How the blockchain could boost sustainability

From tracking diamonds to selling renewable energy, the blockchain’s decentralised nature makes it a perfect tool for sustainability projects

by Nicole Kobie

Tracking diamonds to make sure they come from ethical sources, organising affordable housing, and letting small energy startups trade renewable power — what each of these sustainability projects have in common is they live on the blockchain.

Blockchain is the distributed ledger behind Bitcoin, which secures and verifies each transaction. That technique of transparently ensuring the accuracy of data has plenty of other potential uses, and — unlike Bitcoin, which is infamously an energy suck — they could be helpful for the environment by tracking sustainable sources and encouraging environmentally positive behaviour.

“Bitcoin’s strength lies in how it approaches trust,” notes University of Oxford researcher Guillaume Chapron in a paper for Nature. “Instead of checking the trustworthiness of each party, the system assumes that everyone behaves selfishly. No matter how greedily traders act, the blockchain retains integrity and can be trusted even if the parties cannot.”

Tracking everything, everywhere

Why is that useful for sustainability? Chapron suggests that such a distributed, transparent ledger can prove ownership, which is useful for fighting back against corruption and ensuring authenticity of products, and makes anything traceable. That’s key for ensuring sustainable supply chains, which are at the heart of ethical mining, fishing, and energy production. Simply give an item — be it a fish or a diamond — a barcode or an ID number, and it can be tracked through its lifecycle.

Any standard database could track a fish from the fishing boat that caught it to the supermarket it’s sold at, but that requires trust. Because the blockchain is transparent and held in a decentralised manner, we no longer need to trust the various parties in that supply chain — the entries they make can’t be changed after the fact without anyone knowing. If someone in the chain tries to change the origin of that tuna to a more sustainable geography in order to sell it for a higher price or under an ethical label, everyone would be able to see it.

“Other commodities could have their ecological footprints tagged in the blockchain if the footprint were linked to the Internet of Things, with sensors recording the environmental impacts of manufacturing processes,” Chapron wrote. “Walmart is tracking its pork supply chain in China by recording information such as farm origin and storage temperature in the blockchain.”

Indeed, because of that promise of transparency and verification, the blockchain is being used by a host of companies, from startups to global conglomerates. Provenance uses it to track the origin of fish, while Everledger verifies the provenance of diamonds, to ensure they weren’t mined from warzones, and Blockchain for Social Impact ensures timber really is FSC certified.

Sustainable housing

Blockchain is also used to organise sustainable projects. Ehab is a housing startup in the UK, with founder Josh Graham saying the aim is to let people design, finance and build affordable homes in a sustainable way.

“By creating an all in one system, we intend to make development people-led, to cut costs, make development more efficient, help modern housing technologies scale, give more people access to investing in property projects and create a tool for the democratic creation of whole cities,” he explains.

The aim is to make it easier to buy a house in the UK, but also to help fund the purchase of it without resorting to a traditional mortgage. “A home buyer will land on the platform, inform us of where they want to live, what type of house and their budget, we will then automatically match them with developer and landowners who can make that project happen,” Graham explains. “The project is then funded using a blockchain-based crowdfunding mechanism which gives them access to cheaper finance from investors all over the world.”

Graham admits blockchain isn’t necessary to run such a project, but the technology makes the job easier and more trustworthy. “We use smart contracts to broker the relationships between the home buyers and developers; the blockchain is used as part of the project management aspect of the platform when tracking goods, services and deliveries; smart contracts are use to make seamless payments, and these payments are made via tokens,” he explains. “By using tokens we can very easily access a global pool of investors and we can tokenise housing assets so that their value can be more seamlessly traded. The entirety of this system is very secure and transparent and works with other technologies to create a very robust platform.”

Organising renewable energy

That idea supports the idea of sustainable thinking, but blockchain can also be used more directly to encourage environmental practises such as peer-to-peer energy creation and sharing. Brooklyn-based LO3 Energy is using blockchain to trade power harvested from solar microgrids, while British startup Electron uses blockchain to offer renewable energy providers a trading platform and organising smart grids.

“Our vision is to leverage blockchain technology to create a single, shared trading venue in which all decentralised assets and competing suppliers [or] aggregators can access and respond to price signals,”  said COO Jo-Jo Hubbard. “In our opinion, this is the key missing infrastructure for this new decarbonised, decentralised energy world.”

Before the blockchain, smaller energy providers would have had to build a joint platform, or created a third-party organisation to manage it all. “This would have been tantamount to parties losing control of their own individual products, markets and cost structures,” said Hubbard. Instead, energy providers large and small can work together, supplying renewable sources to a smart grid, without any trust issues thanks to the decentralised nature of blockchain.

The right choice for sustainable projects?

Indeed, the core idea of decentralisation is why blockchain is seen as the right choice for sustainable projects. “It is the technology of decentralisation after all, which is key to many centralised sustainability issues,” noted Ehab’s Graham.

Hubbard agrees. “In our thinking, blockchain is a fantastic technology for decentralised coordination,” she said. “This coordination will enable us to continue to decarbonise our energy generation in a sustainable, affordable way.”

So while Bitcoin has become for many a get-rich-quick scheme that has serious environmental repercussions, thanks to the blockchain, it could still offer benefits for affordable housing, supply-chain transparency, and encouraging green energy.

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