How blockchain can benefit the planet

Blockchain continues to be a hot topic and it’s being increasingly used by businesses as a secure way to make transactions and transfers securely and cost-effectively. As technology develops, and new applications and platforms arise, there is growing awareness about the implications that blockchain can have for the planet. While blockchain has taken quite a bit of heat on the sustainability front – particularly for its energy-intensive nature due to its “proof-of-work” mechanism – it does have the potential to positively impact our planet. If harnessed correctly, blockchain can actually enable a shift to cleaner and more resource-preserving, decentralized solutions. In the process, it can unlock natural capital and empower communities.

Across Europe, we have noticed various developments using the power of blockchain to actually heal and benefit the earth – and yes, startups are the ones leading the way. Ethereum has adopted a “proof-of-stake” mechanism that uses less energy to confirm transactions. Polygon, a Layer 2 blockchain platform that is scaling Ethereum, is on a mission to be one of the most energy-efficient blockchains – they have pledged to set aside $20 million for sustainability projects. Most climate tech startups using blockchain are focused on optimizing trading voluntary carbon markets. As more companies are pledging to work towards net zero, there is more participation in the carbon markets than ever before. By 2030, the market for carbon credits could be worth at least $50 billion.

Traditionally, trading in the carbon markets lacks transparency and is inefficient. To trade carbon credits and carbon offsets, a broker is involved in the transaction and charges a sizeable margin. A few other concerns that exist in the traditional carbon market are the high risk of greenwashing and double-counting carbon credits due to a lack of reliable data. By moving carbon markets on-chain, it creates more transparency as data is immutable. Aside from blockchain being applied to innovate carbon markets to benefit sustainability, startups are also using blockchain in the circular economy and issuing sustainable assets that can be used as collateral or NFTs.

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