Why are global leaders and innovators the world over looking to a way of making secure records without central verification (a ‘distributed ledger’, as you may have heard blockchain technology described) to transform our social systems?
Already in these early days when few can say what it is, blockchain technology is being applied to some major social challenges. In China, IBM and Walmart have joined forces to track the country’s phenomenal quantities of pork from farm to table on blockchain, which may prove a significant first step towards bringing its opaque and hazardous supply chains into daylight.
Dubai’s government has set the goal to log all official documents on a blockchain by 2020.
Sweden’s central bank is considering launching a nationwide digital currency, and exploring blockchain as the foundation for it.
At Forum for the Future we’re asking how we can harness such a game-changing technology to make global systems more sustainable. In search of answers, we brought three blockchain pioneers together for a virtual futures salon, attended by big businesses, including Olam, BT, Capgemini and Kingfisher, non-profits such as the Fairtrade Foundation, and other members of our forward-looking network.
Our three pioneers were: Scott Kessler, Director of Operations at LO3 Energy, a company applying blockchain to the utility grid and developing its first project in Brooklyn; Jessi Baker, Chief Executive of Provenance, which is using blockchain to transform supply chain transparency; and Linz Wilbur, an affiliate researcher at Institute for the Future, who is involved in pilot blockchain applications for neuroscience, marine science and genomics.
Our discussions revealed many possible gains of blockchain for sustainability. Here are the five I found most compelling:
Jessi Baker emphasised the potential of blockchain to rebalance power in systems based on shared data - such as supply chains. Until blockchain, data has been verified and validated by a central authority. At best, this means each piece of information is held up to the same level of scrutiny; at worst, it allows records to be invented, falsified or lost. The distributed ledger, verified by a network of independent computers, takes this power out of central hands, and gives a wider community an equal say in what counts.
This is very powerful: not only does it change what’s valid, but it changes the relationship of people to value. It means we can all create value by saying, ‘Yes, I can see that too.’ And in doing so, we become ‘valid’ in each other’s eyes. This is fundamental for equality.
This takes us to another benefit: visibility. Remember the story of the emperor’s new clothes? When only the emperor’s view of things counts, the myth holds that he is clothed in fine garments. When everyone else’s perspective is acknowledged, it emerges that actually he’s naked. Blockchain is like the ‘visible cloak’ in an updated version of the tale.
Invisibility is at the root of many problems: slave labour, food loss, chemical hazards, fraud. The list goes on. Supply chains recorded on blockchain can reduce loss, ensure safety standards, affirm nutritional value, ensure people get paid, and prevent double-counting in the system. This is the vision of Jessi Baker with Provenance. She shared the story of a tuna supply chain: before it was recorded on blockchain, one sustainably caught fish might be certified and sold. At the market, two people claimed to have bought it. At the next point of sale, four buyers made the claim. Scale it up, and it’s like feeding the five thousand, but on misinformation…
3. Better metrics
Picking up the marine life theme, Linz Wilbur pointed out that blockchain can not only make dead fish ‘visible’ in supply chains, but can also help us see and value live ones. Marine ecosystems are on the verge of collapse - but the case for protection remains weak without a better understanding of the significance of different species and their stock.
What’s needed, Wilbur explained, are means to identify ecologically significant areas, beyond national jurisdiction. A variety of biodiversity indices have been proposed, assessed and criticized: one problem is bias in sampling efforts and sample sizes. A decentralised means of making records could help to overcome bias and coordinate transnational efforts.
When you can see what’s going on, you can make better choices. This is a point Scott Kessler emphasised as he shared what’s happening on President Street, near Brooklyn’s Gowanus Canal, where the first peer-to-peer energy transaction was recorded on blockchain.
Incentives for local energy generation are limited in the US, where Renewable Energy Credits have no local impact, and regional energy markets reinforce monopolies and limit choice.
Here, residents are now selling energy they are generating themselves to each other, and logging the transactions on blockchain. The log does not tell them who generated each electron, but it does show the proportion of energy generated locally, and how much this compares to the amount of energy consumed in the area.
Blockchain can be the basis for systems that assign value to quantities. This is called ‘tokenization’. Whatever is logged is given a value. This is how bitcoin and other blockchain-based currencies work.
In the Brooklyn Microgrid project, a token is assigned for each unit of energy produced, stored and consumed. This creates an incentive for local energy, Kessler explained, by improving return on investment for each unit generated.
That’s five good reasons to take an interest, particularly if you’re serious about sustainability. Then we asked our pioneers what might get in the way, and two points stood out.
Public or private?
The first comes down to whether the technology is deployed in public or private. As Jessi Baker explained, currently when we talk about blockchains, we mean one of two things. One is a public ledger, where the infrastructure is owned and operated by a network of independent contributors. In this case, the data itself may not be visible to the public, but it is held in the public realm. This is the condition for blockchain working as an equalizing force.
In other instances, the infrastructure is distributed among a network, but the contributors are all part of a private collaboration. As Baker put it, this could simply enable the already-empowered to collude more effectively!
For now, both the public and private applications are useful. Indeed, LO3 energy’s Brooklyn energy project is on a private ledger. But as with the internet, open access will eventually be key to maximising its social benefits.
The fear factor
The second big obstacle to maximising the benefits of blockchain for sustainability is as simple as this: not giving it a go. Because few of us really ‘get’ the technology, few of us are prepared to see what it might do for us. This is something like not using a web page because you don’t know how to code. Our pioneers were reassuring: there are lots of resources out there to help you get started, and it’s not that hard! The key is to begin exploring the opportunity for your organisation. Linz Wilbur shared this TED talk by Bettina Warburg, and Jessi Baker offered an open door to discussions.
Forum for the Future is looking to bring together partners to explore the opportunity for sustainability in greater depth, with a focus on transparency, peer-to-peer change, and decentralised collaborations. To join us in harnessing blockchain for sustainability, get in touch with Rodrigo Bautista: [email protected].