Can blockchain make our food system more sustainable?

By Niamh Michail

- Last updated on GMT

Blockchain is evolving to become less energy dependent, say proponents. © GettyImages/iLexx
Blockchain is evolving to become less energy dependent, say proponents. © GettyImages/iLexx

Related tags Sustainable food systems Agriculture Sustainability

Proponents of blockchain say it can make our food system more sustainable from farm to fork. But when Bitcoin alone is said to use more energy than Ireland annually, is there a fundamental chink in its armour?

There are no official figures (and blockchain miners are secretive about their transaction data) but the most widely cited estimates put Bitcoin’s energy use at somewhere between four and 35 terawatt-hours per year.

A 2014 study​ said the Bitcoin network used roughly the same amount of electricity as Ireland. Recent estimations suggest more than Switzerland. This would suggest the blockchain critics are right: it is simply too energy intensive to provide any kind of viable, long-term solution.

Writing in The Conversation​,​ professor of philosophy Fabrice Flipo and economist Michel Berne, both at Télécom School de Management, accuse the digital tech world of “[living] under the illusion that it is intangible”.

The Bitcoin is just one of the many systems being developed without concern for their energy impact. In response to the climate issue, their promoters act as if it does not exist, or as if alternative energy solutions existed,” ​they write.

However, it may not be so clear-cut, argue Angel Versetti and Peter Fedchenkov, two food entrepreneurs whose companies use blockchain.

Fedchenkov, the CEO and founder of INS Ecosystem, a blockchain-powered e-commerce platform​ that connects farmers and manufacturers to consumers removing the need for retailers, told us: “It’s important to realise that […] not all blockchains are the same.”

The top two players, Bitcoin and Ethereum, are heavy energy users because they use a proof-of-work method to validate the transactions, which requires a massive amount of computational power. ​ The proof-of-stake method uses much less energy and Ethereum is gradually converting to this, Fedchenkov said.

According to Versetti, the CEO and co-founder of Ambrosus, a Swiss firm which uses sensors and blockchain technology​ for real-time supply chain audits, the biggest challenge for blockchain and sustainability is not reducing its energy requirements but rather the widespread lack of awareness about its potential - a major obstacle to uptake.

“Many people have now heard about Bitcoin, but few people really understand what a blockchain is and what it can do. Simultaneously, companies are not always easily persuaded to move away from their legacy systems or transforming their business models,” ​he said.

Ambrosus, for the record, says it uses systems that are "precursors to proof-of-stake​".

Incentivising sustainability

Ambrosus works with the United Nations on its 10YFP Sustainable Food Systems, a global multi-stakeholder initiative to accelerate the shift towards more sustainable food systems.

“For example, farmers using Ambrosus platforms will have more incentive to be environmentally-friendly and sustainable as Ambrosus allows them to earn more tokens for environmentally friendly practices of farming. It also rewards distributors who think about sustainability,” ​said Versetti.

Fedchenkov also suggested that the direct-to-consumer model of INS Ecosystem can make the supply chain more efficient by streamlining the inventory and reducing time delays, all of which will reduce food waste.

It will also allow small, local manufacturers and farmers who are often excluded by retailers, to enter the market on a par with big food companies.

“Buying products directly from local producers has two positive effects on sustainability; first it reduces transport needs and is thus less polluting and second it gives producers fairer prices, which in turn gives them the opportunity to be better stewards of the land we use to produce food,” ​he says.

Business innovator at Wageningen Environmental Research Jaclyn Bolt believes blockchain can provide “interesting and promising applications​” for sustainable agriculture.

These range from setting up a cost effective reward system for agro-ecological services that might otherwise not be monetised (“farmers could be motivated to invest in field borders with trees if nearby citizens can reward them in a cost-effective way through tokens​,” she said in an online post​) to establishing micro insurance schemes for smallholder farmers in Kenya, as is the case of US company Riskebiz.

It could also eliminate uncertainties over land ownership that put farmers’ livelihoods in danger by doing away with “flawed paperwork, forged signatures and bribed politicians​”. BenBen Ghana is one company already doing this by verifying land ownership data and creating smart contracts. “Certainty in landownership could boost local economic development​,” she said.

New technology, new challenges

Any new technology brings new challenges, Versetti suggested. The internet has created problems that didn’t exist before, such as cybersecurity threats, but the value it has brought to the global economy and our society is undeniable.

“In a similar way the blockchain technology will definitely bring about some new problems and challenges, but the benefits it offers to the humanity far outweigh its shortcomings.”

The biggest challenge, according to Fedchenkov, will be getting consumers to adopt the sustainable changes blockchain allows into their daily lives.

“Ultimately, the biggest impact on sustainability within the food industry will come from a change in consumer consumption and buying decisions, and we humans are known for our habitual behaviour.

“So another challenge I see is that once, through [blockchain] technology, we have reduced waste, made sustainable production more profitable, and have given consumers the information to choose the most sustainable products...we have to change our habits and actually make those more sustainable choices.”

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