failed because they were not used. As cities move to Smart City “platforms”and “suites” to provide services, this can be a problem, as repeat and continuous use of apps is often low, with one article stating that approximately ¼ users abandon an application after one use and users who open an app more than eleven times is in the 30% - 40% range. The problem will worsen, as Georgia Institute of Technology’s whitepaper “Driving New Modes of IoT-Facilitated Citizen/UserEngagement” lists uses cases in water, waste, smart electric grid, public care, safe city, amenity services, traffic, lighting, parking, and home care.

Incentivization has shown to be a possible solution. Recently, British Columbia, Canada piloted an app which used loyalty points to incentivize positive activity for change of modifiable health behavior, with the return on investment to the Canadian governments being lower healthcare costs (where Canadian governments bear the cost of health care).

As Smart Cities evolve, each is building a suite of Smart City apps for its citizens, where non-use means no return on investment. Most Smart City apps rely on citizen loyalty/motivation. Some other direct incentives have been additional in-app content, gamification, and some reward points. Some problems with those incentives are limited use of the rewards and administration of the rewards (apps typically each have their own non-transferable reward and the rewards require administration). Often the administration is left to the application owner or city staff.

This proposal is for an incentive app that would incentivize citizens to use the Smart City apps by use of cryptocurrency as the reward, and “smart contracts” to minimize overhead for city administration or application owners. Of course this would only make sense in circumstances where the “smart city” apps have some economic value to the city, and should be done in proportion to that economic value. 

Ethereum, a "smart contract" cryptocurrency (the second largest next to bitcoin), can be used to purchase a variety of goods, or even converted to dollars. It is the basis of the prototype shown in the image and discussed in the attachments.

The general approach is to take an existing Smart City app (eg an app centered around a city service or provides that enables a city to improve service) and would take the following steps:

1. Select a Smart City app and determine the target incentive activity

For example, the above mentioned Canadian pilot app employed loyalty points to influence health behaviors references risk factors with modifiable behaviors of not getting a flu shot last year and physical inactivity. A payment amount might be some cryptocurrency on a per event basis (ie a receiving a flu shot). A payment amount might be some cryptocurrency on a time basis (ie per hour of activity).

Within a city context, one of the higher expenditures in a city budget and source of complaints is transportation infrastructure. Shaving traffic during peak periods is a frequently cited resolution, with public transportation being a cited method to reduce vehicle count during those peak periods.

2. Modify the existing Smart City app to capture the incentivized target behavior of users

The existing application is updated to provide direct or indirect information to monitor and communicate the target activity within the Smart City app. 

Generally,the incentive would fall into one of two categories:

2.1. Incentivizing the activity for amounts of time – For instance, target incentive behavior for a pothole monitoring/mapping/alert application might be increased usage of the app while driving around the city. That application might be modified to monitor and communicate time usage of the app within a “geofence” of the city limits.

2.2. Incentivizing the activity for on a per event basis – This might make sense for a Miami-Dade Transit Tracker type app. Where the target behavior is x rides per month during rush hour, the app might be modified to monitor/communicate usage event information, perhaps documenting it with a QR code on a Civiq kiosk at the downtown station or event center.

For example, where the payment basis is an event basis, the Smart City app should be modified to submit the event occurrence information to the smart contract. Where the payment basis is a time basis, the smart city app should be modified to monitor usage and submit periodic time usage information to the smart contract.

3. Periodically submit Smart City app usage events for loyalty rewards in the form of cryptocurrency.

Describe who will use your solution (1,000 characters)

This application would be used to incentive citizens to use Smart City apps or increase usage of Smart City apps that have economic value to the city. The direct users would be the owners of the smart city apps and city administrators. The app itself would be mostly transparent to citizens using it.

Describe your solution's stage of development

  • Initial Design - you are still exploring the idea and have not tested it with users

Tell us about your team or organization (500 characters)

John Lindsay - Blockchain programmer, "Smart Contracts for Incentivizing Use of Sensor Based Mobile Smart City Applications" paper for presentation at IEEE BLockchain Enabled Sustainable Smart Cities (BLESS 2018).

Size of your team or organization

  • I am submitting as an individual

Funding Request

  • $75,000

Describe how you would pilot your idea (1000 characters)

1. Select the app, target incentivized behavior, modify app 1.1 Selecting the Smart City App Pick one or two apps with ROI. As the pilot is six months, the apps should be modified by month two. This example uses the Miami-Dade Transit Tracker app as a reference. 1.2. Select a documentable target behavior and audience A target behavior is increased ridership during rush hour, such as larger employers without paid parking, and increased ridership during major events/venues, with expected attendance in thousands. 1.3 Modify the app to monitor and communicate usage. 2. Communications to the target audience Communications attempts to potential rush hour riders or large event riders can be notifications in the Miami-Dade Transit Tracker app, stations, employer distributions, and/or digital ads on target concert/event related websites. 3. Monitor usage/incentives Monitored usage, number of usage events, disbursements, and other information. Possibly adjust & iterate.

Describe how you would measure the success of your pilot (1000 characters)

The key measures would be the number of users who register and the number of usage events through the app.

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Photo of KatieWalsh 100
Team

Hi John, thanks very much for posting your idea here. I'm going to be honest and say I don't know a whole lot about crypto currency - have you chosen it because it improves the security of your idea? Can it easily be spent on normal stuff or converted into money in your bank account? If you can reply with an answer or update your proposal that would be great - or if I've missed something please feel free to point it out to me,

Thanks,

Katie - Facilitator

Photo of John Lindsay
Team

Key advantages of cryptocurrency to the cities for this use case are in the 5th paragraph of the proposal, page 5 of the IEEE_Smart_Cities_PPT_solidCitizen.pdf attachment, and the Smart Contracts background section of the solidCitizen_IEEEBLESS.pdf attachment.

Several problems that this proposal seeks to address are that cities launch apps that are not used, apps that have loyalty points are often for limited rewards and not transferable, and loyalty point programs require administration.

Cryptocurrency, specifically Ethereum, a smart contract cryptocurrenty (second largest in market cap and longevity after Bitcoin) help address those in the following ways:
1. You touch upon one: Ethereum can be converted to dollars or directly used at a variety of retailers or indirectly used at wider variety of retailers, thus possibly providing a higher incentive.
2. Ethereum provides scripted transfer of cryptocurrency which translates to reduced administration for the city and application owner.

Photo of KatieWalsh 100
Team

Great - thanks for reply and good to see Aaron and you making contact, Katie

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