Blockchain Technology Is Going Green

Blockchain technology, widely assumed to be most applicable to finance and cryptocurrencies, is showing to the potential for making the world a greener place.

The blockchain design, which allows users to transmit information securely without a centralized authority, has received significant attention for its ability to validate and track financial transactions. Yet the power of the technology to manage data in an independent and secure manner makes it ideal for identifying and tracking the value of environmental transactions.

And that would allow environmentally-related behavior to be assigned a value, thus providing a much-needed system of incentives for desired behavior.

Monetizing Morals

“Blockchain provides a strong potential to unlock and monetize value that is currently embedded (but unrealized) in environmental systems, and there is a clear gap within the market” wrote the World Economic FormOpens a new window in a recent report.

Energy trading among peers illustrates how blockchain technology could be applied. Currently, most electricity consumption is managed through a centralized grid, creating one of the major challenges: balancing demand against shortages or unused surpluses.

Under a blockchain-based platform, electricity would be traded and moved locally by individuals and companies interested in investing in renewable energy installations, reducing the need for the traditional large fossil fuel power plants or battery storage. While futuristic in concept, companies such as EcoChain, ElectricChain, Transactive Grid and SunContract are already working on the underpinning blockchain platform requiredOpens a new window to make it possible.

Environmental Validator

Blockchain technology is also ideal for providing transparency in supply chains, which will in turn provide consumers with precise information about whether a product is truly as environmentally friendly as it claims.

“Every single product worldwide can be assigned a cryptographic unique identifier at the start of the chain, wherever it is sourced or created” explained Pieter VandeveldeOpens a new window , the chief revenue officer of TBSx3. “This unique code is tied to a utility token that is time-stamped as it moves through the supply chain, with the entire life cycle of that item stored on the blockchain archive.”

The information, which consumers would be able to confirm on their smartphones, could be the key to pressing for ethical business practices that protect local environments. According to Candice Visser at the University of Wollongong, platforms developed by ConsenSys and TraSeableit have already been used to reduce illegal fishing in the Pacific Islands tuna industry.

It could also help reduce carbon emissions from materials sourced far from their end consumption point, and increase pressure on environmentally harmful products, including crops that account for large amounts of tropical deforestation. According to Future Thinkers, Foodtrax and Provenace are currently working on developing blockchain-powered supply chains.

Following the Money

The way blockchain platforms have been used to back new currencies illustrates their fundraising potential; this leveraging capability could be unleashed on environmental projects, while requiring a much greater level of accountability for how the money is actually used.

“Blockchain technology can ensure that money intended as a reward for conservation, or a payment to a specific cause, does not disappear into unintended pockets through bureaucratic labyrinths,” says Future Thinkers, pointing out that the technology would allow money to be sent to individuals in countries that lack a strong banking infrastructure.

In doing so, it would cut out some of the fraud and waste that often impedes environmental efforts in less developed parts of the world.

Merging Technology for Green Preservation

The potential of blockchain technology to manage environmental resources becomes even more powerful when combined with other new technological innovations like artificial intelligence and smart meters, says the World Economic Forum report. Water shortage issues, for example, are often driven by a misallocation of available resources. Blockchain technology could facilitate a peer-to-peer trading of water rights.

The next step, according to the report, would be to leverage the use of artificial intelligence and the smart technology with blockchain advances to create a water system that uses local resources and water-recycling, while simultaneously eliminating abuse of the system. It’s an advance that could not only transform how water is shared around the world, but could stop battles triggered by shortages.

“Imagine a scenario where farmers in the same water basin could make the decision to trade their allocations based on the latest weather data, crop prices, market trends and longer-term climate trends — much of which is already accessible via their mobile devices,” says Callie StinsonOpens a new window , a project lead for the Water Initiative. “This type of transparent, real-time approach to water management greatly could mitigate tensions within and across certain localities by democratizing access to information and preventing the tampering of data.”