Blockchain technology has positioned itself as one of the leading disruptive technologies worldwide, and it can be applied in solutions that contribute to achieving Sustainable Development Goals.
We can see a wide catalog of such applications in developing and more developed countries, where some initiatives are still in the pilot phase, while others can be measured in terms of impact.
The Potential impact of blockchain technology on the achievement of the Sustainable Development Goals
There are no limits, in principle, to the application of blockchain technology in technological solutions for Sustainable Development Goals. A well-designed solution and/or ecosystem may serve as a conduit to materialize a positive social impact and solve a physical world problem.
Nevertheless, blockchain technology is still in the early stages of implementation despite its potential. It means that there are also unintended consequences derived from its implementation that need to be addressed and for which we still don’t have worldwide accepted solutions.
Some of these collaterals might be related to more technical characteristics, such as:
- Scalability and interoperability: given the diversity of existing protocols, it is challenging to connect ecosystems and solutions efficiently.
- Energy consumption: according to a study, it is estimated that in 2020 users of the bitcoin network consumed the same amount of energy as Switzerland (Cambridge Bitcoin Electricity Consumption Index available at https://cbeci.org/)
- High transaction costs that in many cases might limit the true potential for implementation; there are expectations of lower transaction fees, where side chains such as the Lightning network are becoming more popular lately due to its lower imposed rates. However, we may see as an example that in September 2020, the gas fee in the Ethereum chain reached its peak and made some users pay even 11$ per transaction.
Some other unintended consequences may be more related to regulatory and legal issues:
- Regulatory standards are not correctly defined yet; the lack of an internationally applicable legal framework for implementing the technology makes that. In many cases, the uncertainty of its use poses itself as one of the main impediments to protecting the users.
- Privacy and data protection existing bodies, such as the General Data Protection Regulation (GDPR) in Europe and other jurisdictions, complicate the identification of the responsible parties (the data controller) inside blockchain-based ecosystems and solutions. Technology’s impact on society is still being measured, and, therefore, the regulation is likely to be shaped.
- Due Diligence and Know Your Customer (KYC) controls need to be implemented early in blockchain-based solutions since cryptocurrencies have a special appeal for criminals to exploit the anonymity and decentralized nature of the network for money-laundering illegal financing purposes.
The use of blockchain offers far-reaching possibilities for social impact, including:
- Sustainable Development Goals: SDG 3- Good Health and well-being, SDG 9- Industry Innovation and Infrastructure, SDG 13- Climate action, SDG 14- Life below water, SDG 15- Life on Iand,SDG 17- Partnerships for the goals
Unplastify is a social enterprise on a mission to change the human relationship with plastic. The UPF COIN generates tangible value to unplastifying processes making them visible and traceable while incentivizing change. Each token, cryptocurrency, equals 1 tonne of avoided validated plastic.
- Sustainable Development Goals: SDG 1- No poverty, SDG 5- Gender Equality, SDG 8- Decent work and economic growth, SDG 10- Reduced inequalities, SDG 13- Climate action, SDG 17- Partnerships for the goals
The “Harpalium Core Protocol” is based on a blend of technology and consensus algorithms that leverage the timekeeping properties and the storage problem, improving the performance. The project aims to formulate a new architecture that can enable the creation of financial infrastructure based on a low-consumption consensus. Meanwhile, an ERC-20 prototype is implemented.
- Sustainable Development Goals: SDG 1- No poverty, SDG 3- Good Health and well-being, SDG 8- Decent work and economic growth
The Ribbon Protocol is a decentralized decision support system for Global Health and Public Health that supports problem-specific decision-making to help individuals, organizations, nations, and global bodies to do the right thing to improve global health outcomes.
- Sustainable Development Goals: SDG 1- No poverty, SDG 2 – Zero Hunger, SDG 3- Good Health and well-being, SDG 4- Quality Education, SDG 5- Gender Equality, SDG 8- Decent work and economic growth, SDG 10- Reduced inequalities, SDG 11- Sustainable cities and communities, SDG 12- Responsible consumption and production, SDG 13- Climate action, SDG 17- Partnerships for the goals
Cambiatus is a Brazil/Costa Rica-based Project focused on creating tools for communities to achieve their impact goals through collaborative businesses and social currencies on Blockchain.
Currently impacting almost 5000 people in Costa Rica, Brazil, and Ethiopia who are members of communities using their complementary currencies.
- Sustainable Development Goals: SDG 8- Decent work and economic growth
Trustlines Protocol is an open-source technology stack for peer-to-peer mutual credit. Instead of money issued by banks, central banks, or governments, Trustlines enables communities to issue money themselves (“People Powered Money”) — by using everyday “I-owe-you” agreements based on trust.
Attribution to 101blockchains.com
Initiatives to promote the development of the blockchain technology
- Creation of a national blockchain strategy
Defining a vision of how the technology will contribute to a broader adoption within a specific jurisdiction may be achieved by clarifying the regulatory framework and eliminating ambiguity in public development.
Many countries are currently including innovation strategies connected to the development of blockchain technology. With establishing national specialized blockchain task forces, the general understanding and trust in the technology may result in a more significant and broader impact worldwide.
- Incentives for sustainable innovation
Governments could incentivize blockchain adoption and developments that contribute to achieving the Sustainable Development Goals and set up guidelines on tackling those unintended consequences.
Regulatory sandboxes are significant initiatives to create a testing environment where a network could improve the chances of successful implementation.