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Blockchains could help clean up the planet—if they don’t become environmental problems themselves

September 18, 2018

Distributed ledger technology can help heal the world, the World Economic Forum argues. A new report by the organization lays out 65 “existing and emerging use cases” for which blockchains could be used to address environmental problems, from natural disasters to water scarcity and, of course, climate change. Concepts like peer-to-peer energy trading could make power grids more efficient and resilient, while decentralized systems would help disseminate critical information in the aftermath of a disaster. As for curbing greenhouse-gas emissions? “Tokenized” carbon credits can help with that.

The WEF could be right. But let’s be real: as the report admits, most of these ideas are only concepts or pilots. Blockchain networks can also pose an environmental problem in their own right—the most popular ones use as much electricity as a small nation to carry out the process, called proof-of-work, that participants use to reach a consensus that the information in their shared ledger is accurate.

More energy-efficient consensus mechanisms may emerge and find success at a large scale. But the technical obstacles cannot be glossed over. Challenges related to scalability and environmental sustainability might be overcome by turning to blockchain networks that require participants to identify themselves. That cuts the cost of convincing the rest of the network to trust them (though many would argue that such a structure undermines the very idea of a blockchain). Whatever the path forward, blockchain networks must address their own environmental challenges before they can address the planet’s.

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Illustration by Rose Wong

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