Using Blockchain for Environmental Sustainability

Since blockchain gained popularity over the past decade, startups seem to have presented a solution for everything from financial transactions to voting rights to health records. Blockchain has been positioned as the next technological breakthrough, with its potential to revolutionise mainstream industries. Although the technology provides a range of benefits, blockchain for sustainability and social good is one area which is largely untapped today, even with researchers and enthusiasts analysing the potential and impact blockchain applications could have on environmental sustainability.

“Today, blockchain—the technology behind the digital currency bitcoin—might seem like a trinket for computer geeks. But once widely adopted, it will transform the world.”

—Ginni Rometty, IBM Chairman and CEO

Often times, people do not see the connection between technological innovations and the progress towards achieving sustainability. This is mainly due to lack of knowledge. If anything, frontier technologies like blockchain, artificial intelligence (AI), and the Internet of Things (IoT) have proven to have what it takes to accelerate the process of building a future of health, safety and sustainability. Blockchain has the capabilities to address major environmental challenges, as listed below, because of its features of transparency, traceability and efficiency.

Benefits of Blockchain

  1. Blockchain is a distributed public ledger, which allows users to track products’ origins. Consumers and enterprises would have more confidence about the environmental impacts of their purchasing decisions if they could access verified data about the products and companies they choose to trust. A number of startups have already piloted tracing systems on blockchain platforms, which supports traceability from the source to the final buyer.
  2. In addition to identifying where the product originated from, blockchain also allows the public to see where their transactions are going. For instance, in the case of donations made to charitable causes, blockchain ensures that each donor can view if their donations reach the beneficiaries and go on to make the desired impact. This enhanced level of transparency goes a long way in instilling trust and confidence in donors as well as those who wish to donate but have not found the right avenue.
  3. Blockchain further expands its potential with the help of the smart contract, a computer protocol intended to digitally facilitate, verify, or enforce the terms of a contract without the need for third parties. This accelerates and automates exchanges of information and value concerning natural resources and sustainability.


Despite its benefits, blockchain still faces a number of limitations when addressing environmental issues such as the heavy carbon footprint. The original mechanism used to validate transactions in a blockchain network was called Proof-of-Work (PoW) consensus mechanism, which consumes a lot of electricity because it relies on multiple computers undertaking complex cryptographic calculations to reach consumers on updates to the ledger. Which is why many newer blockchains use Proof-of-Stake (PoS) systems that consume a significantly less amount of energy and is considered to be an eco-friendly alternative to PoW systems. The second challenge comes from the public’s misunderstanding of the technology. Ever since bitcoin and other cryptocurrencies have become a global phenomenon, the world has been watching as dozens of new cryptocurrencies are launched each month and, along with it, a series of initial coin offerings (ICOs) too, some of which have been linked to fraudulent cases. This negative outlook has influenced how people view the technology itself, and eventually distrust led to a lack of total acceptance from the general public, businesses, and governments. People have to be able to differentiate between the blockchain technology and cryptocurrencies, as well as be willing to trust and fully adopt blockchain in order for it to make effective changes. The final challenge is the fact that many people might not be able to get digital access. For instance, in 2018 World Bank reported that only 14% of people in low-income countries had access to the internet. How can they participate as empowered agents in blockchain solutions and receive the benefits if they cannot get a reliable internet connection?

The Road Ahead

Due to the negativity blockchain has faced, it has been increasingly difficult for established businesses to show approval for blockchain and for governments to support it. This lack of law and regulation ties back to the trust missing in the blockchain space. However, despite its challenges, blockchains, smart contracts and consensus mechanisms have great potential to facilitate a more sustainable world. LO3 Energy, a startup based in New York, is using blockchain to manage clean power trading across a solar-fed microgrid that covers a city block. Another firm called Provenance wants to make it easier for companies to verify sustainable claims with the use of blockchain. Finterra, a Singapore-based technology organisation, launched its flagship product called the WAQF Chain to bridge the gap between donors and NGOs and ultimately benefit the community. These firms prove that the blockchain technology, when applied correctly, can facilitate smart choices by producers and consumers, governments and corporations.