Some of you may (or may not) have heard of Bitcoin - a form of cryptocurrency that has grown rapidly in popularity over the years. Many times, a technology called blockchain is associated with Bitcoin as a way to track digital transactions. However, what most people don’t always realize is that blockchain doesn’t have to exclusively apply to cryptocurrency.
You may be wondering - what does blockchain even mean? Well, the concept is actually quite simple and has been used for a very long time, just not with our modern technological twist. Think about when a document is submitted - it could be stamped with a time stamp and the time is recorded in a book. Blockchain follows this exact concept, but virtually.
With blockchain, data is stored in a block and any time it is “stamped” with new information, it creates a chain of blocks - all referencing back to the block it originated from (instead of creating a physical paper trail). The great thing about this technology is that when new information is “stamped”, all of the previous data that is chained on to it is incredibly difficult to alter and has to go through a series of proofs for change. Therefore, trust is built within the data. Trust is also built through the data being decentralized - meaning it could be distributed and viewed from any computer - creating public transparency.
Now, how does this relate to real life? Well, think about two people who want to go into business together. Generally, they may hire a banker or a lawyer to act as an intermediary to validate documents - a process that takes time and money. With blockchain, all of these documents would already have proof of validation through the data. Therefore, the middle-man can be cut out and peer-to-peer interactions can improve.
In terms of sustainability and business transparency, this technology can really hold companies accountable and allow consumers to understand where their products are coming from.
Here are a few ways that blockchain can improve these actions:
- Today, more and more consumers are demanding transparency in retail companies, where ~60% of retail consumers say they are more inclined to purchase from a company that has adopted sustainable policies. Blockchain could be used to document the origin of materials used for retail products - creating sourcing transparency. Therefore, consumers can make truly informed decisions about their purchases.
- Organic and locally sourced food is becoming more prevalent in grocery stores all around the United States. There has been a shift from convenience towards healthier standards. Blockchain could be used in the agricultural industry to track and verify the authenticity of these standards.
- One of the biggest barriers that exists with solar energy is the storage of excess energy. At the moment, the solution is generally to distribute the energy elsewhere. Blockchain could be used to monitor the grid, issue “stamps” when a production threshold is hit, then distribute the excess energy elsewhere. Closing this gap in solar energy could entice more consumers to choose solar energy - ultimately creating more reliance on renewable energy sources. There are even companies that are starting to implement this idea already. In New York, members of Brooklyn Microgrid want to turn three of their zip codes into their own energy markets using blockchain technology.
- Diamonds have been a hot topic in terms of sustainability and labor conditions for many years. The harvesting of diamonds can take place in conflict zones where labor and environmental conditions are very poor, a practice that many consumers don’t want to support. Blockchain could be used to verify the origin of these diamonds when they are being purchased. With this transparency and validation, consumers can actively choose companies that are ethically sourced.
Like any new and emerging technology, there are a lot of kinks that have to be worked out before it is implemented on a larger scale. However, blockchain technology shows extremely promising outcomes that can alleviate many management issues that arise in the sustainability realm. Be on the lookout - you are bound to hear about blockchain more and more as time goes on!