It is often said that the blockchain damages the climate because of the large amount of energy required for the technology. However, there are ways to help protect the environment.
Daimler can give a brief example: it has launched a pilot project that records environmentally friendly driving on a blockchain and rewards the driver with crypto money. Another possibility could be energy certificates that are stored in a blockchain. This would enable consumers to track where the energy supplied comes from at any time. In addition, a peer-to-peer market could be created in which private households could sell their surplus energy directly to other private households without any middlemen. In addition, dynamic pricing could be implemented, which could include CO2 compensation.
Counterfeit protection can also be an interesting point. After all, fake products are often contaminated and thus pose a major threat to the environment. By tracking the supply chain, the sale of fake products can be prevented. Furthermore, this tracking can ensure the circumstances under which the product was manufactured. Thus human rights and fair working conditions can be guaranteed.
One green business model that works entirely with blockchain is Bitseeds. It is basically a crypto currency like any other. But the founder of this currency has set aside 100 million Bitseeds for the Rainforest Foundation. Any other “Bitseed” that is mined can be traded by anyone. You can buy things online or transfer them back into fiat money. As the value of the currency increases, so does the value of the portfolio the Rainforest Foundation owns. Just by using this currency, anyone could help protect the rainforests.
One solution of the Poseidon Foundation is also worth mentioning here: It is called reducing. The goal is to set a carbon price on every product sold. You want to calculate the carbon needed to turn the materials into a product and bring it to your home. When the product is sold, Poseidon will buy carbon certificates for exactly the amount of carbon that was used for the product. Participating online stores can then pass this price on to customers and even give them the chance to pay more than what is needed for the product. By purchasing the carbon certificates, the amount of carbon used for the product is not used elsewhere, so you can say that the carbon footprint of this product is zero. Blockchain is used for digital cash registers and integration into retail store sales systems. In addition, blockchain enables every detail of each carbon credit and its purchase to be publicly available and stored in an unalterable form.
I think that even though the blockchain hype of a few years ago has slowed down, there are very interesting possibilities that can be achieved with this technology. I have read about CO2 pricing in the book “Economics for the common good” by Jean Tirole, a very interesting book by the way. He stated that a climate certificate that prices each ton of CO2 based on the amount that can still be emitted to reach the 2 degree Celsius target is the only way for a global solution for climate protection. Whether this is true or not, if blockchain can help to implement these certificates and keep track of and protect against counterfeiting, this would be a big step. So I am curious to see how Blockchain can have a positive impact on our environment and what business models will result from this.
References:
Poseidon Environmental Solutions Private Limited (2020). The Solution. Available at: https://poseidon.eco/solution.html (Accessed: 24 September 2020).
Rainforest Foundation (2020). Bitseeds. Available at: https://rainforestfoundation.org/new-bitseed/ (Accessed: 24 September 2020).
Schmidt, R. (2020). Blockchain: Das sind die Chancen für den Umweltschutz. [online] t3n. Available at: https://t3n.de/news/blockchain-chancen-fuer-umweltschutz-1323216/ (Accessed: 24 September 2020).
Tirole, K. (2017). Economics for the common good. Princeton: Princeton University Press.
Hi Hendrik,
Thanks for your great piece about blockchain the only problem I would like to raise is the high energy needs that come with the use of blockchains, especially once the network grows bigger. Would you say that these benefits that you presented potentially outweigh the energy costs and therefore, environmental costs that come with extensive use of blockchain?
Thanks again for your great piece and talk soon!