Surprisingly, the United Nations and the World Economic Forum have declared the potential that Bitcoin and blockchain technology could have on the fight for climate change through the boost they could provide. This is despite widespread concerns about massive carbon emissions and electricity usage associated with Bitcoin mining and other blockchain networks and the negative impacts these could have on the environment.
In an article by the World Economic Forum, the potential of Bitcoin and blockchain is unraveled through the ingenuity of smart contracts, which present an opportunity to disrupt the traditional way of executing contracts. And therein lies their relevance to blockchain transactions.
A smart contract is a computer programme designed to initiate, execute, and control the necessary actions set down by the terms of an agreement or contract. Smart contracts circumvent the need for intermediaries and, designed to be automated, reduce arbitration and enforcement costs.
They are useful in the context of climate change as they allow the designing of fully automated incentive systems accessible globally. These systems reward people, companies, and even governments, for taking part in activities associated with environmental sustainability. Some of these activities are carbon offsets, regenerative agriculture, crop insurance, permaculture, etc. In essence, smart contracts incentivise people to be more conscious of their consumption habits and move towards more sustainable practices.
Also, climate change experts met in May at the UN Climate Change Conference in Bonn, Germany. At the conference, the experts touched on the positive impact blockchain technology could have in the fight against climate change.
Furthermore, they discussed such possible advantages of making blockchain technology and climate change concerns work together. This relationship could influence and improve carbon emission trading, as is seen in the example of IBM and Energy Blockchain Lab working to develop a Blockchain platform that enables the trading of carbon assets in China.
It could also facilitate clean energy trading through secure peer-to-peer trading of renewable energy trade in the shape of tokens or digital assets. It was also revealed that blockchain technology could help develop finance flows for the climate change struggle through crowdfunding and peer-to-peer financial transactions dedicated to climate change support.
Speaking at the conference, Alexandre Gellert Paris, Associate Programme Officer at the United Nations Framework Convention on Climate Change (UNFCCC), said,
“As countries, regions, cities and businesses work to rapidly implement the Paris Climate Change Agreement, they need to make use of all innovative and cutting-edge technologies available.
“Blockchain could contribute to greater stakeholder involvement, transparency and engagement and help bring trust and further innovative solutions in the fight against climate change, leading to enhanced climate actions.”
What other new opportunities and advantages could come from blockchain technology? With blockchain, it seems the possibilities are endless. Perhaps it’s time to believe.
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