Blockchain Technology & Crypto for Positive Impact
- A commentary by Niall Murray, Director — Global Business at SALAMANTEX
In today’s world, companies and innovations are being evaluated based on their contribution towards society. Innovations entering markets should fulfil a need and contribute positively to our world. Blockchain technology and crypto currencies do indeed possess the potential for improving people’s lives:
Positive Impact on Sustainability
When comparing the environmental footprint of cryptocurrencies and fiat money, it is important to also shed light on all the related infrastructure required. Fiat’s secondary footprint is visible at any street corner with 80,000 bank branches and 470,000 ATMs in the US alone, together with skyscrapers and major buildings that house the banks’ headquarters. Millions of people are commuting to their physical office location daily. As per the most mainstream estimates, we can consider the carbon cost of fiat to amount to 1.5kWh per dollar. This equates to keeping a 1,000 watt appliance running for one hour. And let’s not forget the amount of paper and metals needed to print physical money. By comparison, Bitcoin is among the most green technologies humanity has ever invented.
In addition, an increasing number of tokens make use of renewable energy to offset their energy consumption for mining and blockchain processing. As estimated by the Bitcoin Mining Council Q3 2021 Report, currently 57% of the energy used for crypto mining orignates from renewable sources (hydro, wind, solar, nuclear, and geothermal). Blockchain technology spurs positive developments in the energy sector. To name only one example, Perth-based Power Ledger enables a blockchain-based solar power exchange to trade surplus energy from solar panels in the neighborhood.
Let’s talk about social impact investment, this works similar to crowdfunding. Blockchain technology enables easy and fast investment by individuals, for example to build new renewable energy plants. There is no need for legal intermediaries to pay out the profits to shareholders, as this is managed through automatic smart contracts on the chain.
Positive Impact on Society
- Charity & Research:
The same concepts work well for micro donations. By collecting large numbers of minor donations from individuals, charity work and research projects can be funded more easily. In the field of medical and scientific research researchers have been hesitant to share findings before the official final publication as they fear the loss of being credited. With the help of blockchain technology, this attribution of credit is well-documented along the way, remedying this risk factor.³
- Country’s political situation:
News stories abound of cryptocurrencies acting as enablers of illegal activity, such as the darknet. Especially NFTs are associated with money laundering schemes. So it is clear, there is an issue on transparency and compliance. However, the illicit use of crypto for illegal activities can be prevented. Governments are increasingly implementing clear and holistic regulations and policies to address issues of transparency and protecting investor rights. Let’s also keep in mind that everything is traceable and verifiable on the blockchain while cash, on the other hand, is impossible to track.
Thanks to blockchain technology, governments’ power is on the one side weakened — when it comes to corruption and money printing in times of inflation — and on the other side strengthened, as voting in a democracy would be much simpler and more trust-worthy if enabled through the blockchain.³ In addition, countries with unstable local currencies can introduce crypto as a national currency, as done with Bitcoin by El Salvador in 2021 and the Central African Republic in 2022.
The potential for money movements moving at greater efficiency as previously, are near endless thanks to blockchain technology and tokenization of assets. Securely and quickly sending money across borders and being able to spend (providing a regulated payment infrastructure for cryptocurrency is in place) without converting to the local currency will positively impact global trade and the tourism industry.
- Serving the under-/unbanked:
Lastly, we want to talk about how cryptocurrencies and blockchain technology helps the underbanked and unbanked populations, as they exist in large quantities in many countries. With the unbanked population dwelling primarily in rural areas, in which the financial infrastructure and education are scarce. Several initiatives need to come together to help these populations get full access to and control of money. Public and private sector collaboration using existing infrastructure and manpower can make this happen. For instance, exploiting local infrastructure in telecommunications or convenience stores, in short, places where people tend to go frequently can be exploited for offering up financial services catered specially to those without bank accounts or ID: At the same time those local infrastructures share the role of acting as local knowledge ambassadors to raise awareness and educate people.
The implementation of digital wallets and assets in less developed countries facilitates the business of cash-based business owners, and provides greater individual control and access to micro-financial services these groups require.