Blockchains such as Ethereum are not just speculative investment vehicles for those hoping to strike out lucky. In fact, lots of investment is going into projects with real-world use cases that run on Blockchain. Especially the sustainability space is seeing a myriad of projects that bring real value to the environment and its users.
The Energy Solution
Let’s address the elephant in the room. Energy. The Blockchain oftentimes receives massive criticism due to the enormous electricity consumption on some networks. For instance, a single Bitcoin transaction uses the same amount of electricity that an American home uses in the span of six weeks (As a side note, the amount per transaction is not equivalent to the amount per payment. A single Bitcoin transaction, oftentimes represents thousands of small underlying transactions.). Nevertheless, the technology is not completely sustainable.
The second-largest Blockchain, Ethereum, is switching the consensus mechanism on which it verifies transactions. It is changing from Proof of Work (PoW) to the so-called Proof of Stake (PoS technique). This is significant because the Ethereum Blockchain is most commonly used when building Blockchain projects. By changing this, the whole industry is becoming greener. The image below visually demonstrates the change that we are talking about.
There are many projects with different approaches. However, they all come down to one key aspect: the correct alignment of incentives. By creating a network that is decentral and in which all processes and incentives are open to the public, sustainability projects receive a whole new layer of trust. This brings supporters and sustainability organizations together to create win-win situations.
NFT Art in Exchange for Conservation Donations
For instance, the WWF recently released NFTs titled: Non Fungible Animals (NFA). In that project, artists created beautiful renderings of ten critically endangered species. The number of NFTs sold per species is equal to the current number of animals in the wild. So far, they have raised €272,468 The proceeds from the campaign will be used to save the ten endangered species. Whether it is for the preservation of their habitat, the creation of new protected areas, or for the fight against poaching and overfishing.
Carbon Offsetting Made Transparent
Another example is the Blockchain-based carbon market. A number of different DAOs and Companies have entered the space within the past few years. They aim to replace the incentives that dictate land use. Currently, the economics of many areas incentivize the destruction of nature and the environment. By attracting value to natural resources, such as forests, these projects prevent deforestation and fund reforestation.
Supply Chains Made Traceable
Companies’ operations can also be made more ecological through the use of the Blockchain. Monitoring supply chains can be made more secure and functional. They can also become more efficient and less wasteful. Amazon has developed a Track and Trace Program which seeks to harness the Blockchain: “With Blockchain, supply chain companies can document production updates to a single shared ledger, which provides complete data visibility and a single source of truth. Because transactions are always time-stamped and up to date, companies can query a product’s status and location at any point in time.” — Amazon Web Services
This is the Beginning
Now is an interesting moment for both Blockchain projects and sustainability initiatives. Firms with a sincere interest in producing more ecological products and services can harness the Blockchain to do so. This ranges across all steps of value creation, from creating streamlined supply chains to offsetting carbon. At the same time, the Blockchain offers consumers and the public creative and efficient ways of supporting ecological projects. There is still a lot of work to be done, but the industry is heading in the right direction.
About Sustaim: At Sustaim we believe that an impactful and trustworthy climate-compensation market is necessary to successfully mitigate the effects of climate change.
We are a German based sustainability company that aims to support organizations that take their net-zero promises seriously. Sustaim offers climate-compensation solutions that generate publicly verifiable impact. Through utilizing both technology and close partnerships, we provide full transparency so that our partners can be sure that their financial efforts actually have an impact on the environment.
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