Cryptocurrencies are taking the world by storm. It started with Bitcoin and has continued with the creation of more than 2500 cryptocurrencies. One of the biggest contributions of this craze has been introducing humanity to blockchain technology.
In short, blockchain technology, which we can define as an unalterable archive that records all transactions, which can be public or private, performed over the network, first entered our lives as “the technology that forms the infrastructure of cryptocurrencies”, but today it is used for many different purposes in many different industries. The transparency and reliability offered by the technology promises revolutionary innovations in finance, insurance, transportation, healthcare, and many other fields.
Recently, blockchain technology has also been frequently used in environmentally conscious initiatives. In this respect, we can say that the technology is of great importance for the future of our planet.
For example, Steve Wozniak, one of the co-founders of Apple, founded a new company called Efforce. According to Wozniak, one of the most effective ways to combat climate change is to increase energy efficiency. Unfortunately, despite the long-term benefits of these upgrades, companies sometimes struggle to invest in efficiency upgrades upfront. Efforce, on the other hand, utilizes smart contracts to make improvements that result in energy cost savings that are then partially returned to the original investor in the form of a cryptocurrency token called WOZX.
Similarly, companies like Lo3Energy and SunContract are using blockchain to create consumer-centric, localized energy markets that overcome the massive inefficiencies of centrally run power grids.
Energy efficiency is not the only application of blockchain for environmental sustainability. Social Plastic, for example, allows people to turn the trash they collect into digital tokens that can be exchanged for food, fuel, or other goods. Users can record their transactions on the Social Plastic blockchain via their mobile phones, ensuring full transparency. The collected plastic is then recycled to make new products.
Providing transparency in supply chains is also one of the applications where blockchain technology is frequently used. Solutions such as VeChain, Provenance, Food Tax and IBM Food Trust use blockchain to transparently track a physical product from its source to the store shelf. This allows for the optimization of transport routes, reducing carbon emissions, preventing waste, and increasing consumer knowledge about unsustainable environmental practices.
There are many applications of blockchain technology that can have a positive impact on the environment. So why do all these companies prefer blockchain? The reasons are generally categorized under 3 main headings:
- Transparency: As mentioned before, blockchain technology is completely transparent. Each transaction has a unique identifier, and the associated value is visible to anyone who accesses the system. This means that investors can track whether their money is going to the project they paid for, thus ensuring supply chain integrity, and preventing corruption.
- Speed: Thanks to blockchain technology, transactions enable faster execution and less latency, making the whole process much more efficient. Instead of working through slow, cumbersome banks or centralized servers, the process happens instantaneously in a decentralized way.
- Cost advantage: Due to its high-tech and decentralized nature, blockchain reduces the costs associated with verifying transactions by eliminating the need for trusted “third parties” or intermediaries. This makes verification, a key issue in many eco-friendly projects, much easier and cheaper.
This trifecta of transparency, speed and cost-efficiency means a new and innovative future for everything from finance to environmental protection. Not only will the technology improve human lives in countless ways, but it will also significantly benefit the environment.
Why is blockchain important for the environment?
The now well-documented fact that we are severely polluting the world we live in and irreversibly destroying resources has given governments’ concerted efforts to address the problem an ever-increasing momentum since the 1990s. And we are only now beginning to see the results of these efforts.
For example, the ozone layer, which thinned by about 10% in the 90s due to the increasing use of CFC (chlorofluorocarbon) gas, has started to increase in thickness by 3% per decade since 2000 because of the measures taken against the use of this gas. This is great news. Is it enough? No, it is not. This is just the beginning and moreover, some countries, including China, are still claiming to be a threat to the ozone layer with some of the chemicals they produce.
It is right that environmental problems should be addressed in a coordinated way by governments. But because of the complexity of the system, the different interests of the players and the high cost of environmental investments, there is still a long way to go. Governments should first agree on any issue, then the necessary auditing and measurement/reporting mechanisms should be established in accordance with these agreements, and finally, private, and public players should act in accordance with these rules, measure the results of their actions and report them to the relevant authorities. This is a very slow mechanism. This slowness may lead us to leave an irreparably damaged planet as a legacy for future generations.
Since the early 90s, negotiations have resulted in intergovernmental agreements in many areas and countries have been set reward/punishment systems and targets to reduce pollution. Measurements have also been taken for a long time. As a result of these measurements, companies that win awards, especially for the damage prevented in greenhouse gases, make their environmentally friendly investments more profitable by selling these awards to companies that harm the environment. In other words, the wheel is slowly turning.
However, we are still at the beginning of the road. There are still many improvements to be made for the system to work properly. And this is where blockchain-based technologies can help us. We should not only think of it as improving the existing system. Brand new systems can also be built from scratch. There are so many actions that can be taken in this area. For example, the World Economic Forum has even prepared a report with 65 different ideas/initiatives that can be implemented in the environmental field (you can access the pdf version of the report here). We will look at the content of this report in the rest of this article.
Where can blockchain be useful?
A report, prepared in collaboration with PwC and the Stanford Woods Institute, focuses specifically on how Blockchain can be applied to environmental problems such as climate change, loss of natural diversity and water supply constraints. It argues that, when built correctly, blockchain technology has the potential to provide cleaner, decentralized solutions that make better use of resources, unlocking natural capital and empowering communities.
In the meantime, two issues previously raised in these columns are also highlighted here. The first is the power of new technologies to redistribute value created while changing (or even inverting) existing traditional economic systems, not only to capitalists but to all stakeholders. The second is that such major changes will not happen spontaneously. For change to take place, all stakeholders, from technology providers to policy-making institutions, need to gain the ability to work together. It is not enough to simply implement a technological platform; systems must also change for this change to be permanent.
Would you like to be part of green blockchain environment? Contact Enkronos blockchain team.