By Loukas Metaxas
Scattered across our social news feeds, this cryptocurrency mania that we find ourselves embroiled in is often merely a token with which to impress your friends. Plenty of mine are now self-proclaimed bitcoin masters, frantically checking the value of bitcoin on the stock market as if they were high-flying investment bankers. Rather than spoil their dreams, my aim is to explore the potential of its underlying technology (blockchain) to make the world a more sustainable place. Blockchain is more than just a platform for cryptocurrency miners. It has the potential to transform business by providing solutions to pressing global sustainability issues. Existing solutions address themes such as energy efficiency and supply chain management.
What is blockchain?
In brief, blockchain is a shared self-governing database of transactions, for things involving value. That can be anything from money to governmental votes. Each transaction is managed as a ‘block’ and added to the chain. Blockchain acts as digital ledger in which transactions are made publicly available through cryptography, ensuring that they remain meddle-proof. It consists of a peer-to-peer network of computers, commonly known as nodes, resulting in a decentralized network without the need for a middle-man to certify the transaction.
How can it be used to solve sustainability issues?
1.) Supply chain management - More and more consumers are looking to buy sustainably sourced products. Blockchain technology can be used to trace a product’s entire lifecycle and hence provide a shared transparency of the products in question. Companies such as Walmart and Provenance use blockchain-like technology to track and monitor meat and tuna supply chains respectively. This helps to focus on promoting key social and environmental features in the supply chain such as farming methods, waste management and fraudulent activity.
2.) Energy management - With energy storage still in its infancy, inefficient surpluses in energy production for conventional and renewable sources are a recurring issue. As a solution, a company called LO3 initiated an experiment where a neighbourhood in Brooklyn was connected and powered by a solar microgrid and used blockchain to manage the amount of electricity being produced and consumed. In this set-up, if a building produced more electricity than required, it could trade it to another building that needed it. This can lead to more decentralized methods of production and distribution, promote the uptake of renewable energy sources and eliminate the inefficient process of long distance electricity transmission and distribution.
3.) Improved environmental regulations - The ‘Cap And Trade’ system in the European Union for example, which sets greenhouse gas emissions limits and establishes trading emission allowances, has very high administrative costs. Blockchain can automate such a system, registering a businesses’ carbon footprint and trading activity in a transparent and secure manner. It can be used as a tool for enhanced market regulation, by helping facilitate which companies may enter the Cap And Trade depending on their carbon footprint history, or penalising those that exceed their emission allowance.
Having only touched the surface on the potential contributions that blockchain could make towards the development of a more sustainable future, it is of course only fair to mention its main flaw. Blockchain technology consumes an enormous amount of energy. In fact, bitcoin mining consumes annually more electricity than the entire country of Ireland does. However, the technology is still in its infancy and developments are underway to change this course. For example, the bitcoin masters out there will be pleased to hear that a new cryptocurrency, ‘SolarCoin’, administered by the SolarCoin Foundation, involves no computational power in their mining activities. Instead, it mines by the production of renewable energy.
All in all, despite the major sustainability challenges facing our planet, there remains hope. We can alter the course of business for the better. Pockets of innovation and technology present one of our biggest opportunities to achieving a sustainable future – meaning that we should explore blockchain’s potential to create positive impacts even more. In any case, the next time your friends start talking about Bitcoin, you can impress them with a new angle for the conversation - using the same technology to make the world more sustainable!