Corporations face an increasing regulatory, reputational, investor and consumer pressure to address supply chain risks, such as corruption, human rights violations, modern slavery, gender-based violence, water security and environmental degradation. Through blockchain, records of transactional data throughout the supply chain and establishment of an immutable record of provenance (i.e. origin) warrant full traceability of products from source to store.
Blockchain is a foundational technology of the fourth industrial revolution - with its distributed and immutable ledger along with the advanced cryptography as defining features, the transfer of a range of assets among parties in a secured and less expensive manner without third-party intermediaries is enabled. Democratized by design, the technology allows participants within the network to own a piece of the network by hosting a node (a fully simultaneously synced blockchain ledger). At its most fundamental level, blockchain has become a novel, decentralized and global computational infrastructure that could transform existing processes in business, governance and society.
Blockchain may underpin a transition to decentralized utility systems at scale. Platforms may collate distributed data on resources (e.g. household-level water and energy data from smart sensors) to end the current asymmetry of information that exists between stakeholders, allowing more informed – and even decentralized – decision-making with regard to system design and management of resources which includes peer-to-peer transactions, dynamic prices and optimal demand-supply balance.
The phenomena builds confidence to legitimate operations, exposes illegal or unethical market trading and activities, mitigates quality and safety problems, reduces administrative costs, grants greater access to finance, improves monitoring, verification and avoids litigation. Investors and asset managers may implement responsible investing practices with improved effect through better acquisition of corporate data.
Moreover, blockchain could generate a step-change in the optimization of distributed water management. Real-time transparent data on water quality as well as quantity can inform conservation, dynamic pricing and trading, and spot illegal extraction or water tampering. Blockchain could become a core part of the solution to give rise to off-grid water resources, analogous to decentralized energy systems. Household smart meters produce large volumes of data that can be used to predict water flows, spot inconsistencies and check leaks.
Blockchain technology may support peer-to-peer trading of water rights wherein users willing to share their excess resources will become prosumers without relying on a centralized authority. On top of blockchain, machine learning and internet of things may produce a decentralized water system where local resources and closed-loop water recycling gain value.
Blockchain-enabled platforms could also be employed to unlock access to capital. Its ability to seamlessly manage complex financing environments means it can integrate a wide number of stakeholders, for feasible projects and ventures to crowdsource funds from a large number of diverse investors rather than just several large investors. The decentralized framework may significantly increase efficiency and cut down transaction costs.
The tokenization of financial investments opens up an opportunity for a wider group of stakeholders to invest, therefore, access and entry requirements are democratized. Consequently, projects that attempt to tackle environmental challenges may gain access to capital, without red tape delays, which is often a step in business transactions with prominent institutions. Decentralized energy grids have the potential to cut costs and integrate renewable energy at the same time as energy efficiency and reliability increases. Through smart contracts, blockchain may accelerate coordination which genuinely permits local markets for energy trading.
Harnessing blockchain technologies to drive sustainable, resilient growth and a new wave of value creation will require decisive action. The opportunities that blockchain offers need to be developed and governed wisely, with upfront and continual management of unintended consequences and downside risks.
A variety of measures will be needed, from ensuring compliance with privacy rights, improving security and clarifying accountability through establishing standards for minimizing energy consumption. Establishment of novel global platforms or accelerators focused on creating a responsible blockchain ecosystem creation, rather than a simple incubation of specific projects, would be a relevant action moving forward.
Such a platform could support stakeholders from across different sectors to develop effective blockchain solutions for environmental challenges, ensure sustainability of blockchain technology as well as take a crucial role in building out the necessary governance arrangements at industrial, state and global levels.
Majority of the world’s current environmental problems can be traced back to industrialization, particularly since the global economic activity’s great acceleration during the 1950s. While the development delivered impressive gains in human progress and prosperity, it has also led to unintended consequences such as climate change, unsafe levels of air pollution, depletion of forestry, fishing and freshwater stocks, toxins in rivers and soils, overflowing levels of waste on land and in oceans, and loss of biodiversity and habitats.
As the fourth industrial revolution gathers pace, innovations are becoming faster, more efficient and widely accessible than ever before. Technology is becoming increasingly connected, and we are now witnessing a convergence of the digital, physical and biological realms. Emerging technologies, including the Internet of Things (IoT), virtual reality and artificial intelligence (AI), are enabling societal shifts as they seismically affect economies, values, identities and possibilities for future generations.
Topp Founder and Group CEO of Bitkub