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Seoul to release native cryptocurrency by November in blockchain smart city transition

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A local digital currency, separate from the national currency, is an essential part of the smart city toolbox.

Seoul is nearing several significant milestones in its journey towards becoming a blockchain smart city, blockinpress reports. By November, it aims to have the following in place:

  1. Public services accepting Korea's national blockchain ID system as valid documentation.
  2. A blockchain system for managing part-time worker labour contracts, insurance and work history.
  3. A native city-wide cryptocurrency, dubbed S-coin.

According to blockinpress, S-coins will be redeemable for rewards and given to citizens when they use public services and participate in citizenship duties, such as paying taxes and participating in public opinion polls.

Beyond that, the potential applications of a digital currency such as S-coin are almost limitless, as a way of shaping people's behaviour and streamlining interactions in the smart cities of the future.

The value of S-coin

To understand the value of the S-coin – the real rather than speculative value – it's important to understand that one of the guiding principles of Seoul's smart city program is to put engaged citizens at the centre of everything. After all, a city (and the entire planet for that matter) is for the benefit of its inhabitants first and foremost.

A native cryptocurrency is an excellent way of incentivising desirable behaviour in an organic way.

As people have previously said, government incentives have historically been oriented almost solely around punishments. Citizens behave because they get punished if they don't. But just about every piece of behavioural research on the planet says a combination stick and carrot approach is by far the best way to instil desirable behaviour in humans and other animals.

Why cryptocurrency is better than money for incentives

For the purposes of influencing citizen's behaviour and building a smart city, you need to have an incentive other than money available.

First, the Korean won is the national currency and it has to be accepted everywhere. You can't experiment with it, restrict access or start adjusting prices without the risk of causing some serious damage.

Second, the S-coin is purely digital, which means it can be programmed as smart money. As the government, you can choose in exact detail where it can and cannot be spent, in which quantities and frequencies, and so on. You can choose exactly how useful and valuable it is at any given time or in any situation, which is essential for ensuring it functions as a suitable incentive.

For example, you could prevent people from transferring it to each other freely, but could still let parents give it to their children as rewards for good behaviour and program it to be redeemable for specific treats at certain stores – but only when being spent by a child.

Plus, by choosing where the S-coin can be redeemed, you can ensure that it's only spent in beneficial ways. For example, letting people redeem S-coins for public transport encourages public transport use, making the issuance and redemption of S-coins more of a win-win situation rather than a cost to be borne.

You can't do this kind of stuff with money.

Although the exact scope of S-coin, and where it will be rewarded and redeemable, is still up in the air, some of the areas it could be applied include the following:

  • Encouraging citizen participation in governance
  • Facilitating cooperation between citizens
  • Information gathering

Cooperative public-private decision-making

As a rule, most voters are apathetic. The exceptions to this rule are typically places with a longstanding history of citizen participation, and where participants can get a genuine sense of empowerment.

Only time can create that tradition, but a combination of incentives and some new processes can help create that sense of genuine empowerment on which everything rests. In this case, S-coin is the incentive part of the puzzle. South Korea's citizen's suggestion box website is another. Here people can make proposals, and others can vote on them.

Popular proposals go to public discussion forums, where government, private sector and citizens can all weigh in.

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The suggestion box is a mixed bag, as one would expect.

Of those above, the one on the far left is a complaint that funds for a new public fertility centre were misspent, and the money should instead have been earmarked for infertile couples directly, so they can seek out their choice of provider. The far right is a suggestion that public bathroom locks have three colour-coded settings rather than the binary "vacant" and "not vacant" options, so people can use the colour codes to indicate how long they'll be spending in the bathroom. That way people will know which stalls to most efficiently queue outside of, and people won't have to knock on the doors as much.

Right now the goal is to encourage more use of the suggestion box site, and more citizen participation in it to the point that it can start meaningfully driving development in more ways.

It's important to note that this isn't just for city or nation-wide suggestions. Many of the issues raised on there are most relevant on local levels. According to some theories, one of the best ways of encouraging citizen governance is by dividing things down to local levels. By breaking things down to a local governance level, citizens can have a meaningful voice and can start seeing results from their participation in governance.

Facilitating cooperation between citizens

Incentives can help citizens organise and cooperate among each other much more effectively in that smart city kind of way. For example, since 2016 Seoul has been using a shared private parking scheme to reduce incidents of parking violations and more efficiently allocate parking space.

Seoul has 3.4 million parking spots and 2.6 million registered vehicles, so obviously parking is a major problem given how inefficiently we use space when left to our own devices.

As is common wherever parking is tight, the on-street parking in front of people's houses belongs to them. Otherwise, you risk multi-car households hogging the neighbour's parking spots, and people having nowhere to park after arriving home from work.

Unfortunately, this system inevitably results in a lot of parking violations and headaches for everyone, as well as an enormous amount of wasted space as resident parking spots go unused during the day.

The solution, which emerged as an experiment in Seoul's Seocho-gu borough in 2016, was for residents to register their priority parking spots on an app, along with a price per hour. The residents can mark the spots as available when the space is free, and people can park there for limited times and pay the parking spot owner through the app. The parking spot owner gets some extra revenue, and drivers can find more parking cheaper.

In the first year after its introduction, this scheme saw parking violations drop 60% in Seocho-gu. The extraordinary success saw the Seoul Metropolitan government roll it out across all 25 districts. Money works fine as an incentive in countries with a functional domestic payment network, letting people make these kinds of peer-to-peer payments.

But cryptocurrencies like S-coin can add another dimension to these kinds of schemes.

For example, by allowing S-coin as a payment method for parking, you can encourage more drivers to take part in governance to earn those S-coin rewards and to avoid the risk of governance interest skewing towards public transport-takers.

Also, your behavioural modification toolkit is much more flexible when you have both S-coin and Korean won at your disposal. For example, you could quickly make S-coin more valuable to encourage more participation by offering discounts, relative to the Korean won, when people pay for something with S-coin.

Information gathering

Citizen data plays an important role in building smarter cities. If a government is investing billions in public infrastructure projects, it's good to know the money is being well spent. Sometimes it's simply not enough to commission a survey or let lobbyists tell you what their clients think is in the best public interest.

For example, prior to building out its night bus lines, Seoul metropolitan government analysed the origins and destinations of about 3 billion taxi calls made after midnight.

But attitudes towards sharing information with one's government vary widely by country. People might welcome it if it goes towards the construction of useful public works. But it might be much less welcome if, for example, your government is selling your data to marketing companies.

Digital currencies can present a way of collecting information that's attractive to both parties.

Citizens can be directly rewarded for voluntarily providing certain types of information such as a map of their daily commute or the air quality in their location. It's better than getting nothing, and by using the same local cryptocurrency for this and for everything else, the provision of that data can be seen as a civic duty of sorts.

On the data, rather than the currency, side of things, you also have the assurance that blockchain can provide, where governments can collect verifiable correct information without actually collecting the data itself.

Down the line, you could even have the government start acting as a secure data thoroughfare, collecting information of all kinds from its citizens and then making it all freely and publicly available in ways that preserve individual privacy.

Beyond simply being interesting, this would also be a boon to the local private sector, which could probably think of a few ways to use all that data.

Smart cities

The smart city ideal is getting closer by the day, but it naturally won't arrive at the same speed everywhere, and South Korea's blistering evolutionary pace comes courtesy of some of the same reasons it's such a cryptocurrency-friendly location.

Half of South Korea's population lives in Seoul. It has a population four times higher than Los Angeles in less than half the space, furnished with the world's fastest Internet connection.

But this is just one smart city.

As previously mentioned, smart cities are for the residents, and each will be shaped to a great extent by local needs and cultures. Consequently, smart cities will take very different forms in different places. They will be a digital reflection of the lay of the land.

Whether smart city efforts are government or private sector driven, which issues are front-of-mind for residents, how receptive governments are to citizens and many other factors, will all determine the shape of cities of the future.

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Disclosure: The author holds BNB and BTC at the time of writing.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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