Blockchain

How Blockchain Can Provide Funding to Sustainable Projects

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Blockchain technology has tremendous potential to facilitate sustainable action. Various companies try their hand at creating a more sustainable planet and rely on distributed ledgers to secure funding. Interestingly, these efforts are more varied than one may think, resulting in varying degrees of success.

Why Blockchain Matters In Funding Sustainable Projects

There is no shortage of projects trying to do social good these days. Most people are familiar with efforts like Red Cross and UNICEF, which have been around for decades. Moreover, every country has more local initiatives that aim to bring financial relief to those in need, either domestically or abroad.

One flaw all of these projects have in common is their lack of transparency. More specifically, users never know where their money ends up or how funds are spent precisely. That became rather apparent when the Red Cross collected billions of dollars in support for Haiti years ago, yet only a few shacks were built, and the rest of the money somehow disappeared. In addition, having too many intermediaries in the chain to handle funds means less cash makes its way to those who need it. 

The demand for more transparency has become much louder in recent years. Especially with sustainable planet-oriented ventures, as they attract a lot of money. That makes the transparency of funds all the more crucial. Blockchain technology seems like an obvious solution, as it provides public and immutable records of all transactions. Several projects have begun experimenting with this approach, all the while trying to build a more sustainable future for future generations.

The Numbers Confirm Momentum Is Building

One of the more common methods of mixing technology with sustainability is by offsetting carbon emissions. Some projects like Nori offer users to contribute reverse climate change through its transparent carbon removal marketplace. These efforts resulted in over 86,0000 tonnes of carbon dioxide emissions removed and have paid over $1.4 million to farmers to date. The approach by EarthFund DAO helps people form their own Decentralized Autonomous Organizations for sustainable causes. Users control how they raise money and the first cause has secured over $116,000 in total funds raised. Interestingly, the project with a similar name but bigger funding of $10 billion was launched by Amazon (AMZN) founder Jeff Bezos to help scientists combat climate change. Bezos encourages other companies to contribute to the fund, so the transparency of the initiative remains under question.

In July 2022, India's 5ire blockchain network secured $100 million in Series A funding to incentivize system users to implement the United Nations' sustainable development goals. 

The overlap between sustainability and play-to-own gaming may seem like a strange one, although Alóki makes much sense by reconnecting people to nature through blockchain technology. Founders Bartek Lechowski and Maurycy Krzastek bought a 750-acre plot of jungles in Costa Rica to advance such an endeavour. Today’s value of the land is approximately $30 million, according to the company executives. 

The thing is that Costa Rica is one of the leading countries in terms of sustainability. In 2021, Costa Rica became carbon neutral: the latest chapter in this small Central American country's contribution to the climate change agenda. As part of the country’s ambitious ecological program, its government plans to reduce its carbon footprint in 2035 to the levels had in 1940, and have no carbon footprint by 2050 at all. Deriving 98% of energy from renewable sources, Costa Rica is on the way to becoming fully carbon-neutral – the ideal setting for a virtual experience.

Through the Play-to-Own metaverse, Alóki aims to make people pay attention to the climate change problem and be interested in contributing to something useful. Yet through this metaverse, Alóki also allows players to explore the physical Costa Rican jungle. Actions in the game can be taken in a real-life Costa Rican plot, with NFT investments made by users going directly into real-world development. One example of it: one NFT bought in the game may result in one tree planted in the real Costarican sanctuary. Overall, the project plans to double the number of trees already planted, making a total of more than 20,000 trees. Alóki is also working on producing microorganisms and different natural compost varieties, whilst also cultivating the super fertile soil and making use of the sustainable water source.

Looking beyond individual projects, a report by the European Commission confirms blockchain-related projects focused on sustainability attract tremendous funding, surpassing 83 million euros across production, traceability, circular textiles, energy and transport as of mid-February 2022.

Now is The Time To Build

There are a fair few different approaches to leveraging blockchain to build a sustainable future. Some projects offer an "intermediary" solution, like EathFund, whereas others directly back causes themselves. Both approaches will work out well, as the blockchain is an immutable ledger, and transactions are publicly visible. 

Nasdaq contributor Gabriela Herculano dives into the largest funding initiatives, including the one backed by the World Bank, that use blockchain to solve the climate change problem in this article. The biggest power of them is that be it the use of Green bonds instead to replace paper cash or a real tree planted every time an investor buys an NFT, the virtual activities will increasingly bring benefits to ecology.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Julia Magas

Julia Magas is a researcher/journalist who covers the latest trends in finance and technology. Her works are published on Cointelegraph, Investing, SeekingAlpha, Beincrypto, Coincodex, where she interviewed the representatives from MIT, Binance, IRS, Bitcoin Cash, Ethereum, Algorand, the Austrian government, Grant Thornton, and more.

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