Blockchain from Cradle to Cradle: Circular Economy is Real.
By Eloisa Marchesoni on Altcoin Academy
When talking about sustainability, the general public often thinks about environmental sustainability only. However, sustainability researchers and activists have a much broader definition: sustainability is defined as meeting the needs of the present without compromising the ability of future generations to meet their needs. Such an approach, aiming at a good livelihood for all, has to consider both natural systems as well as human systems and think them together. Sustainability problems like the climate and biodiversity crisis, economic inequality, poverty pose great challenges to humanity. To help tackle this situation, the United Nations have defined the 17 Sustainable Development Goals (SDGs) with the objective to produce a set of universal goals that meet the urgent environmental, political and economic challenges facing our world.
These goals are broadly defined, very often interdependent, and include 169 sub-targets. The SDGs cover environmental, social and economic development issues including poverty, hunger, health, education, global warming, gender equality, water, sanitation, energy, urbanization, nature conservation, environment protection, and social justice. The SDGs provide a common and agreed framework to address our most pressing sustainability issues. To reach these goals it will not only be necessary to work together across sectors, industries, countries, and communities but also to find new ways of how to organize our societies and their economies.
Blockchain-based applications provide many opportunities to help us create a more sustainable world:
- Transparency
The lack of transparency along the supply global supply chains poses challenges regarding fraud, pollution, human rights abuses, and other inefficiencies. Sustainable behaviour of individuals and companies is therefore currently hard to track and not well rewarded. In this context, Blockchain has the potential to provide an unprecedented level of transparency, with a shared, decentralized database where immutable and encrypted copies of the information are stored on every computer (node) in the network. This enables otherwise trust-less parties, such as individuals and firms that do not know each other, to engage in near-frictionless peer-to-peer transactions. This type of transparency has applications along the supply chain of good and services and in institutional settings, for less corruption and more accountability.
Supply Chain
Supply chains represent a complex network of distant, separate entities that exchange goods, payments, and data across a dynamic, continuously evolving landscape. Their underlying architecture has many similarities to how Blockchains are set up. Blockchain-based solutions can, therefore, help us trace the provenance of goods and services along the supply chain, to unambiguously identify a product’s input materials, including the material’s quantity, quality, and origin. The Blockchain protocol, as a decentralized network with distributed and transparent data structures, allows a disparate group of network actors to exchange data relatively seamlessly from anywhere in the world, replacing traditional centralized data structures (client-server architecture, multiple document copies, data inconsistencies, or in many cases still paper copies) with a distributed ledger, in almost real-time, so that auditing can be automated.
Institutional Weakness
Blockchain and similar distributed ledger technologies have the potential to mitigate institutional weaknesses through the transparency of processes, restricting deception, corruption, and uncertainties. For example:
- Traceability of Donations
Blockchain provides near real-time transparency of what happened to the money that has been donated to charity organizations, supporting civil society accountability by tracking funds and ensuring they support the cause of the donation, tackling bureaucracy and corruption, and releasing funds where needed without sophisticated banking infrastructure. - State Corruption
Blockchains can provide near real-time transparency of what happened to taxpayers money and international loans, and how the funds have been reallocated, preventing corruption and tackling public mismanagement. By providing an unprecedented level of security of the information and the integrity of records it manages, guaranteeing their authenticity, Blockchain-based applications eliminate opportunities for falsification and the risks associated with having a single point of failure in the management of data and funds. It can also help overcome data silos in traditional bureaucracies in which public entities are reluctant to share information among themselves. Blockchain eliminates the need for intermediaries, cutting red-tape and reducing human intervention.
- Reduction of bureaucracy & transaction costs
Blockchain-based machine consensus and smart contracts have the potential to reduce transaction costs and bureaucracy in many industries and across jurisdictional borders, introducing many new use cases in governance, government and impact assessment especially across jurisdictional boundaries, inclusion of the underbanked and undocumented of the world and disintermediation, making some clearing institutions or governmental institutions obsolete thereby reducing power asymmetries.
Governance, Government and Impact Assessment
Blockchain-based applications can provide solutions that contribute to:
- CO2 emission reduction
Reducing the necessity of physical commute to a government office (ie: to pick up a new driver’s license, apply for a tax number, register a car, etc.), fossil fuel emission could also be cut down. - Impact assessment & global governance tool
Blockchain is especially useful for cross-jurisdictional governance were cost-effective, transparent and auditing measures can be implemented into the protocol, making monitoring and enforcement of all sustainability goals easier. Unfortunately, until now, monitoring and reducing our impact on the planet has been difficult, mostly because access to data is limited. Combining Blockchain with AI and IOT will allow us to draw better data for impact assessment and evaluation and make collective sustainability behavior across groups and geographic boundaries more transparent, leading to quicker results and feedback loops. - Lean & Transparent Government
Reduce the cost of bureaucracy through more efficient e-government tools saving taxpayers money.
Inclusion of Undocumented and Underbanked Population
More than one to two billion people worldwide are unable to prove their identity to the satisfaction of authorities and other organizations? — ?often excluding them from property ownership, free movement, and social protection as a result. Additionally, a lack of identity prevents credits, loans and thus prevents entrepreneurship. Blockchain can solve part of the problem by allowing for complementary, decentralized and self-sovereign identity solutions, as well as by removing the need for verification from costly intermediaries such as banks or other institutions, thanks to its peer-to-peer nature.
Disintermediation and Power Asymmetries
Blockchain-based applications are also seen as a development vehicle which can help to empower people directly and mitigate power and information asymmetries, replacing certain aspects of clearing institutions or governmental institutions with smart contracts. One example could be applied in the renewable energy sector: Once on the grid, renewable electricity is indistinguishable from electricity from conventional sources. Existing mechanisms, such as renewables certificates that are traded between parties, needlessly take up time, energy and resources. These certificates could be replaced by a system that monitors renewable electricity generated on-site, feeding data into a blockchain. This would result in the automatic creation and distribution of certificates. Furthermore, the prevalence of smart meters and other IoT devices could enable P2P energy trading, where owners of distributed grids efficiently and legitimately sell excess power to anyone within an open market.
- Incentivizing behavior with purpose-driven tokens
Bitcoin and the token governance rules specified in the Bitcoin blockchain protocol have introduced a new form of value creation, where a network of actors agree on a specific goal, and value is created when someone proves that they have contributed to such goal.
Cryptographic tokens issued through smart contracts on the Ethereum blockchain (or similar blockchains) can now be used to incentivize individuals and corporations to act in a sustainable manner, incorporating gamification mechanisms. Such incentives can be a key to reaching a sustainable future and tokens can be used as a representation of the rewards collected for:
- riding a bike, walking, public transportation instead of using a car (CO2 emission reduction);
- using energy-efficient devices, turning the lights off (energy consumption reduction);
- undertaking actions to help natural resources, like planting trees, cleaning a beach, reduction of food waste, recycling of goods (sustainable actions);
- staying in environmentally friendly hotels, using Blockchain-based solutions to track the sustainability of holiday service provider (zero-carbon footprint holidays).
Remaining on the basic values of the new eco-friendly culture, the EarthBi project fits perfectly into the sustainable economic model of the future, using Blockchain technology both for transparency and token-based behavior incentivization purposes. The Benefit Corporate Bio Valore World S.p.A or BVW, which promotes and develops EarthBi is a new Italian solution that, thanks to the combination of its own bioplastic and the innovative blockchain technology, joins the movement dedicated to environmental sustainability. In fact, with the aim of reducing the pollution caused by plastic materials, EarthBi bioplastics are realized using patented and innovative production processes, which include the use of the blockchain to ensure transparency in the traceability of the entire production chain. Not only that, but EarthBi also opts for the digital world by creating ERA, its own ERC-20 utility token and launching its own IEO “Initial Exchange Offering”. EarthBi thanks to its ERA utility token will allow buyers to obtain more quantities of raw material and/or discounts on design products made out of bioplastics, thus helping mass adoption of such materials.
Blockchains, smart contracts, and token inventive mechanisms have ]great potential to facilitate a more sustainable world. However, change does not happen by itself. Technology is just a tool, and, only if applied correctly, will it facilitate smart choices by producers and consumers, governments and corporations. However, it is still in its early stages, with many technological, legal and network effect challenges ahead. Furthermore, token engineering is a new domain, as most tokens today only represent assets, but the few experts in the field are slowly raising awareness on the fact that tokenized structures need to be translated into everyday applicability for the improvement of local livelihoods, taking a range of different agents into account and including existing physical and social infrastructure.
