Blockchain: Enemy Or Ally In The Fight Against Climate Change?

Blockchain, a digital ledger technology, is widely known for its application to cryptocurrencies. Introduced in 2008 to serve as a public ledger for Bitcoin, the technology has spawned hundreds of cryptocurrencies (eg, Ethereum, Ripple, NEO, Litecoin), as well as having other emerging applications in various fields, including blockchains. supply and digital content, patents, smart contracts, governance and electronic voting.

What Is Blockchain?

Understanding the fundamentals of blockchain technology is essential to assessing its impact, which can be huge and transformative for society, the economy, and the environment. The European Union Information and Network Security Agency (ENISA) defines blockchain as:

A public ledger consisting of all the transactions that take place through a network of peers. It is a data structure consisting of linked blocks of data… This decentralized technology allows participants in a peer-to-peer network to transact without the need for a trusted central authority while relying on cryptography to ensure security. transaction integrity.

Unlike traditional ledgers used by banks and governments for centuries, which are centralized and inaccessible, chain ledgers are decentralized and transparent . There is no central authority that acts as the exclusive manager of the ledger, with sole responsibility for the storage, updating and verification of transactions. Rather, all participants in the blockchain network have a copy of the ledger, and transactions, even if encrypted, are visible to everyone.

The Blockchain And The Environment

The most well-known implication of blockchain technology for the environment is related to its energy consumption and, therefore, its possible negative impact on the climate. The current standard transaction verification process requires a large amount of processing power and therefore electricity. 

The Bitcoin app is particularly illustrative. Compared to alternative payment methods, Bitcoin was claimed to consume 20,000 times more energy than Visa). According to some analysts, the energy consumed by each Bitcoin transaction had increased to 635 kWh, which is equivalent to the electricity that could power approximately 21 American homes for 1 day). For example, the Cambridge Bitcoin Electricity Consumption Index cites a figure of 64 TWh per year , which exceeds the annual electricity consumption of Switzerland or all electric vehicles in operation worldwide. (58 TWh) in 2018. These estimates should be interpreted with caution, due to methodological problems,

Despite the energy consumption and e-waste issues, blockchain technology can also support environmental protection. In particular, it may offer opportunities to make existing production and consumption processes more transparent, which could improve their sustainability. Blockchain can make information about a product’s origin, processes, and parties involved in related transactions and logistics visible, traceable, and verifiable by all those in the supply chain). As the information is protected and time-stamped, it cannot be altered or modified, which reduces the risks of fraud and errors . 

Current Investigations

Other potentially beneficial blockchain applications are being explored for renewable energy diffusion, energy efficiency, and energy consumption reduction. IBM and Energy-Blockchain Labs are experimenting with a blockchain-based green asset management platform to trade carbon assets in China more efficiently. Some envision a blockchain-based peer-to-peer energy transaction platform that would enable efficient electrical energy transactions between prosumers and generate economic and environmental benefits.

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