By the SMU Social Media Team
By now, everyone has probably heard of “blockchain”.
For the uninitiated, blockchain is essentially a decentralised, distributed ledger that records information across a peer-to-peer network. Data held in the blockchain is shared and continuously synchronised across multiple computers, and recorded in batches (what we call a “block”). The latest batch includes information from the previous batches, such that records cannot be altered retroactively without the alteration of all subsequent blocks, which would highlight inconsistencies in the ledger.
While most of us know it as the underlying technology behind bitcoin and the cryptocurrencies, blockchain technology’s potential has, in fact, evolved far beyond this.
However, as it is a relatively new technology, many people are still in the midst of grasping its potential applications—and its impact on society. One such group is the SMU Blockchain club, a student-run club under SMU’s Institute of Innovation and Entrepreneurship which started back in August 2018 and is the first official Blockchain club at a tertiary institution in Singapore.
Beginning as a group of students with a like-minded interest in cryptocurrencies and enterprise blockchains, they subsequently decided to create an official body to act as a conduit of information for other students and consolidate discussions on the topic.
A top issue that has been heavily debated in relation to blockchain is that of its effect on sustainability and climate change. One of the considerable costs of running blockchain is the heavy computing power that is needed due to the complex algorithms run by blockchain technology. According to Forbes, Bitcoin claimed that the computing power required to keep the network running consumes as much energy as was used by 159 of the world’s nations.
To find out more, we spoke to SMU Blockchain member Jorden Seet, a third-year SMU School of Information Systems undergraduate, to help shed some light on this discussion.
Jorden explains that there is a fundamental misconception about the actual damage blockchain does to the environment because people tend to associate it with the cryptocurrency Bitcoin which is said to consume high amounts of energy.
“I personally believe that reducing paper trails and having more transparent, auditable logistic processes are the most likely ways that blockchain can positively impact the environment,” he continues, adding that at the same time, it’s not exactly as straightforward as it may seem.
One of the most lauded advantages of blockchain is its “technology of trust”, whereby the security of cryptography ensures that records cannot be altered retroactively without affecting all the subsequent blocks. In other words, no one can change the records without everyone else finding out about it. Plus, a blockchain is also designed to be resistant to modification of data as each “block” locks in a timestamp, transaction data and cryptographic hash of the previous “block”.
As such, the UN has identified specific uses of blockchain technology to aid efforts in addressing climate change, such as the improved tracking of greenhouse gas emissions and enhanced climate finance flows that ensure financing is allocated to projects in a transparent way. Through its newly established global initiative, Climate Chain Coalition, the UN hopes to promote socially responsible practices by organisations and governments with the help of blockchain technology
But can blockchain technology truly impact climate action and socially responsible practices for the greater good, or is it just marketing spiel by industry insiders hoping to put a positive spin on the tech? Jorden shared his thoughts on four areas where blockchain is expected to have a positive impact:
1) Accurate measuring and recording of greenhouse gas emissions
The first step in combating environmental problems is by assessing the damage, such as measuring the level of greenhouse gas emissions and an entity’s carbon footprint. “A blockchain is only as good as the information it records. In order to calculate environmental taxes, one usually has to measure the amount of damage done by the entity. For example, to calculate carbon tax, one usually calculates the greenhouse emissions by the company,” says Jorden.
And since blockchain is much more secure by nature, there is a lower likelihood that these measurements will be tampered with. Jorden adds, “Assuming that the information fed into the blockchain is accurate, and blockchains reconcile the books before recording the relevant information, this ensures that the measure of greenhouse gases is more transparently and accurately recorded, thus allowing for more precise measurements of things like carbon taxes.”
2) Tracking the action from environmental agreements signed by governments and companies
Taking it one step further, blockchain offers the potential for secure and authentic tracking of what happens after government bodies or various entities sign agreements promising to work towards reducing their carbon footprint.
Jorden explains: “Assuming stakeholders are cooperative, blockchain could allow us to monitor the amount of emissions or other contaminants made by each government or company. The reconciliation done before information is recorded ensures that the sums add up and that every attribute recorded is accounted for. The tamper-resistance ensures that government or companies are unable to manipulate information after it is recorded in the blockchain, which enhances trust in the data.”
The reconciliation done by blockchain refers to the recording and tallying of information done by blockchain technology before the final information is officially inscribed. This ensures that environmental agreements signed between companies and governments are strictly adhered to. In the event that information recorded by companies and governments do not tally with this reconciliation done by blockchain, it helps trace errors or discrepancies made by any parties involved, allowing for the effective implementation of these environmental agreements.
3) Increasing efficiency of peer-to-peer energy grids
Blockchain can also potentially streamline processes related to peer-to-peer (P2P) energy grids, which is the concept where any individual home or organisational body could produce its own energy—including renewable energies like solar energy—and sell any surplus to others who need it. Excess energy from each producer goes towards a common energy pool that can be harnessed by others within the network.
In this instance, Jorden notes that certain mechanisms in blockchain can allow information to be recorded across different nodes almost instantaneously. With this speed, energy grids with a surplus of energy can be detected multifolds faster by nodes with the help of blockchain technology.
“In this case, one would imagine that given the speed with which different nodes are updated with information, if one is able to act equally as fast, we could divert surpluses of energy to grids that have a shortage. This allows for greater utilisation of the energy as wastage would be reduced,” he explains.
4) Protecting small producers through a blockchain-powered supply chain
In many industries, small producers who tend to lean towards responsible practices often find themselves at the mercy of larger, profit-driven corporations. But with blockchain, there is hope that increased transparency in cashflow and production lines can help empower the smaller players to have better control over their business and products.
For instance, having a distributed ledger means every amount is accounted for, so there’s a higher degree of confidence that the books have not been manipulated, while the clear audit trail will allow companies to have more confidence that their supplies are coming from reliable and genuinely sustainable producers.
That said, Jorden highlights that there are many assumptions being made in this scenario, such as how companies might act in the interests of these small producers or how the costs of implementing a blockchain solution may increase the costs these small producers face.
After all, transparency could also be a double-edged sword. If a consortium blockchain records the costs and profit margins offered by multiple small players, corporations will be able to pick and choose based solely on price point. “This could force small producers to price their supplies even lower than before. It all boils down to what information is being recorded in the blockchain,” he says.
In fact, that’s the thing that makes blockchain so complex. As Jorden puts it: “It is not a panacea. The technology opens new possibilities to conduct existing processes in, or perhaps even create room for new types of processes. But, ultimately, it is the design of the use-case, the implementation, execution and maintenance that will decide whether or not this technology can be used to impact the environment. It is the humans behind the technology that decides what happens to the world we live in, and this can be said of any other technology, not just blockchain.”
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