For all the controversy over the environmental implications of blockchain (the technology underlying popular new financial technologies such as cryptocurrency and NFTs), there has been relatively little exploration of how blockchain could be leveraged to help rather than hurt the environment. At least, that is, until the release this May of a study from Cambridge University which suggested that blockchain has the potential to reduce global deforestation.
“We find that the technology may have the potential to improve verifiability, reduce transaction costs, and, to a lesser degree, aid in addressing additionality and permanence concerns,” the authors of the study wrote.
The study echoes proposals that have been made by industry voices such as Michael Kelly, who co-founded open source blockchain-based platform Open Forest Protocol for just such investment opportunities. “With blockchain we can create a system whereby the measurement data is collected by the locals on the ground, reported on-chain and permanently kept on-chain, and then validated on-chain, with the decision also being permanently recorded,” said Kelly.
Encouragingly for eco-conscious fintech leaders, Open Forest Protocol is hardly the only option for such positive social action. Tech startup Veridium Labs has been working with brands including IBM to build a project impact token directly into global supply chains.