Behind cryptocurrency lies the technology that makes it possible: blockchain.
Although crypto has enjoyed extensive coverage and discussion, blockchain’s many applications beyond financial transactions extend into methods for automating record-keeping, maintaining accountability, decentralizing regulation, and facilitating new processes and innovative solutions.
Nonprofits, thinktanks, and entrepreneurs are currently exploring blockchain’s potential applications in addressing issues related to the environment. Can this technology provide solutions to enhance sustainability and conservation efforts?
What is blockchain?
The simplest way to think about blockchain is as a virtual checkbook or digital ledger.
Instead of being stored in a physical book, this record is stored in some form of electronic memory. This can exist directly on a device like your phone or computer hard drive, or it can be stored remotely via the “cloud.”
Either way, only you or anyone you authorize can actually access whatever blockchain you have stored. You can move it from where you have it stored. You can also give it to someone else. In these ways, it is ‘decentralized’; you don’t need a third party to manage the ledger since it lives with you.
Now, imagine if your checkbook were also the actual money you were using to pay for purchases. A transaction between you (the buyer) and a seller would involve you handing over your checkbook, giving the seller not just the money but also the records associated with the money. The seller would know where your money has been. After all, you received the money from someone else, who in turn received it from someone else, and so forth in a history that was tracked in the ledger since the money was first “mined,” or created.
An added layer of functionality comes via blockchain’s capacity for smart contracts. These provide objective conditions that must be met before transactions may proceed further. For example, a certain amount of excess material could be produced and detected by sensors; when a certain threshold is reached, this could trigger the production of a certificate or the transfer of resources between parties.
Can you only track money in a ledger? Of course not — any resource that can be quantified can be tracked using a ledger. In this way, blockchain can be used to track the usage of any resource; it just happens to have gained a lot of attention for its applications to money in the world of cryptocurrency.
What are some ways to apply blockchain to save the environment?
Reward successful recycling, sustainability, and conservation efforts.
Financial incentives can motivate everyone—from businesses through individuals—to live green. Annual research figures around trending topics are released by environmental watchdogs and consulting firms, and these numbers show pollution tied to huge dollar amounts lost within local economies.
The Yangtze River alone contributes 55 percent of the plastic waste polluting the ocean. All industries suffer; from fishing through tourism, they incur losses of billions of dollars. For businesses along the Yangtze, major gains could result from environmental accountability. Over time pollution accumulates and generates additional damage to the environment. The tragedy runs deeper when pollution encroaches on a heritage of biodiversity, such as in Indonesia.
But tracking the flow of resources is expensive. It costs time and material resources to execute. Regular audits are needed to ensure that the data obtained are reliable. Building systems to collect and process the waste in sustainable ways costs additional R&D time.
Enter blockchain. Well, enter major US corporation S.C. Johnson in partnership with Canadian startup Plastic Bank. Together, they seek to prevent plastic pollution in the ocean—using blockchain as their primary tool.
The two groups acknowledged that poverty is a major regional problem alongside plastic pollution, and potentially exacerbates the lack of green habits. Addressing both of these problems could positively impact the region and reinforce adherence to good habits. They have implemented a platform where individuals can bring plastic to recycling centers and receive digital tokens as compensation. These tokens use blockchain technology to track value and ownership and can be used for purchases in local shops.
Why blockchain? Why not just give people money in exchange for the materials they brought in?
The answer lies in how blockchain provides a scalable, secure way to deliver value to individuals. Many of the people in these heavily polluted areas do not have bank accounts, while carrying cash can prove dangerous in many impoverished (and crime-ridden) areas.
Instead, blockchain wallets are stored locally on their phones. “Payment” made for materials brought to the recycling center need not be local currency; they can be credits for essentials like food, water, or even the ability to charge one’s phone. Storeowners can use apps to securely receive payment.
Each token contains a ledger of its history, allowing for internal accountability to ensure the value is taking its intended course: to reward individuals who promote the recycling of plastic, and therefore reduce waste in the ocean. Donations can be made to the recycling center with the guarantee that they will be spent on such programs.
Optimize energy consumption and trading.
The sale and distribution of energy involves extensive infrastructure and high costs. The people and groups administering its systems wield a lot of power, with a high financial barrier of entry for any potential newcomers. This is not an ideal environment for transparency or efficiency.
Blockchain and its smart contracts can reduce the associated costs, reliably automate accurate record-keeping in real time, and streamline energy transactions. McKinsey recently released a report on what blockchain can do for electric power and natural gas, although these insights can translate into general utilities and commodities trading.
For starters, the use of renewable energy certificates (RECs) can become more widespread using blockchain technology. Using sensors that report to the blockchain ledger, actual generation can be monitored and used to issue RECs; currently, this is done based on forecasts. Eliminating the need for separate steps to estimate and then to verify the energy figures saves costs both for producers as well as for public agencies, who also have to deal with storing the figures. In fact, energy transactions in general can occur in real-time, using smart sensors connected to blockchain ledgers.
Blockchain has low costs associated with each transaction. Again, the ability to automate (through code) steps that otherwise would have involved the steep costs of maintaining manpower saves money. This opens up growth opportunities for companies. For example, if a small energy producer now has surplus resources available, they can afford to sell excess energy. Blockchain’s smart contracts allow for production data to be communicated in real time between producers and interested parties, who can then buy the power and immediately receive it.
Because blockchain can operate via mobile networks and remote sensors, undeveloped regions can use it without having to worry about building complex infrastructure. This allows for the implementation of systems like electricity in areas that don’t otherwise have them. For example, individuals in remote African areas can install loaned solar panels that have been fitted with blockchain technology and use mobile payments to gradually pay off the panel and even sell power to their neighbors.
Track and reduce water consumption and pollution.
As the global population only continues to grow, so does its demand on the Earth’s resources. Water is one of them. All signs point to current population growth leading to water shortages for as much as half of the world’s population by 2035, both as a result of direct consumption as well as usage for food production.
This problem is only made worse when the effects of industrial and consumer water pollution are considered, further restricting the amount of drinkable water that is available.
Because natural water sources are often shared resources, there are political and cultural disagreements over their usage and protection. While current agreements could be further refined to fully address environmental concerns, even the limited policies in place have proven to be problematic. Regulation to actually enforce these policies has not been effected, while local conflicts further reduce potential cooperation. How can third-party enforcement be carried out?
Sensors and blockchain technology — once again, with its capacity for smart contracts — can come into play here and help out. Sensors can detect water pollution, and levels can be documented in the blockchain ledger, triggering specific actions at specified cut-offs. The same can be said of water consumption. In the case of water policy, such as the Clean Water Act setting standards for industrial pollutants in waste water, blockchain can be used to enforce the standards in real-time. This not only eliminates the high costs of manual checks by government agents; it actually allows for faster detection of problems.
Help ease climate change.
Climate change continues to be a major global concern. 97% of climate scientists concur that the last century’s worth of escalating global warming is likely due to human activities. In 2015, 196 countries came together and committed to fight global climate change as part of the Paris Agreement.
And yet, a scan of the news in the years since reveals that national affirmations either confirming or denying ongoing participation in this agreement show how political conflict can get in the way of environmental action.
Pulling out of environmental agreements endangers both the detection of climate change as well as the protective measures put into place. Taking the power for compliance away from governments and making it an automatic, real-time process will increase the likelihood that global warming may continue to be tracked and even be reduced.
For one thing, carbon emissions – closely tied to global warming – could be monitored using independent sensors and blockchain ledgers. Carbon emissions could be public knowledge that can be used to apply the pressure needed for effective policy changes.
A public, open-source blockchain protocol is already in the works with The Blockchain for Climate Foundation, which is working to place the terms of the Paris Agreement onto blockchain. Its initial build is starting in Canada, but it aims to reach all of the countries under the Agreement and connect their carbon accounts into one unified spot for recording and real-time data gathering.
This will allow for transparent tracking of country emissions. But it will also allow for the conversion of emission reduction into an asset that can be traded. Using smart contracts, reductions can be tied into a rewards system like what we’ve seen with plastic or even renewable energy certificates.
Maintain accountability for nonprofit contributions.
We keep referring to blockchain’s capacity as a digital ledger of transactions. We’ve previously described its capacity to track the flow of donations and ensure they are being used towards their intended purposes through the use of smart contacts.
By restricting the ability to use currency until specific conditions have been met – such as the fulfillment of promised action items as part of a nonprofit’s development plan – donors can know that their contributions are being used appropriately. Because there is no need for a third-party to intervene and release the funds, the transactions can happen more effectively – and with less opportunity for corruption.
What about in countries with limited government resources? It might be harder to make the types of critical contributions they need to further relief and similar efforts, since they lack the financial infrastructure and regulatory manpower. Fortunately, donors can now use blockchain and smart contracts to donate safely, so that their donations can be tracked and spent appropriately.
There are other ways in which charities can leverage blockchain. UNICEF was one of the first nonprofits to start accepting donations of computing power that they use towards mining cryptocurrency; they don’t just accept contributions — they actually generate them for themselves! Blockchain also allows for the creation of cryptogoods that have been auctioned off, with proceeds being donated to charity.
What do the skeptics say about applying blockchain to help the environment?
There are already efforts underway to apply blockchain toward solutions for environmental concerns, and they’ve been balanced by a healthy dose of skepticism. Here we present some of the biggest concerns raised by blockchain critics.
Although they might not warrant abandoning blockchain, these concerns are worth considering and addressing to prevent any unintended consequences from emerging.
Blockchain requires too much computing power (and energy).
PwC bitcoin specialists estimate that bitcoin mining alone consumes 22 terawatt-hours per year, which is about as much as the entire country of Ireland uses in a year. Since bitcoin is a currency that relies on blockchain technology for development and security, critics point to figures such as this one as evidence that blockchain has a major environmental footprint. They claim that it might not be a great tool for green efforts.
The industry has responded to this in a major way. University researchers from the likes of MIT and Cornell joining forces with tech giants like IBM and Intel to find ways to reduce blockchain’s energy consumption.
Developers are working to build applications that are able to scale without consuming as much electricity by optimizing the algorithms behind the blockchain.
So far, Ethereum has been a key cryptocurrency tied to these efforts, as it already has smart contract capabilities that allow for efficiency to be directly baked in. Finding new ways to validate the blockchain, including shifting away from “proof of work” to “proof of stake,” is another way in which developers are trying to make blockchain require less energy.
Blockchain leaves the public vulnerable.
Decentralization is one of the biggest perks cited by blockchain fans, and yet it’s also one of the biggest downsides mentioned by critics. Who should be regulating blockchain products?
So far, the focus is on regulating blockchain as it pertains to cryptocurrency. Around the world, government bodies that regulate finances and economics are trying to figure out where to place cryptocurrency regulation. Where does one body’s jurisdiction start and stop? How can each agency stay on top of the rapid industry developments?
Independent of its cryptocurrency applications, does blockchain need regulation? The argument is that by eliminating third-party regulation, blockchain is actually more secure. It’s not susceptible to corruption the way individuals are. Its automatic, real-time updating and its ledger component both reduce the number of hands (and thus liabilities) that touch it, while also documenting a history that can be reviewed at any time.
Now, there has been some potential vulnerability to hacking exposed. Interception of communication between nodes of the blockchain (termed an “eclipse attack”) is just one example of the type of tampering an ambitious hacker could attempt to carry out. Requiring permission to access a blockchain is one way to reinforce security, but if a hacker gets access to an administrator’s keys, even private blockchains are susceptible.
Security measures are being developed to help make blockchain safe. Alternative consensus protocols to add blocks to the chain are one possibility wherever there is mining. There have been calls to action for enterprise security experts to incorporate additional security measures. As more blockchain applications emerge, we can expect to see security measures tailored to fit them.
Requires universal adoption to be effective.
Getting widespread adoption of blockchain is going to prove challenging, say the skeptics. They’re not wrong.
Some people find new concepts like “blockchain” to be intimidating. Some people are resistant to change, and so even if you explain the benefits, they will push back. Some people are also discouraged by how new blockchain is; they view it as immature and therefore risky, while the volatility of the cryptocurrency markets is not exactly countering this argument. Some might even resist blockchain because of how beneficial it is; for example, a politician trying to resist adherence to the Paris Agreement might not be very welcoming to blockchain, a technology that will be used to directly counter that resistance.
The issue of adoption is a difficult one to tackle, and there is no perfect solution readily available. However, public education is one effort that might assist with this. Shedding light on how blockchain works, what its realistic limits are, and what sorts of benefits it can offer over the existing technologies out there will all contribute to blockchain adoption. Knowledge is power, and so educating people is the biggest tool for developing not just blockchain tools, but environmental solutions in general.
Marvel’s Spider-Man says, “with great power comes great responsibility,” which is certainly true of blockchain and its potential for innovative solutions.
There is tremendous potential to use blockchain to make a positive impact towards addressing environmental problems — and even addressing other issues along the way, including poverty. But the concerns raised by blockchain skeptics bring up important considerations for public safety, which must be addressed in parallel with any solutions developed.
We anticipate that blockchain applications will only continue to thrive into more sophisticated solutions.
- What is blockchain? (Blockgeeks)
- Everything you need to know about smart contracts (Hackernoon)
- Pros and cons of blockchain technology (Bitcoin Market Journal)
- How universities should teach blockchain (VentureBeat)
Blockchain to solve environmental problems
- World Economic Forum Outlines Over 65 Blockchain Use Cases for Environmental Protection (CoinTelegraph)
- Blockchain potential for progress (Stanford)
- Blockchain establishes trust for nonprofits (Forbes)
- Blockchain to fight corruption (World Economic Forum)
- The Future of Pollution Tracking with Blockchain (Bloomberg BNA)
- Can Blockchain Technology Save The Environment? (Forbes)
- Formal systematic review of blockchain technology in the energy sector