Cities aren’t quite ready for blockchain, CIOs say

Cryptocurrencies — and blockchain, the decentralized distributed-ledger technology that powers them — are more popular than ever in mayor’s offices around the country. But technology officials, in cities like Miami, Philadelphia and San Jose, California, still have unanswered questions about how the technology applies to their local governments.

Though public blockchains — which provide a mostly tamper-proof method of keeping records without the need for a trusted third party — have existed for more than a decade, Miami Chief Information Officer Mike Sarasti said he only recently began taking them seriously. Sarasti told StateScoop that until 2021, he had mentally cast aside the technology as a “generic smart-city” sales pitch, most often encountered through cold emails or events held by blockchain enthusiasts within Miami’s budding technology sector.

And until recently, he said, he wasn’t swayed by blockchain’s potential government use cases, few of which have taken hold in cities. A handful of states have formed blockchain committees to study the technology in recent years, but locally, Sarasti said, “it didn’t really have a lot of meaning for me.”

“Everyone was just like ‘blah, blah, blockchain,’” Sarasti said.

A change of heart

Sarasti’s attitude changed, however, when Miami Mayor Francis Suarez took steps during the COVID-19 pandemic to embrace the technology. Suarez has courted cryptocurrency mining operations, considered paying city staff partially in bitcoin and recently went public with support for CityCoins, a cryptocurrency nonprofit that helps fund local governments with digital currency.

Now, “it’s a whole different ball game,” Sarasti said. Miami will soon invite companies to propose how they could help the city accept and invest in cryptocurrencies. Sarasti said the city is also exploring how validation, verification and auditing could be automated through the use of blockchain, potentially improving the efficiency of decades-old government processes, he said.

“Blockchain is creating a real possibility that those things at some point could be automated without the need for trust,” Sarasti said. “That’s the thing that well-designed, secure blockchains are enabling. They’re enabling an environment where you don’t need an individual guaranteeing trust — you now have the technology itself and you can now have trustless transactions.”

Sarasti said it will take time for those innovations to make their way into city government, largely because the knowledge required to navigate local government bureaucracy aren’t well-documented or easily translatable to software developers who’ve never been in government.

“To the extent that there are still a lot of unanswered questions, in practice this is still a very difficult thing for government to adopt,” Sarasti said. “One, because of the mindset change and the cultural shift that’s going to need to occur to some extent isn’t insignificant. And frankly, we still have a lot of government processes trapped in people’s minds.”

‘The rhetoric is off the charts’

Philadelphia CIO Mark Wheeler said he’s also become more intrigued by blockchain over the past few months. Despite questioning some of the promises from blockchain enthusiasts that it will lead to a “utopia” of government efficiency, Wheeler said, he said “there is more to the technology than I had learned about in 2018. And there seems to be a great deal of interest.”

“If at some point this really takes off, and Philadelphia wants to be a CityCoin participant, I want to really understand how this mining works, stacking, holding a token that is related to bitcoin and what that holding means and why you would get a reward for that,” Wheeler said. “It’s not for the faint of heart.”

Even as a technology official, Wheeler said, he had trouble at first understanding the complexities of blockchain, leading him to question how effective it could be for Philadelphia. The city has no plans to test blockchain, but Wheeler said he’s looking for experts who can help the city find possible use cases.

“I don’t know where we’re going. I just want to have a conversation with my local blockchain people. People who’ve been doing the work, believe in Philadelphia and see what we might be able to do together,” Wheeler said.

One use case that piqued Wheeler’s interest was blockchain to track vehicles, allowing the city to know “what all of the Ubers, all of the rental cars and privately owned vehicles are doing, not necessarily who’s behind them,” Wheeler said. He said the city might be able to better manage congestion if it collects aggregated data on where vehicles park, stop or which roads they take. That’s a promising idea, Wheeler said, but it’s not something the city could do on its own, and there are still a lot of unanswered questions.

“We can’t anticipate them all, but we have a chance to have a much better conversation about unintended consequences,” Wheeler said. “And unfortunately, when I’m in some of these chatrooms on Clubhouse, the rhetoric is off the charts with how magical the world is going to be once we’re all using bitcoin and there’s no more banks and no more governments. It’s just not helpful.”