Blockchain technology could hold the key to protecting the environment and fighting climate change, the United Nations has stated. The U.N. is already looking at initiatives that employ blockchain to ensure transparency in environmental protection, develop clean energy markets and boost climate financing. It also touted blockchain‘s potential in promoting sustainable development.
In recent months, there has been great focus on the energy consumption of block reward mining. Ever since Elon Musk announced that Tesla had dropped BTC as a payment option due to its energy consumption, many experts, legislators and regulators have weighed in. The ongoing crackdown in China on digital currency miners has further piled pressure on the industry.
However, according to the U.N., the underlying blockchain technology could prove critical in the fight against climate change. Already, the global intergovernmental organization is trialing a number of projects that rely on blockchain to protect the environment.
In its blog post, the UN stated, “These range from a tool to eliminate illegal fishing in the tuna industry, developed for the World Wide Fund for Nature (WWF), to a platform (CarbonX) that turns reductions in greenhouse gas emissions into a cryptocurrency that can be bought and sold, providing manufacturers and consumers with a financial incentive to make more sustainable choices.”
UNEP, the arm of the U.N. that responds to environmental issues, has been working with the Danish Ministry of Foreign Affairs and the Technical University of Denmark on a blockchain initiative. The trio have identified the three main areas where blockchain can accelerate climate action—transparency, clean energy markets and climate finance.
Data on harmful greenhouse gas emissions in many countries is incomplete and unreliable and blockchain can improve this. On climate financing, blockchain can scale carbon markets, “allowing businesses and industries to transition to low carbon technologies.”
Aside from environmental protection, blockchain technology can be an important driver of sustainable development.
“Because the technology is resistant to tampering and fraud, it can provide a trusted and transparent record of transactions. This is particularly important in regions with weak institutions and high levels of corruption,” it stated.
The World Food Programme, the arm of the U.N. dealing in food assistance, has already trialed a blockchain-based programme in Pakistan that allowed it to distribute cash directly to beneficiaries, bypassing the traditional banking system. This system has also been trialed in a refugee camp in Jordan.
“If this can work for refugees, it can also work for other disadvantaged, vulnerable groups.”
The U.N., however, warned that while digital currencies have great potential, they must address the energy consumption dilemma. It concluded, “Despite all of these potential benefits, the huge energy consumption associated with the technology is one of the main hurdles that needs to be overcome, and many players in the industry are working on ways to address the issue.”
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