Blockchain Cities: Shanghai Case

The government of Shanghai has unveiled ambitious plans to implement blockchain technology in city management, aiming to virtualize governmental processes. These plans, announced in June, are part of a broader effort by China to embrace and integrate blockchain technology into its governmental infrastructures and systems.

Development of Blockchain Infrastructure Shanghai is investigating advanced technologies to transform the city’s infrastructure using blockchain. The research projects will focus on multichain communication, quantum security, and processes to monitor and censor illegal content on the chain. To realize these plans, the city will start by developing basic hardware, such as computer processors and high-bandwidth wireless electronics.

Monitoring and Governance Shanghai plans to develop container technology to protect different applications across multiple chains, backed by a new type of encryption and zero-knowledge proofs. In terms of governance, economic sanctions will be implemented to discourage improper behavior detected through behavior analysis. Additionally, image filtering and keyword chaining will be used to control content and analyze user access frequency.

Testing and Metaverse Before the full implementation of these systems, the government will test the technology in various scenarios, such as governmental affairs, cross-border trade, and supply chains. Moreover, Shanghai is exploring the potential of blockchain technology in the metaverse, with Chinese conglomerates like Alibaba and Tencent already developing private networks and other provinces expressing their interest in developing blockchain infrastructure.

Impact on Tokenization Shanghai’s efforts in adopting blockchain could accelerate developments in the field of tokenization, a promising technology that immutably assigns ownership of an asset on the blockchain. Although banks like Citi, JPMorgan, and DBS have experimented with tokenized money transfers, the potential of the technology remains largely untapped. William Quigley, co-founder of Tether, anticipates that tokenization businesses will gain momentum in 2024 and 2025.

Challenges and Future Despite advancements, a method to transfer physical items to the token owner after the token transfer has settled on the blockchain has not yet been standardized. Additionally, interacting with digital twins of physical items in the metaverse still faces significant technical challenges.

Conclusion Shanghai’s commitment to blockchain technology marks a significant step towards innovation and the adoption of new technologies in city management. As more regions explore and adopt blockchain and related technologies, a new horizon of possibilities in governance, administration, and urban development opens up, potentially redefining the way we interact with our urban environments and governments.