The subject of sustainability remains a key discussion for modern society, businesses and companies. This is paramount for different reasons aimed at ensuring the continuation and advancement of the environment, economies, and, most importantly, social justice.
While there are traditional strategies used over the years to improve sustainability in diverse sectors, blockchain technology itself has also proven helpful in recent times, in the pursuit of sustainable development, especially in Business, Finance and Agriculture. Yes, the first and most popular use case of blockchain is cryptocurrency. However, its features are useful and can be applied to support sustainability in different sectors.
To better understand the potential of blockchain in sustainability developments, let’s quickly explore the basics of the technology and some of its groundbreaking properties or features.
The Features of Blockchain That Support Sustainability
Some of the features of blockchain useful for fostering sustainable developments in Business, Finance, Agriculture, etc., include the following:
Especially in the area of Finance, decentralisation is one of the most important features of blockchain that supports sustainability developments. Decentralisation is the opposite of centralisation. It simply means that there is no central authority or third party that controls or manages the network. All the controls are managed by the users.
The benefit of decentralisation is that every participant in the network is given equal power and responsibility. This is one basic reason blockchain has become an attractive technology for modern entities in different sectors, like financial services, supply chain management, and data sharing, looking to empower users.
Immutability is another key feature of blockchain technology. This particular property ensures that any transaction recorded on the blockchain cannot be changed or reversed. It’s responsible for the tamper-proof and accuracy of data on the blockchain.
This is so because every block in a blockchain is connected to the previous block through a cryptographic hash. Therefore, changing any data in a block would require a change in the hash as well, which would invalidate all subsequent blocks.
Blockchain is inherently transparent, meaning all the transactions or data stored on the network can be accessed and viewed by anyone. In addition to allowing greater accountability and trustworthiness of information stored on the blockchain, transparency also makes the technology attractive in the area of fraud prevention.
The transparent nature of blockchain discourages fraud and corruption because all transactions are visible to everyone on the network. Thus, illicit transactions can be traced.
The cryptographic encryption of data is what ensures the security of data and records on the blockchain. Each transaction is verified by multiple users on the network. This makes it very difficult for hackers to tamper with the data on the blockchain.
How Does Blockchain Support Sustainability in Business
The features of blockchain stated earlier can be beneficial in the sustainability of Businesses in many ways. These may include the following:
Asset management can be tedious and challenging for businesses. The cost of maintaining the personnel or traditional systems might also be on the high side for startups. But with blockchain, the processes can be streamlined for more efficiency. Using blockchain, businesses can track the ownership of assets, including properties or equipment, in a transparent and secure fashion.
Data Security and Privacy
Security and privacy are important for certain business practices. Businesses using centralised systems for data storage are liable to experience a point of failure. But data stored on the blockchain is more secure and can be accessed anytime, anywhere. Moreso, the data cannot be altered or hacked.
How Does Blockchain Support Sustainability in Finance
Blockchain has gained more attention in the area of finance, especially with digital currencies, which are based on technology. Below are some ways blockchain supports sustainable efforts in the financial system.
Efficient Payment System
As seen with cryptocurrencies, blockchain can efficiently improve the payment system, making it cheaper for consumers and merchants to send and receive money across the world. Presently, many people still find it difficult to make cross-border payments with traditional payment systems. It is also expensive and time-consuming to process huge amounts of money through this medium.
But cryptocurrencies have shown that blockchain technology has the potential to address these issues. There have been instances where hundreds of millions are transferred with minutes for less than $10 in transaction fees.
Given the decentralised and immutable nature of blockchain, banks can use the technology to improve or facilitate settlement transactions amongst other financial institutions. Popular US investment bank, JPMorgan, has already begun trialling collateral settlements with blockchain. Last year, HSBC and Well Fargo planned to leverage blockchain to facilitate interbank FX transfers.
How Does Blockchain Support Sustainability in Agriculture
Over recent years, blockchain has played an important role in Agriculture, improving food safety and trust in food producers. Below are some of the major ways blockchain supports Agriculture.
Supply Chain Management
The immutability of blockchain allows farmers and food producers to leverage the technology to accurately record the process of production. They can use blockchain to track and manage the supply chain of foods from the planting stage to the harvest stage, including shipping items to market. This ability allows for better accountability of their goods.
Transparency and Trust
Blockchain can offer transparency in agriculture which is vital for any farmer or food producer to gain more trust from market participants and consumers. The majority of people would be interested to know how and if the foods they consume are safe. This is where keeping records on the blockchain comes in handy.
The brilliance of blockchain-based smart contracts can be used to provide better insurance coverage for farmers and companies in agriculture. Insurance programs on the blockchain can be faster and more transparent, and the issues of corruption or false claims will be countered since it’s automated by the smart contract.
Tokenisation and Funding
Blockchain provides the bedrock for Agricultural companies and individual farmers to tokenise their assets or seek funding by issuing assets or digital tokens.
Blockchain technology has enormous potential to revolutionise different sectors. The inherent features of blockchain can support sustainability efforts in diverse areas like Business, Finance, and Agriculture. The technology can promote data security, transparency, and an efficient system for cross-border transactions.