Blockchain and sustainability — There’s more to it than electricity usage

Bringing the social and governance spheres to the discussion about the sustainability and potential of blockchain technology.

In a little more than 40,000 days — or over a hundred years — we have gone from the first terrestrial flight to the first flight on another planet. Within that short time, the amount of fuel burned and, unfortunately, even lives lost have been immense. In exchange, flight has completely transformed everything from commerce to warfare and has led to the birth of completely new industries. As aviation progressed, fuel efficiency improved and mortality rates also dropped immensely. 

In the digital realm, blockchain technology could be equally as transformative, with applications in everything from trade, exchange, cooperation, identity, and resource usage management. At the moment, these advancements come at the cost of high levels of electricity usage. This is a concern that should and will be addressed.

Related: Ignore the headlines — Bitcoin mining is already greener than you think

The issue is that the current narrative uses this high electricity usage to call blockchain projects, and especially Bitcoin (BTC), unsustainable. This is not only detrimental to blockchain projects — especially from an investment and adoption perspective — but it is also untrue.

Sustainability is judged on the three broad metrics of ESG — environmental, social and governance. The current debate — characterized by lack of nuance on the one side and needless finger-pointing on the other — has only focused on the environmental aspect of sustainability. The social and governance aspects have been widely ignored, which leads to an inaccurate sustainability perception for both Bitcoin and blockchain projects in general.

Related: Bitcoin miners can prove green potential by undergoing ESG ratings check

Social

The social aspect should be seen in the broader context of the economy-wide shift to platforms. Everything from ride-hailing to buying books to ordering take-out is now taking place on platforms. In this winner-takes-all world, the market power of successful platforms allows them to eventually dictate unfair terms to their workers.

Tokenized blockchain projects have the potential to address this wrong by making possible the ownership of a platform based on a worker’s contribution. The result being workers benefiting from the growth of the platform instead of getting oppressed by it.

Related: Understanding the systemic shift from digitization to tokenization of financial services

Governance

Blockchain technology enables the transparent and automated execution of rules/procedures on a global scale. This capability is based on a combination of immutability, transparency, censorship-resistance, decentralized software execution and economic incentive exclusive to the blockchain.

This makes the blockchain a rich proving ground for governance in the digital age — a proving ground which, as we have seen in the decentralized finance space, is making interesting progress on an almost daily basis. It is only a matter of time until the lessons learned spill over into helping us better manage the global commons.

Related: Decentralized parties: The future of on-chain governance

Conclusion

A piece of fabric and wood from the original Wright Flyer was taken to the surface of the moon by the Apollo 11 astronauts. The fabric and wood had no functional purpose beyond the symbolic tying of these two historic events together.

It has been around 4,600 days since the Bitcoin whitepaper was published. With the breakneck speed of innovation in the blockchain space, the current blockchains — and their energy consumption — will also be icons of the past.

It would therefore be more productive to take a more holistic view and steer toward a sustainable end result, rather than being overly judgemental of a work in progress — and losing possible social and governance gains, opening blockchain up to grifting and profiteering in the process.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Gys Hough is managing partner at Coinstone Capital — a Dutch digital asset investment advisor that focuses on customized crypto assets portfolios for retailers, HNWIs and family offices. Gys writes and lectures on blockchain and society with a special focus on tokenization, inclusive platforms and CBDCs.