Important role for blockchain technology in a circular economy
Blockchain technology has made significant progress in various sectors and is increasingly being used to promote circular economy principles. This article explores how this can be made possible in various industries.
The circular economy principle
A circular economy requires a system that ensures that resources are kept in circulation for as long as possible, and blockchain technology can facilitate this. By creating a transparent, tamper-proof digital ledger that tracks every transaction made on the network, blockchain technology can increase transparency, reduce fraud, prevent redundancy in processes and ensure accountability.
Blockchain in a circular economy
There are many ways blockchain technology can help enable a circular economy in various industries. The following are just a few examples of the most common ways they can be integrated with them:
1. Trace material flows
Blockchain can promote a circular economy by tracking material flows across different industries. In the manufacturing sector, materials such as metals, plastics and other resources can be tracked on the blockchain throughout their entire life cycle. It records the supply, use and destination of materials, enabling companies to make informed decisions about their supply chain and identify inefficiencies or areas for improvement.
Similarly, effective tracking of material flows brought about by blockchain can help companies reduce their waste products and extend the life of their resources.
2. Activation of the sharing economy
Blockchain can also facilitate a sharing economy across different industries, where resources are shared between users. For example, a car-sharing platform can use blockchain to track vehicles’ usage and ensure efficient use. By doing so, the platform can effectively match the number of cars on the road based only on the existing demand and promote sustainability.
3. Creating smart contracts
In addition, the technology can facilitate the use of smart contracts, which are self-executing contracts where the terms of the agreement between the parties are entered directly into lines of code. Smart contracts can be used to guarantee the smooth exchange of resources and services in a circular economy across different industries.
A smart contract can ensure that a product is returned to the manufacturer also at the end of its life cycle, which can either be reused or recycled. These keep the materials in circulation, reduce or eliminate the need to use up more raw materials for production, and prevent used products from ending up in landfills.
4. Promote transparency in supply chains
In addition, the blockchain can promote transparency in supply chains, and ensure that goods and services are produced sustainably. By tracking material flows and creating smart contracts, blockchain technology can ensure that goods are produced in a responsible, legal and environmentally friendly way. Redundancy in the supply chain can also be eliminated or at least reduced along the way.
5. Ensure sustainable agriculture
Finally, blockchain technology can help push for sustainable agriculture by tracking the source and quality of food. For example, blockchain technology can track the journey of fruit and vegetables from the farm to the store, ensuring that they are produced sustainably, free of harmful chemicals, and that they are delivered to the right market.
Final thoughts
As businesses and governments seek to promote sustainability, blockchain technology will undoubtedly play an important role in achieving these goals. By embracing the circular economy and leveraging blockchain technology, we can definitely create a sustainable future for generations to come.
Giancarlo is an economist and researcher by profession. Before joining Blockzeit’s dynamic team, he handled several crypto projects for both the public and private sectors as a project manager for a consulting firm.
