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How Blockchain Can Solve the Environmental Problems of Cash
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How Blockchain Can Solve the Environmental Problems of Cash

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People have always been focused on the functions of money throughout history. They use it as a medium for exchange, store value, and unit in account.

We have also demonstrated ingenuity with regard to the many ways money has been represented throughout history, from animal skins and shells to paper and precious metal currency of today. However, the larger scope of money doesn’t change much over the centuries. It is a technology, an application for practical purposes. Money serves the same purpose today as it did in the 17th century.

This is notable because, while everyone has worked hard to invent almost everything around it and many people have failed to notice, currency innovation has been largely ignored. How can money be overlooked in a world that focuses on making everything better, easier and more healthy? Why haven’t people improved their money? And, even more important, why haven’t we considered its negative effects on the environment?

As we learn more about the devastating effects of climate change, it is important to make environmental protection a central feature of money and the global financial market, including capital flow. It is possible to design and issue digital currencies more responsibly using sustainable blockchains. Blockchain tech isn’t all energy-inefficient, despite what the headlines may lead us to believe. It can be used to enable people all over the world to transact in environmentally friendly ways.InverseThe crisis is caused by climate change, not the other way around.

“Money often comes at too high a price.” Ralph Waldo Emerson

Moneys environmental problem

When we hear economic health, our first thought is of the economy’s state. A healthy economy is one with a growing GDP, high levels of employment, and high consumer confidence. Good economic health is defined around the globe as increased production, consumption, and employment. This definition ignores the high price our planet has to pay for a shining economy. It doesn’t take into account the waste that results from a healthy economy and the financial framework that allows money to flow across borders and over seas. We dismiss as externalities the environmental costs of pollution and resource consumption in our current economic system.

It is time to admit that money, and the daily operations, including the wider flow of capital through it all, contribute significantly to our current ecological crisis.

On average, financial institutions’ underwriting, investing and lending activities result in greenhouse gas emissions of approximately 1.2 million tons. Their direct emissions are over 700 times more than theirsAccording to a April report, the figure is. CDP, a non-profit that supports, through research and development, the creation of a sustainable economic system.

Fiat currency blindly tracks what the economy does. It acts as a lubricant and its supply expands or contracts to meet the economy’s demands. It does not have the functionality to, for instance, account for environmental costs. However, digital currencies can be very smart in this regard. They can not only serve the economy’s currency needs but also provide other benefits, such as ecological protection and regeneration.

Blockchain-based financial and currency creation

Blockchain technology has the potential to change the world. Because blockchain technology allows for innovation in how we transact daily, we are certain of this. Blockchain tech allows us to create cryptocurrencies that can be widely adopted and could help reverse the current ecological crisis.

Smart contracts and reserve algorithms, such as those found on the Celo blockchain, can be used to enable stablecoins that have natural capital backing. This mechanism can be used to support a monetary market in which economic growthand an increase in stablecoin circulationwould result in the preservation and regeneration natural resources. Charles Eisenstein, who first proposed the idea of natural capital-backed currency was the one to make it possible. Sacred Economics.

Eisenstein observed, “The value of money is derived form the commodity that backs it.” People will always seek to create more of this commodity. Gold was an example of this. People rushed to mine it when money was backed up by it because they were incentivised by its price. Gold Was money. In the same way, cattle backing money incentivized people to increase their cattle production. Eisenstein suggested that money be backed with other valuable things, such as clean rivers and pristine forests.

Why not?

Be open to the economics of tomorrow

The world needs to adopt a new view of economic health. This can be achieved by not only measuring production and consumption, but also by assessing the impact of the global financial system on the state of the planet. We can move beyond sustainability to planet renewal if we place high priority on long-term ecological health using emerging technologies such as the blockchain.

Learn more about the collaboration between Celo and other financial institutions to combat climate change. Climate Collective initiative.

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Dr. Markus Franke, a Partner at cLabs and a co-creator for Celo, is a co-creator. Celo’s mission it to create a financial system that promotes prosperity for all is to do so. Markus’s focus is on platform economics, stability, and research. He’s been working at the intersection of finance, economics, and research for over 15 years at several organizations, including J.P.Morgan, Merrill Lynch, risklab, AllianzGI, and various research institutions, such as the Ludwig-Maximilians-Universitt Mnchen, Columbia Business School in New York, and Hong Kong University of Science and Technology. He holds a Ph.D.

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Author bio: Dr. Slobodan Sudaric, a Partner at cLabs is responsible for the regenerative economics group and coordinates the activities. Climate Collective initiative. His work focuses upon asset tokenization and reserve management at intersections of crypto, economics and climate tech.

Slobodan began his career in crypto by working with NERA Economic Consulting. There, he advised companies and law firms on antitrust economics and regulation. He holds a Ph.D. and Masters degrees in financial economics, both from Humboldt University of Berlin.

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