Here’s everything you need to know about the importance of blockchain technology in achieving sustainability and mitigating climate change.
Blockchain technology can also drive sustainability. It is expected that in 2023, we will witness an expansion of blockchain systems devoted to sustainability, such as monitoring plastic production and water usage, indicating that blockchain’s ability to promote environmental sustainability surpasses energy consumption and carbon credits.
Blockchain technology and sustainability
A United Nations Environment Programme (UNEP) report highlights the potential benefits of blockchain’s distributed ledger technology. It could facilitate collaboration between investors, renewable energy project developers, and purchasers on a unified platform with globally recognized standards for compliance due diligence. Powerledger, an Australian technology firm, has initiated a study on blockchain’s effects. It launched a pilot initiative in Uttar Pradesh, India, where homeowners with rooftop solar panels were permitted to sell power to others on the grid. These initiatives can promote renewable energy deployment.
Blockchain technology can also be applied to encourage sustainable and eco-friendly supply chain practices. By enabling transparency throughout the supply chain, the technology can track goods from the manufacturer, reducing inefficiencies and waste. One aspect of environmental sustainability where blockchain can make a significant impact is recycling. RecycleToCoin (RTC), a blockchain-based decentralized application (dApp), provides users with a reward and incentive system for recycling aluminum, plastic, and steel cans.
Blockchain technology and climate change
Using smart contracts stored on a distributed ledger is one potential application of blockchain technology in addressing climate change. These contracts have the ability to track and manage environmental data effectively, making them suitable for companies that emit harmful pollutants. Air quality monitor readings can be recorded and stored on a blockchain, rendering the data immutable and extremely difficult to modify. At the conclusion of each year, the data may be consolidated, and the company may be penalized or incentivized based on the reduction or increase in the number of pollutants emitted. Since the execution of these contracts is automated, the process is more efficient, and there is no need for a third party. Additionally, the sharing of encrypted records of transactions ensures that the information cannot be altered or manipulated for personal gain.
Challenges and Limitations
- Low scalability due to transaction speed reduction with network congestion.
- Problematic integration with legacy systems, risking data loss or corruption.
- High energy consumption compared to a country’s annual electricity usage, leads to increased cooling costs.
Future of Blockchain and Sustainability
Blockchain technology offers multiple benefits, such as increased security for data and transactions, which can contribute to sustainable development by simplifying resource tracking and management. Additionally, it has the potential to reduce expenses by optimizing procedures and eliminating intermediaries while boosting speed and efficiency by automating tasks and removing manual operations. Lastly, blockchain’s crucial benefit is that it promotes transparency by providing a secure and tamper-proof record of transactions.
The Bottom Line
Blockchain technology can be a valuable tool in addressing the environmental crisis and promoting sustainability across several fronts. Nevertheless, to expand the use of emerging technologies like blockchain, it is crucial to enhance digital infrastructure. As blockchain and other digital technologies progress swiftly, policymakers must revise regulations to shape future energy systems and minimize environmental hazards.
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