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Witnessing the digital breakthrough

Green DLT Can Add $1 Trillion To The Volume of The Global Trading

18 September 2018 11:59, UTC
Green DLT Can Add $1 Trillion To The Volume of The Global Trading
By Oleg Koldayev, Anna Zhygalina

The World Economic Forum published the report "Building Block(chain)s for a Better Planet", which outlined 65 promising directions for using the DLT technology in order to reduce environmental damage from harmful industries.

WEF experts distinguish several product segments where the DLT technology can be used: supply chain tracking, energy and water managing, monitoring of greenhouse gas emission quotas, and changing the financing system for production. All of them are present in the mining industry. One of the most significant problems of the raw materials industry is "dirty" technologies. Moreover, environmental safety often directly depends on the economic efficiency of the enterprise. In other words, the better the technology cycles are controlled, the more precise the logistics is, and then the less production pollutes the environment.

And here there is a conundrum: these are industrialized countries who take the lead in terms of the number of emissions. For example, China occupies the first place in terms of CO2 emissions - 10,357 million tons; the second place is occupied by 5414 million tons in the USA, followed by India with 2274 million tons, and Canada closes the top ten leaders in emissions to air - 557 million tons.

At first glance, the problem is simple: the more production, the more emissions. But what about the severe environmental requirements and increased attention of the controlling bodies in the leading world economies? Well, China and India. They are, maybe, not so much concerned about their future, they have the present to cope with. But the top 10 of dirty countries includes Germany, Japan, and the United States. These countries are difficult to blame for the indifference to the problems of the purity of environment.

Evidently, the root of the problem is deeper. Not the production itself but the transport system delivering raw materials to processing enterprises and then to consumers accounts for a significant (if not the greatest) part of harmful emissions.

"Commodities have a supply chain from the production and processing of materials to the final product and the consumer,” - the Professor, the Chairman of the Board of Directors of Cobalt Blockchain Inc. Company (Toronto, Canada) Samuel PERALTA said in the interview with Bitnewstoday.com. – “Blockchain can be imposed on the supply chain to ensure the transparency and integrity of databases. For example, in cases where the source of raw materials, the product or the conditions under which it is produced, must meet tough requirements. And this especially applies to those branches of raw materials production, where human conditions of work must be strictly observed."  

But the problem is not limited to this: environmental challenges here are closely related to social ones. By the way, Canada is the second largest producer of cobalt in the world (6%). But 60% of this raw material needed to produce batteries for every modern gadget is produced in the Republic of the Congo.

According to Amnesty International, from 110 to 150 thousand miners descend to the mine daily in this African country. Approximately 40 thousand of them are the kids. The shift of the miners lasts 12 hours. And they earn $1-2 a day. At the same time, the price of this mineral has increased thrice during the last 5 years.

Cobalt dust causes heart and lungs diseases. A worker in this industry rarely lives up to 50 years. And the main reason that pushes people to this hard and dangerous work is poverty. At the moment, many experts consider the appearance of virtual assets to be the result of the unfair wealth accumulation. And as a consequence – the instrument of its distribution from 1% of the global economy beneficiaries to 99% of producers. Will, as the WEF believes, DLT and virtual assets be able to help create a new finance system for the raw materials industry?

"Decentralized databases primarily affect the increase of business efficiency and credibility," – CEO of the Minespider Company Nathan WILLIAMS (Berlin, Germany) says. - "Companies are looking for new progressive technologies to help speed up payments for raw materials, reduce the risk of corruption by creating a provable link to the responsible source with unchanged records, and reduce the burden of bureaucracy by moving paper documents to reliable, unchanging electronic forms. This will make the economy more efficient."

Another interlocutor, the fintech consultant from Canada Tariq Ali ASGHAR agrees: "In my opinion, an open DLT-ledger is a real decentralized system of trust accounting. The existence of such a tool is especially important for the oil and gas, metallurgy and raw materials industries. An appropriately registered chain of supply of raw materials for each company or group of companies is a guarantee of equal cooperation and maximum optimization. This will reduce transaction costs, as well as eliminate other "bottlenecks" in a modern centralized system".

An independent and authentic fixing of rights is able to affect the birth of a legally fair structure of the world economy. But it cannot guarantee the monetization of its natural resources by underdeveloped countries. Can the digital assets be tied to the raw materials and manufacturing sectors of the economy emerge? How effective will they be in the current economic conditions?

"This, of course, depends on what the virtual assets are tied to," - Samuel PERALTA comments. - It is necessary to take into account the economic system, which is embedded in the supply chain of raw materials. Nevertheless, digital coins can be a stimulus for, for example, the respect for human conditions of work. In this case, virtual coins may well take on the value, which is much higher than the product itself - raw materials".

However, the particular solution of the tasks on accompanying the production processes within the framework of the efforts of individual companies is just a special case of concern for the fairness of the profit distribution, environmental cleanliness, and improvement of conditions of work. This is not enough to change the negative traditions of the raw materials business.

The WEF sees a way out in the creation of a global distributed ledger system for selected sectors of the economy. But for this, one needs to answer three main questions: can this technology affect the solution of a particular environmental problem; is it possible to manage certain unintended risks; and are new technologies acceptable for all market participants? As we see the business responds positively. But the authorities of many countries are still hesitating on the issue of creating a legal framework regulating the application of a new production and, most importantly, legal technology.

At the same time, the progress is inexorable. According to the WEF, in the next 10 years, the DLT-technologies can add $1 trillion to the volume of the global trade. The key word here is “can”. This will happen if the politicians are mensch enough to accept the new digital reality as a given and not as a threat to the usual world order and to their status.

By the way, if this happens it will be the first ecologically and morally clean trillion in the human history.





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