when talking about the applications of
blockchain technology people start by
discussing currencies finance and their
more general business applications such
as to supply chain management and then
later about its potential applications
for the Internet of Things
what is rarely talked about is its
application to the environments but as
we'll try to illustrate in this video
this could turn out to be one of its
most important potentials to understand
why this is so we need to appreciate
that the reason we're in an
environmental crisis is largely a
function of the design of our economic
system we developed our modern
industrial framework in a world that was
industrializing with abundant natural
resources and limited industrial
infrastructure the system was set up to
grow GDP by producing and consuming more
products with limited interests the
effect that they had on the environments
as a consequence natural capital was not
accounted for in the system creating a
strong incentive for people to simply
overuse natural resources converting
this natural capital that was not
accounted for in to increases in GDP in
profits today of course we realize that
this whole linear economic framework is
unsustainable and one of the most
effective ways to alter the model is to
try and incorporate the costs and
benefits that accrue from eco systems
into economic models of accounting this
means essentially placing a value on the
ecosystem so that people factor the full
environmental costs of their actions
into the cost-benefit equation under
which they're acting and we call this
full cost accounting or natural capital
accounting this idea is not so new
indeed it's becoming evermore mainstream
in a recent and sun-young report
entitled accounting for natural capital
the elephant in the boardroom the
executive summary starts by saying quote
natural capital will become as prominent
to business concern in the 21st century
as the provision of adequate financial
capital was in the 20th century we are
already drawing down on 50% more net
for capital a year then the earth can
replenish and the rate depletion is
accelerating all too soon
businesses will face a stark choice
adapt or fail this powerful capacity of
blockchain token economies to design new
incentive structures has the potential
to fundamentally alter this current
dynamic between economy and environments
when designed properly token economies
can provide powerful incentive
structures for people to collaborate on
growing some underlying resources value
to the community this same capacity can
be harnessed to develop and grow the
natural capital of community towards
building their ecosystem unlike our
traditional industrial age economic
system that simply quantified and
incentivizes people to consume products
by creating token systems we can
actually incentivize and reward people
for any action that is beneficial to
growing ecological resources tokens can
be gained by choosing less consumptive
options but conserve and replenish
resources as example we can think about
a small town in rural Australia that has
a limited amount of water to go around a
finite amount of water tokens could be
issued and earned for any activity that
conserves on water for example if you
replace your plumbing with a system that
leaks less you would earn water tokens
that could be used elsewhere or traded
for fiat currencies this means that
people can earn by conserving resources
creating an economy around that and an
incentive system or with respect to
carbon emissions a token economy could
likewise be created to manage this in a
distributed fashion every time you emit
carbon you could pay for it
with a kind of carbon coin every time
you sequester carbon you get paid in
carbon coins when all carbon coins have
been redeemed the world is running at
net zero carbon likewise any community
could take account of its stock of
natural capital an issue a finite amount
of tokens to the community members if
someone does something that is
ecologically beneficial to growing that
underlying stock they could earn more
tokens
likewise if someone wants to chop down
lots of trees they would have to
purchase tokens from others
this would incentivize people to go and
plant trees or perform other activities
that contribute their ecosystem in order
to earn tokens in such a way ecological
services would not have to be managed
and performed by a centralized Authority
as everyone could clean the lake or
switch to renewable energy to earn
carpenter cones and thus provide
environmental services of course clothes
organizations have always seen the
benefit of conserving in their
production processes because it directly
affects their bubble sheets but what is
happening with token economies though is
that we can push that capacity to
benefit from conserving out to the
end-user and the edges of the network so
that we can harness everyone's
incentives to conserve which is
potentially a much more powerful
mechanism than centralized organizations
simply telling people to be nice and
environmentally friendly which doesn't
really work because it lacks real
incentives of course the move towards a
full cost economy will not happen
overnight
already it has been growing over the
past decades with such things as organic
food green bonds carbon trading etc
incentivize recycling systems are
already made possible on the blockchain
via the etherium token based app called
recycled coin the token platform allows
the public to exchange harmful plastic
at their reverse vending machines these
cryptocurrencies can then be exchanged
on crypto exchanges for other currencies
the recognition and increasing
quantification of ecosystem services
coupled with the development of a fully
fledged blockchain natural capital
accounting system could support a
fundamental reorganizing of the
incentive structures in our economy
towards one that is systematically more
sustainable as Prince Charles noted the
ultimate bank on which we all depend the
bank of natural capital is in the red
the debt is getting ever bigger and
that's reducing nature's resilience and
considerably impeding her ability to
restock it leaves us danger
the exposed fixing that equation
requires a new accounting system and the
blockchain could be a critical
technology enabling Matz the blockchain
would not only be important in enabling
a token economy for managing ecosystems
capital but also as a system for
tracking authenticating and making
transparent the underlining workings of
supply chains and business activities at
present when we go to buy something we
have little idea where it came from or
how it was actually made supply chains
are conventionally held secret limiting
the stakeholders who can prevent
environmental social health and safety
problems in such a system there are so
many intermediaries that it's very easy
to be deceitful companies can perform
all sorts of actions without it being
revealed to the end-user who gets green
washed by massive amounts of advertising
so they don't know what to think when
walking down the supermarket aisle bock
chain technology could enable
environments of transparency along the
supply chain of products a block chain
network could be used to ensure that a
fish that has been sold through the
Tokyo market as she came from the
sustainable fisherman in Indonesia or to
track the actual price that the villages
in Kenya were paid for their coffee
beans for example the provenance
blockchain has been used to verify proof
of payment to 55 farmers whilst tracking
coconuts from Southeast Asia to Europe
the initiative has demonstrated the
possibility of using blockchain
technology to track ethical claims and
digit approve their fair trading
practices working with the NGO fair food
provenance tracked ethical claims on a
thousand coconuts they tracked the
movement of payments and products along
the supply chain registering the harvest
via SMS messages and verifying chain of
custody along the supply chain as
discussed previously the blockchain is
not magic it can only authenticate what
is within the network in order to ensure
that the information that is inputted
into the system is authentic and
corrects it needs to work in tandem with
other technologies here again the
blockchain
after intersect with IOT systems and big
data advanced analytics if we're going
to be able to automatically ensure that
the fish was fished at the date and
location inputted to the network data
automatically inputted from tamper-proof
IOT systems and cross correlated with
data points from a multiplicity of other
sources could work to create truly
trustworthy inputs a reliable
information to someone on the other end
of the supply chain automatically
without human intervention via the
distributed database for example an IOT
device in a warehouse might scan the
RFID tags on pallets when they come in
to verify the date of entry
automatically with that information sent
directly to the blockchain this is one
of the advantages of big data big data
by definition is decentralized not
relying on a single data source but
multiple varied sources cross correlated
x'
blockchain networks themselves can't
provide a trustworthy supply chain
they'll have to be integrated with these
other technologies enabled by trusted
automatic and distributed Oracle's for
data input that are not dependent upon
corruptible third party institutions
this is of course particularly relevant
in parts of the world where government
organizations are not trustworthy
knowing that the apple you bought has
been certified organic by a country at
the bottom of the list of corrupt
nations doesn't really tell you very
much on a broader level we can identify
the centralization of many existing
systems as a huge source of owner
ability in our worlds of climate and
environmental change in a world of
stability centralization appeared to
create efficiencies and stability but
today we're increasingly recognizing
that these large centralized components
create critically vulnerable single
points of failure with huge dependencies
large centralized components by big
financial institutions electrical power
stations or factories also create
inertia within the system they reduce
adaptive capacity and the agility
required to deal with systemic changes
by supporting peer-to-peer distributed
systems the blockchain can able greatly
more agile adaptive and potentially more
resilient networks with low dependency
on critical centralized elements
removing the need for centralization of
resources could also greatly increase
the efficiency of these networks as
resources can be exchanged at locally
without having to always be routed to a
centralized components blockchain
platforms can enable local food systems
where the food is grown locally
disintermediating long and complicated
supply chains of supermarkets by
matching producers and consumers within
peer to peer local networks or is
another example blockchain based power
ledger provides a platform for people to
trade energy it appear within a local
smart grid within this platform people
can simply trade at electricity with one
another and receive payment in real time
I'm an automatic and trusted
reconciliation and settlement system
there are many other advantages this
also such as being able to select a
clean energy source trade with one's
neighbors receive more money for excess
power benefit from the transparency of
all trades on a blockchain low
transaction costs and automation through
smart contracts
you