Q: As an industry, we are very focused on the sustainability aspects of our business. Can blockchain be deployed in a way that aligns with our sustainability goals?
A: Absolutely. Not only can you take advantage of blockchain technology in a sustainable way, but you can improve business efficiency when it comes to supply chain efficiency and liquidity—and thus support larger business sustainability goals.
When I hear people say, “Blockchain isn’t sustainable, it uses too much electricity,” I have to stop and take a deep breath. There is a lot of incomplete information out there in the media and on social media platforms.
As mentioned earlier, the Bitcoin blockchain does consume a significant amount of electricity across the network. Thousands of individual computers are working together to ensure the integrity of the ledger and to ensure the legitimacy of every new transaction which gets added. The more computers on the network, the less likely it is to be compromised.
Unfortunately, the network is designed with a consensus protocol (how all machines agree to new transactions) which uses a LOT of computing power—and thus electricity.
Unlike the Bitcoin blockchain, the majority of enterprise blockchain projects are different in two specific ways:
- Enterprise networks have a much smaller number of computers running them, and thus the amount of electricity involved is far less. The integrity of the network relies on every member knowing every other member. Additionally, the network is closed to the general public. On the Bitcoin network, there is no identity of the people or the computers who run the network and thus there is a need for large numbers to avoid compromising the network.
- Enterprises have a wide range of protocols to choose from in building their blockchain network. Two of the most common protocols are HyperLedger Fabric and Corda. You can think of a protocol as an operating system for a network. Today’s desktop computers run Windows, macOS or something similar. Today’s blockchain networks run Corda, HyperLedger Fabric, bitcoin, Ethereum or one of the dozens of other protocols. Many of these different protocols have a low energy use profile as well as more significant overall performance characteristics.
Blockchain brings real value across a supply chain through improvements in speed, efficiency, accuracy and liquidity. This value is achieved when each member of a supply chain agrees to work together and to accept a single ledger as the 'golden record'—a single source of truth.
With blockchain, there are no delays of waiting for the end of the month, running a report, exporting it to Excel and emailing to the next person along the supply chain. Everyone can read the most current and up to date information directly from the blockchain. Furthermore, there is a single set of records to examine in the process of auditing a supply chain. All of these efficiencies mean that operations are more efficient, require less resource, have greater transparency and accuracy—and in the end—are more sustainable.
Blockchain technology is not a panacea; it’s not going to end hunger on the planet or bring world peace, nor is it going to make every supply chain more sustainable. Blockchain technology enables creating a new layer of information which is safe, secure and tamper-resistant. And when entire industries agree to use this new fabric for exchanges of information and value, the result is more sustainable businesses.
Visit Blockchain Rookies for expertise on how blockchain will disrupt both industry and business—and how to prepare for this disruption with new business models, data strategies and partnerships.