What is blockchain?

Starting from its definition “blockchain is a digitally distributed, decentralized ledger that helps to verify and trace multistep transactions.” The core competencies of blockchain technology, according to OECD are identified in “transparency, data auditability, privacy, value transfer, and process efficiency and automation”. These elements are fundamental to promote the systemic changes needed to deliver sustainable infrastructure. Therefore, blockchain technology can help achieve sustainable development goals by influencing the way resources are used.

Specifically, the United Nations’ Sustainable Development Goal 7 (SDG 7) on Affordable and Clean Energy aims at ensuring universal access to affordable, reliable and modern energy services with the objective of improving living standards in local communities and supporting broader socio-economic development. To reach this goal, blockchain can be deployed to manage the data underpinning distributed clean energy infrastructure. With the help of additional emergent technologies, blockchain could also be applied to address the challenge of growing diversity in climate market mechanisms, by supporting interconnections between individual climate markets at the transnational, regional and national levels. Moreover, it could be fundamental in supporting the realization of a sustainable supply chain, improving energy efficiency and promoting the creation of secure and reliable smart cities.

Blockchain 3.0 for sustainable development

The latest technological advances in blockchain have led to what could be called Blockchain 3.0. This innovation has created many opportunities to solve the most enduring problems affecting sustainability and sustainable development.

One of the issues that could be solved by the blockchain is that of personal identity management. In fact, over one and a half billion people in the world do not have an officially recognized identity. This is the result of wars, famines and other natural disasters.

Managing services that deliver digital identity is a $ 12 billion plus business that could double within the next year. The investment is substantial but necessary to cover the costs of security, storage and privacy of user data. This service also offers data interoperability or the ability to verify, in real time, the integrity of government data regardless of the source database.

The blockchain could also provide quality health and vaccination services. During the COVID-19 pandemic, from the developed economies of the West to the emerging economies of Africa and Asia, each country fought for its containment within its own borders. Much like a land registry demonstrating the provenance of a parcel of land, the blockchain’s distributed ledger (BTL) technology can also be used to accurately track citizen vaccination records.

Finally, blockchain could help build stronger and more reliable public institutions. Indeed, as suggested by United Nations Sustainable Development Goal 16, one of the ways we can encourage sustainable development is to promote peaceful and inclusive societies.

For example, public procurement is the largest source of government spending. These processes are highly complex and bureaucratic, and sometimes lead to a substantial waste of public money. For this reason, it is important to ensure greater transparency in these processes.

Recently, the government of Colombia tested a prototype for a blockchain-based procurement system. Although the exercise demonstrated that technology alone is not enough, it confirmed that it could be a powerful tool when combined with public inclusion in the process, established by global bodies.

For these reasons, blockchain technology is not only a significant step forward in emerging technologies but could also represent an important novelty in terms of promoting sustainable development goals.

Finally, it is important to consider also the side effects of blockchain. While scholars have emphasized mostly its positive effect, less attention has been given to the environmental challenges derived by this technology adoption. For example, traditional blockchain systems require the use of a large amount of energy, creating consequently negative effects on the natural environment; moreover, the host of big servers requires bulky buildings that can have a negative impact on the landscape.

Therefore, future research should focus on lowering the environmental impacts of blockchain and use its potential to promote sustainable development.

By Ingrid Garosi

Ingrid Garosi is a recent joint master graduate in European Studies at the University of Uppsala and University of Strasbourg. She is a project manager and research advisor in European fundings and European projects at the University of Bologna.

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