Are blockchain and cryptocurrencies promise of a brighter future?

Imagine a world that is poverty-free, environmentally-friendly, economically efficient and socially just. Impossible, you say? Perhaps. But what if we had a technology that helped us to move much closer to that dream? Maybe somewhere in the distant future, you say? But what if that technology was already here?

Cryptocurrencies and especially the underlying blockchain technology are constituting a paradigm shift, not only in the financial sector but beyond. The above-described picture might be overly optimistic and utopian but there is no arguing that the new digital economy offers countless possibilities and can help us move away from our old wasteful ways. So, let’s take a closer look at some of the most relevant potential uses.

Sustainability and circular economy

The resources on our planet are finite, so our society will indispensably have to move towards a circular economy. Achieving that, however, is not easy. For the producers and service providers, it is extremely time- and labour-intensive to safeguard the trustworthiness and sustainability of their supply chains. For the end-user, it is virtually impossible to verify whether the provenance and ethics supposedly behind a product or service are really true. The same goes for the quality and safety of the products.

All that, however, can change. With blockchain technology, it is possible to create a virtuous circle of transparency and incentive for behavioural change. If everybody in the supply chain knows how resources are used and can verify their impact, then it will stimulate consistent change towards a circular economy and sustainability in its broader sense. Companies can step up their practices and consumers will be able to make informed decisions.

When used in combination with cryptocurrency, positive behaviour can be tokenised. Those who act sustainably can receive immediate compensation — something that is probably much more effective than calls for saving our planet or for fair work practices that are too abstract.

Such blockchain solutions have already been developed in different fields. MonoChain is one good example — they propose increasing resource-efficiency by bringing primary and resale markets closer together and thus extending products’ lives. Even big players such as Amazon are filing patents to make their supply chains verifiable. Provenance is increasing transparency of the fish industry by offering an answer to the much-discussed issue of the origin and environmental impact of tuna fish. Bext360, an AgTech startup, is focused on agricultural supply chains and helps to trace commodities such as organic cotton, palm oil, minerals, or coffee. They have for instance developed a kiosk — they call it ‘bextmachine’ — that is able to verify the quality of coffee and tokenise it accordingly, enabling direct payments to the farmers.

Ideas to boost efficiency are also ever-growing in the food sector. Walmart and other food giants are tracing their supply chains to avoid waste and ensure their customers receive high-quality fresh produce. In healthcare, much can be achieved thanks to blockchain technology as well — examples include RemediChain in the United States that redistributes unused or PharmaLedger that is working on improving medical supply chains in Europe.

Waste management is also focusing on the possibilities offered by blockchain technology. The circular economy has to cover all the stages a product goes through and make them as efficient as possible. Therefore, numerous initiatives and pilot projects have been launched; reciChain, PlasticBank, Recereum, and PlasticTwist are just a few examples. Improved traceability will enforce greater accountability and, once more, everybody in the supply chain can improve their behaviour.

Overall, from the environmental perspective, it is true that blockchain can have its downside. The technology has come under (unfair?) criticism for being highly energy-intensive, as well as for generating e-waste. However, that can be tackled with and, in the bigger picture, the negative side effects are outweighed by blockchain’s potential to enable truly sustainable solutions.

Equality and social justice

Besides its ability to promote sustainable development goals, blockchain can be a valuable tool in the fight for social justice.

One of the burning issues blockchain could help out with is foreign aid. Huge amounts of money fail to deliver full value because they are misspent or end up in the wrong hands. Experts estimate that billions of dollars in foreign aid are lost to corruption every year, constituting up to 30 per cent, as the former UN Secretary-General Ban Ki-Moon pointed out some years ago. Blockchain and digital transfers could change that reality by avoiding unnecessary middlemen and enabling transaction tracking from beginning to end.

Similarly, blockchain can solve the wide-spread problem of property rights in many developing countries. Transparent public ledgers of ownership would be a good remedy for unfair expropriation, regardless of whether it is intentional or done by mistake because of cumbersome bureaucracy.

Another problem people struggle in some parts of the world — which might come as a surprise — is lack of identification. Someone who cannot prove their identity faces many barriers in accessing health services or education, for instance. Therefore, blockchain-based digital IDs could be an effective solution by empowering the most vulnerable groups. UNICEF has applauded the emergence of platforms like Bitnation that facilitate emergency IDs to the refugees.

Last but not least, when talking about the developing world, its economy largely depends on remittances, i.e. money that foreign workers in richer countries send back home. Cross-boarder payments are expensive and slow. — according to the UN, remittance fees can make up over 20 per cent of the sum and the total amount lost every year is about $25 billion. If cryptocurrencies and blockchain were implemented, transactions would be economical and swift, as well as completely traceable.

Conclusion

Cryptocurrencies have already gained wider popularity in recent years, promising to transform the international financial ecosystem. Meanwhile, smart contracts, decentralized apps (DApps), decentralised autonomous organisations (DAOs), and other innovative solutions are extending. They offer an unimaginable array of applications. We mentioned sustainability, supply chains, circular economy, and social justice but the list of possibilities is almost endless — e-governance, copyright, data protection, true sharing economy, etc.

If used wisely, cryptocurrencies and blockchain could be real game-changers and offer sustainability in every way imaginable. They can provide improved quality, cost-efficiency, environmental-friendliness, and social justice. If more and more companies and organizations turn towards disruptive practices and innovative solutions such as blockchain technology and it goes mainstream, then the opportunities before us are limitless.