UN experts have stated they believe cryptocurrencies and the blockchain technology that underpins them can play an important role in sustainable development, and may actually benefit the environment.
The United Nation’s report was commissioned in response to the widespread environmental concerns and energy-consumption criticisms surrounding crypto, with Bitcoin (BTC) mining taking much of the flak.
The UN admitted that “cryptocurrencies are still in their infancy, and there are still many technical and political challenges to be overcome”.
This bodes well with the report optimistic about the future of the technologies.
“The more we experiment, the more we learn about the technology,” said Minang Acharya, a UN blockchain expert.
“This is likely to improve our UN-wide knowledge on blockchain, our understanding of the environmental and social implications of mining operations, and improve our chances of coping with any problems the technology may bring in the future.”
Bitcoin mining is an energy-intensive process currently, infamously producing more greenhouse emissions globally than countries such as Kazakhstan. But many argue this is simply a reflection of global energy generation or fuel sources, and miners cannot simply decide how the electricity they use is produced – the greener the grid, the greener the Bitcoin.
Blockchain transparency
At the heart of the United Nations’ support for blockchain technologies is the value the organisation sees in blockchain’s ability to completely ensure transparency within the system – it solves the fundamental problem of trust plaguing many UNDP projects.
Cryptocurrency adoption within the paradigm of these development projects offers a potential solution to the often weak institutional backing and high-levels of corruption in some countries.
BTC and other cryptocurrencies present a solution to tampering, corruption and fraud through the provision of a public ledger recording of transactions between the UN, project staff, and the local government.
Building Blocks – a pilot scheme run by the UN World Food Program (WFP) in Pakistan, has already unlocked the benefits of cryptocurrencies with great success. By introducing cryptocurrency payments into the project it was possible for the WFP to get cash directly to beneficiaries, securely and quickly, without the need to go through a local bank.
The project has also been successfully trialled at refugee camps in Jordan, facilitating the creation of a reliable online record for every single transaction.
Digital environmental stewardship
The UNEP’s DTU Partnership (comprising the UNEP, the Technical University of Denmark, and the Danish Ministry of Foreign Affairs), have stated there are three main areas where blockchain can accelerate climate action – transparency, climate finance, and clean energy markets.
Blockchain solutions could provide a trustworthy way to show how nations are taking action to reduce their impact on the climate.
Climate financing is an exciting use of blockchain to fight climate change, if carbon markets are scaled up then investments that contribute to slowing the rate of climate change could be boosted, facilitating businesses and industries to transition into low-carbon technologies.
There is also an important role for blockchain to play in accelerating the adoption of renewable energy sources such as wind and solar power. As these sources are, by their nature, intermittent and decentralised, new forms of energy markets are needed. Blockchain provides a means of making these solutions marketable.
Cryptocurrencies turn green
The UN admission that blockchain and cryptocurrencies are in their infancy is right. And as the industry continually pushes and innovates, cryptocurrencies and blockchain technologies will become increasingly efficient in energy consumption and savings.
Proof of Stake (PoS) technology is already reducing the carbon footprint of the industry.
In a huge innovation for the industry, Ethereum 2.0 presents a move towards PoS transaction verifications, and the Ethereum Foundation suggest this could reduce Ethereum’s transactional energy usage by 99.5%.
This follows efforts from within the community, such as the creation of a Crypto Climate Accord in April.
More crypto news and information
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.