The BlockChain: A futuristic approach to sustainability
What is blockchain?
In 2008, Satoshi Nakamoto, who is believed to be the inventor of digital currency Bitcoin, came up with the concept of blockchain as a core component of his digital currency Bitcoin, where it functions as the public ledger for all transactions. A blockchain is a distributed ledger technology(DLT) that holds transaction information in so-called Blocks. When linked together, the blocks form a chain of connected, secure information. In simple words, you can say it is an inventive way of transferring information/data from one person to another in a secure and safe manner. Blockchain is a revolutionary and innovative technology that provides fraud stamping and transparency in online transactions.
here, we can understand it with the example of google docs. When we create a google document, basically we share the document with a group of people without any transferring and copying of data. More than one or two people can work simultaneously. This creates a decentralized distribution chain for the access of data. But it's just an analogy to understand, blockchain is far more complex and secure than google docs.
Key factors of blockchain that makes it safest
- Decentralization means a single entity does not reside in a single place, However, data distribute among people connected in a P2P network
- A block of data consists of data, a hash of the block, and a hash of the previous block, as the name suggests Blockchain. Data is store cryptographically in the blocks
- The blockchain is immutable that means no one can temper the data that is inside the blockchain
- Transparency is the key to security in blockchain, everyone can track the data if needed
A block is a primary unit of storing data in the blockchain. A block generally has three basic elements:
- First and foremost, the data.The block store the data
- A 32-bit whole number known as a nonce. The nonce is randomly generated when a block is created, which then generates a block header hash.
- The hash is a 256-bit number which combines with a nonce
When we create the first block of data, a nonce generates the cryptographic hash. After the assignment of the hash to the block, the data within the block is signed forever.
Three pillars of Blockchain
Blockchain operates on decentralized networks i.e P2P network in which people interact directly without any third-party interaction in between like bitcoin. Information is not stored at one node, it is shared with all the nodes connected. In Contrast, the centralized network has a central node to save all the data. Decentralization solves so many faults of the centralized network like :
- Data is available to people always whether the system is updating
- No need for halting the whole system if there is mishappening somewhere in the system
- Data becomes more secure because of decentralization data. Vulnerability to hackers decreased
Blockchain provides transparency in the data transfer and transaction among people. Transparency means being honest about what your data is. In the blockchain system, everybody can see the whole details of the transaction a person had made with his account.
In the context of cryptocurrency, anyone can see how much money has been transferred to which account but privacy is not compromised. Because the identities of users do not visible to others. Don’t you think blockchain could be very beneficial with supply chain management in the food and clothing industry? We could know about the origin and end of our products.
Immutability means the data once entered in blockchain cannot be changed or tampered with. It is the strongest pillar of the blockchain system that makes it different from other systems. A cryptographic hash function functionality to build an ingenious property of blockchain. Hashing is the process of generating an encrypted output of the same length as of input using cryptography algorithms like the SHA-256 algorithm.
Types of Blockchain technologies
1. Public Blockchain
Public blockchain protocols are based on the Proof of Work (PoW) consensus algorithms that are available as open-source. This type of blockchain is available to all. Everyone can download the code and start running any of the public nodes on their local device to validate various transactions in the network. Anyone from any place in the world can send their transactions through this network. This process doesn’t require much infrastructure cost. Bitcoin and Ethereum are examples of a public blockchain.
2. Consortium blockchain
Consortium blockchains always operate under the control of a group. No, every other person can enter the system and access the transactional data without verification. In comparison to public blockchains, they are faster, more scalable, and even more secure. Consortium blockchains are widely used in the banking sector. This type of technology reduces the duplicity of data and the associated transaction costs. As a result, the document handling process becomes easy and smooth. For example, EWF (from the energy sector) and R3 (in banking).
3. Private blockchain
Private blockchains contain different groups and participants who can easily verify various transactions internally. Two types of permissions are allotted in this system: read and write. Write permission is always kept restricted to one organization and read permission is public or restricted to some extent. Privation blockchains are very efficient for their security against fraud detection in various banking institutions. For example, MONAX and Multichain.
Here are some of the best open-source blockchain platforms:
Platforms to create your own Blockchain
This is an open-source blockchain platform that helps in running smart contracts and provides different programming tools to create them. It was proposed by Vitalik Buterin in the year 2013. It is a distributed public network that enables developers to build and deploy various types of next-generation decentralized applications easily. Ethereum helps in designing and issuing cryptocurrencies and tradeable digital tokens.
This is an open-source distributed ledger system that is designed for storing large data sets and enabling its developers to deploy various blockchain Proofs-of-Concept and applications. The important thing about BigchainDB is that it’s based on a production-ready database. This makes it appealing for deployment in production. The network of BigchainDB could be public, permissible, or private, as per the access permissions over the system.
This is an open-source extension of the Ethereum blockchain platform that helps in developing and deploying different permissioned distributed ledgers. HydraChain is compatible with the Ethereum protocol and also provides the infrastructure to develop smart contracts in Python. It supports many tools and hence helps to reduce development time and improve debugging capabilities. It also provides a high level of customization
Corda is one of the preferred open-source platforms for building and developing various permissioned distributed ledger systems. It was created by the R3 consortium, which comprises the largest banks and allows them to manage all the legal agreements between parties. It can be used by diverse businesses like financial institutions to keep a shared ledger of all the transactions. This is one of the primary problems for which Corda was developed. Similar to other blockchain platforms, R3 Corda also provides safe data storage and immutable records of data.
MultiChain technology is a platform that helps users to establish certain private Blockchains that can be used by the organizations for financial transactions. A simple API and a command-line interface are what MultiChain provides us. This helps to preserve and set up the chain. MultiChain is for creating new blockchains with their native currencies and/or issued assets.
Is blockchain good for sustainability?
Blockchain is having an emerging role in sustainability by promoting engagements between consumers and producers. It helps in assisting people in adopting more sustainable lifestyles, and helping companies improve their sourcing and recycling practices.
Simultaneously, another major advantage of blockchain technology is that it provides transparency. In simple words, blockchain provides a detailed information transaction flow from one person to another. This means that companies who claim to be sustainable and resource positive and reducing their environmental impacts can be cross-checked and verified.
Though blockchain is synonymous with cryptocurrencies for many, it has applications beyond that like Finance, supply chain, real estate, and retail are some of the significant industries blockchain has already started to evolve.
Blockchain for Environment
Blockchain came up with innovative solutions to deal with environmental challenges. They might not solve the issue directly but have the potential to promote environmental sustainability in a good way. Here are the possibilities of how blockchain can help to boost environmental sustainability.
- Energy Efficiency
With the help of blockchain, an electric energy trading system could be made with a peer-to-peer network so that consumers can trade energy directly without needing central authority. With the continuous growth in electricity consumption in electric vehicles, households, and industries, blockchain can enable a system to provide a better way to sustainability
- Natural resource management
Blockchain could be a great help to stop illegal mining, deforestation, natural resource extraction to the next level. All the data can be stored in a single chain of blocks and could be updated in real-time. Moreover, large-scale projects involving land resource extraction can be precisely measured and verified so that no unauthorized mining has taken place. data on the blockchain cannot be altered, the whole tracking process can be put under scrutiny to prevent any third party from manipulating the system.
- Green energy
With blockchain technology, energy can be 100% utilized from production to consumption making sure it is renewable. A blockchain system could connect the power plants with areas of consumption like houses and commercial industries allowing easy trace for a source of energy and total consumption of energy at the consumer level. That’s how blockchain increases transparency and encourages the use of renewable energy.
Benefits of Blockchain technology for sustainability
Blockchain is a type of distributed ledger, all network participants share the same documentation as opposed to individual copies. Transaction histories are becoming more transparent through the use of blockchain technology. Shared documents can only be updated through consensus, which means everyone must agree on it. To change a single transaction record would require the alteration of all subsequent records and the agreement of the entire network. Thus, data on a blockchain is more accurate, consistent, and transparent in comparison to paper-heavy work.
When exchanges of goods are recorded on a blockchain, you end up with an audit trail that shows where an asset came from and every stop it made on its journey. This historical transaction data can help to verify the authenticity of assets and prevent fraud. With this technology, each time exchange of goods is recorded in the blocks. This can not only help improve security and prevent fraud in exchange-related businesses, but it can also help verify the authenticity of the traded assets. In industries such as medicine, it can be used to track the supply chain from manufacturer to distributor, or in the art industry to provide irrefutable proof of ownership.
3. Fraud Control
Blockchain is far more secure than other record-keeping systems. Because each new transaction is encrypted and linked to the previous transaction. A system that is based on data stored in several places is immune to hackers; it’s not that easy to get access to it. This immutable and incorruptible nature makes it safe from falsified information and hacks.
Due to the decentralization of data, Blockchain removes the need for middlemen in many processes for fields such as payments and real estate. In comparison to traditional financial services, facilitates faster transactions by allowing P2P cross-border transfers with a digital currency.
5. Reduced Cost
For most businesses, reducing costs is a priority. With blockchain, you don’t need as many third parties or middlemen to make guarantees because it doesn’t matter if you can trust your trading partner. Instead, you just have to trust the data in the chain. You also won’t have to review so much documentation to complete a trade because everyone will have access to a single, immutable version.
Blockchain is open-source software, there are fewer entry barriers that lead to a stronger developer base and enhanced transparency. Open-source software is free to share, transparent to develop. No single individual or a company develops, sells, or owns the software which removes any chokepoints or bottlenecks in the open-source software development process.
As the participant’s identity remains confidential. So, everyone can deal freely with another through a secure network. Complete anonymity and transaction security are among the top advantages of blockchain technology. Participants must maintain privacy and anonymity for many reasons. It protects addresses in a given wallet by changing addresses constantly which makes it difficult for hacking payments or transactions.
8. Ease of use
With competent integration capabilities, blockchain has the advantage of being easy to use and fast. The flow of data or money is quicker because of the absence of middlemen. However, In traditional banks, transactions of huge volumes take multiple days to complete owing to different protocols or transferring software. Blockchain technology operates on a 24×7 basis, which means you can make transactions anytime quickly and safely.
Disadvantages of Blockchain system that still needs improvement
1. Lack of Scalability
It is one of the major setbacks of this technology restricting its demand for many businesses. Meanwhile, existing transaction networks like VISA can process thousands of transactions per second. But, Bitcoin enables this technology to only process 7-8 transactions per second. After increasing traffic, it slows down.
2. Restricted interoperability
There is a lack of interoperability and uniformity between large networks of blockchains. Mostly, every blockchain network has standalone varieties of platforms and solutions with different protocols, individual mechanisms, and privacy measures. As a result, networks cannot communicate with each other. This makes blockchain technology very difficult to adopt as mass. This technology needs universal standards that would allow different networks to communicate with each other.
3. Integration with legacy systems
It’s a challenge for companies to incorporate this technology into their existing technology else they need to reconstruct the whole design that requires a lot of effort, resources, and time to do. Companies do not have skilled developers to do the integration. There are high incidences of data loss and breaches that are discouraging most companies from transitioning to the blockchain.
4. Lack of blockchain developers
Currently, blockchain technology is still in its infancy and evolving. From 2017 to 2020, the demand for skilled developers for blockchain technology has increased. Every industry is concerned about the well-qualified developers for blockchain technology to develop and manage complex peer to peer networks. The technical industry will take time to adopt this technology into the market.
5. Environmental cost
In addition, the disadvantage of this technology is the energy consumption. Much higher in comparison to other technologies and networks. Mostly blockchain technology follows bitcoin infrastructure and uses the proof-of-work mechanisms to solve complex mathematical puzzles. This process needs tremendous computing power to verify and process transactions and to secure the network. To overcome this issue, developers are trying to propose more efficient algorithms to save energy. Consequently, blockchain technology could be a milestone in the world of sustainability.
In conclusion, Blockchain is having a lot of benefits for organizations, supply chain management, and of course sustainability. But, a question arises, why it’s not that widespread? Further, we can only say that this technology is at its infancy stage and still evolving, having some disadvantages too. Still, there is a lot more scope for improvement in this technology in the future so that it can match up with other technologies.
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