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Add to Preferred SourcesBlockchain hype peaked in the media in 2017 when “cryptomania” hit the trading markets. There is a good reason for the hype around blockchain. It is fundamentally a new form of computing architecture that brings with it transformational new capabilities, much like the internet brought in the 90s, or the smartphone in the late 2000s.
However, despite the hype, considerable challenges will need to be overcome for it to reach the scale and adoption of the internet or mobile phones. These include tackling user trust and adoption, performance barriers (including interoperability, scalability and energy consumption), security risks (including cyber and identify verification), and legal and regulatory challenges.
If these challenges can be overcome, then as the technology matures and its application across sectors and systems grows, blockchain could help tackle a range of environmental issues from illegal fishing and deforestation through to better water and energy management.
The eight most significant game changers are listed below. Some of these are cross-cutting and more overarching in nature (but clearly have significant ramifications for environmental challenges), while others focus more specifically on environmental challenges. Although some of these game changers could improve the efficiency of existing markets, others could drive transformational shifts in how we operate and how we tackle environmental challenges.
1. ‘See-through’ supply chains. Transactions all along the supply chain can be recorded through a blockchain and an immutable (unchangeable) record of provenance (e.g. a product’s origin) can be created. This offers the potential for full and radical transparency and traceability of products from source to store.
Looking into the future, blockchain has the potential to connect all stakeholders in a global supply chain – from the workers in factories through to logistics, the retailers, consumers, investors, NGOs, and regulators – under one platform. A platform that provides the data, traceability, transparency, control or compliance mechanism that the given user needs would be a truly transformational proposition for workers in the informal economy and consumers alike.
2. Decentralized and sustainable resource management. Blockchain can underpin a transition to decentralized, clean and more resource-efficient energy and water systems at scale. Platforms could collate distributed data on these resources (e.g. household-level water and energy data collected with smart sensors). This is a game-changer because often decision-makers in the systems – both centralised authorities and retail-level users – are making decisions with only partial information. Blockchain-enabled platforms could overcome this and enable more informed decision-making and even decentralized decision-making about the management of those resources or the broader system. This could include traceability and verification of renewable energy sources, peer-to-peer trading, dynamic pricing, and better demand-side balancing.
3. Raising the trillions – new sources of sustainable finance. Blockchain-enabled finance platforms could potentially revolutionize access to capital and open up a whole new class of potential investors for projects to address environmental challenges; from investment in green infrastructure projects to enabling blended finance or charitable donations for developing countries. More broadly, there is the potential for blockchain to enable a system shift from shareholder to stakeholder value, and from a traditional financial capital to accounting for social, environmental and financial capital.
4. Incentivising circular economies. Blockchain could fundamentally change the way that materials and natural resources are valued, used and traded, incentivizing individuals and organizations to realise financial value from things that are currently wasted, discarded or treated as economically invaluable. This could drive widespread behavior change and help to realise a truly circular economy.
5. Transforming carbon (and other environmental) markets. Blockchain platforms could provide cryptographic tokens with a tradable value to optimize existing market platforms for carbon (or other substances) and create new opportunities for carbon credit transactions. An early pilot example is China’s “Carbon Credit Management Platform”, developed by Energy Blockchain Labs and IBM. The aspiration is that with the introduction of smart contracts, the transparency, auditability, and credibility of the Chinese carbon market can be increased. Further, into the future, it is conceivable that blockchain could underpin a global carbon trading market for individuals, households or organizations.
6. Next-gen sustainability monitoring, reporting and verification. Blockchain has the potential to transform sustainability reporting and assurance, helping companies better manage, demonstrate and improve their performance and enabling consumers and investors to make better-informed decisions. Automatic data collection and management (e.g. of greenhouse gas emissions) could be realised through smart contracts in order to access real-time, trustworthy data and minimise fraud.
7. Automatic disaster preparedness and humanitarian relief. Blockchain could underpin a new shared system for multiple parties involved in disaster preparedness and relief to improve the efficiency, effectiveness, coordination and trust of resources. A well-designed system could enable a wide range of actors to share crucial information automatically in the event of a disaster through smart contracts. This could, for example, mobilize emerging resources more quickly and effectively, redirect supply chains automatically, and enable relief agencies to better coordinate their efforts in response to emergencies.
8. Earth management platforms. New blockchain-enabled geospatial platforms, which enable a range of value-based transactions, are in the early stages of exploration. They could enable new market mechanisms to protect the global environmental commons, from life on land to ocean health. These applications are further out in terms of technical and logistical feasibility but remain exciting to contemplate. For example, a global ocean data platform to monitor ocean resources could incorporate blockchain to secure and enforce fishing rights to communities or fishers.
If blockchain lives up to its hype and if directed at the right problems, it has real potential to enable a shift to cleaner and more resource-preserving decentralized solutions, to unlock natural capital, and to empower communities. This is particularly important for the environment, where the tragedy of the commons and challenges in capturing the non-financial value are currently so prevalent.
Meet and share your experience with professionals engaged in harnessing the potential of Blockchain for international development at the first Blockchain for Development Forum to unfold in Southeastern Europe. The event is scheduled for November 7th, 2018, and is due to take place at Hotel Opera Plaza, in Cluj, Romania.
Original source: World Economic Forum
Published on 19 September 2018