Ironically, Blockchain Could Save Bitcoin’s Environmental Downfalls

It is safe to say that while blockchain technology hasn’t been around for long in comparison to other revolutionary technical ideas, its effect is being felt in every industry in some way or the other. For the masses, bitcoin, by far, remains the most popular term associated with the innovation, while Ethereum comes a clear second in that order. A Google trends chart comparing these three search keywords for the past 12 months shows that the results aren’t surprising, as bitcoin outshines the other two.

Popularity Comes at a Cost, Especially in Iceland

However, there have been specific issues presented by environmentalists who believe that bitcoin, or any cryptocurrency mining, is harming the environment. They argue that the processors required to keep these participating nodes running in the network, specifically for mining purposes, are drawing from huge amounts of electrical power and making worse the problem of climate change.

According to the article posted by the World Economic Forum (WEF) in collaboration with Business Insider, it is said that Iceland may soon use more electricity to mine bitcoin than it uses to power its homes. In the wake of this news, it is high time to determine how blockchain can be more beneficial to humanity rather than a parasitic depletion.

One potential idea way in which this could be made possible is by incentivizing people to protect the environment by giving them tokens for good deeds in the way of environmental issues. Currently, there is no significant incentive given for recycling, for instance. In such a world, recycling centers would issue tokens to those who recycle their used paper and other junk.

Another idea was to protect the environment through a “carbon credit” system. Carbon credits are to be given to individuals and organizations that have taken steps to reduce their respective carbon footprint.

The concept failed to take off, unfortunately, due to a lack of clarity by authorities and governments across the globe. Furthermore, the absence of a universal parameter to count carbon credits was the final nail in its coffin.

Blockchain to Revive Incentive Schemes

This opportunity is where blockchain comes into the picture though. A blockchain can be used to transparently track a variety of data like the carbon footprint of each product, the greenhouse gas or waste emissions of a factory, or a company’s overall history of compliance with environmental standards.

Technically speaking, the blockchain is decentralized and offers a standard set of rules to govern everyone. It ultimately means turning our trust towards a few lines of code rather than a committee of authorities. Following the above example, a smart contract could be configured to offer organizations tax breaks for heeding environmental standards.

Similarly, blockchain technology can also be used for the conservation of water. Citizens can be issued a certain fixed number of tokens every month which they can use for their water needs. These tokens can be exchanged with the government body to pay for water charges.

Citizens who save water will at the end of the month have an excess amount of tokens in balance which they can trade at a price to those who have quenched their monthly quota of tokens but still need more water. Such a move would incentivize not only water saving but also reward those who play a role in the process of conservation as a whole.