Blockchain is the technology du jour, seeing rapid
increases in its deployment across a variety of industries from banking to
farming, a popularity driven by the recent successes of the Bitcoin virtual
currency, which uses blockchain technology as its primary source of security.
But what exactly is blockchain, when one strips away all the buzzwords around
decentralisation and peer-to-peer transactions? And could use of blockchain be
a boost for the bioeconomy?
What is blockchain?
Stripped down to its barest of bones, a blockchain is simply
an electronic logbook or ledger. As its name would imply, it consists of
“blocks” in a “chain”. Each block is simply a record of a transaction: a string
of code indicating what has been transferred and to whom, along with a unique
code, known as the hash. The chain is simply the complete list of all of these
blocks. What, then, differs a blockchain from an ordinary electronic register?
The key is in not only the hash, but in how the blockchain is stored.
Security features
A blockchain system is built in such as way as to ensure the
records are both difficult to delete and difficult to modify. The former comes
easily: every blockchain is publicly viewable, and stored separately on a large
number of computers (known as the blockchain network). This makes blockchain
records inherently difficult to delete, as a potential saboteur would have to
remove the record from each computer individually. Not an impossible task, but
one that would require a degree of effort so large it is unlikely to be
attempted. It is here that one of blockchain’s emergent properties presents
itself: it becomes more secure with scale.
The second feature, wherein records are difficult to alter,
comes from the way in which blocks are processed by the network and added to
the chain. Every transaction has a unique hash code, which is generated by a
complex algorithm known only to the computers on the network. Every block
includes not only its own hash, but the hash of every block preceding it in the
chain, meaning if a part of the blockchain is altered, it becomes easy to spot,
as the hash code will differ from what is expected. Thus, if one were to
attempt to alter a record in a blockchain, one would have to likewise alter
every subsequent block, generating new consistent hash codes. This is, once
again, computationally intensive to the point of being functionally impossible,
particularly if the blockchain continues to grow.
The last advantage of blockchain systems is
decentralisation: unlike other systems wherein some central authority is
responsible for maintaining and validating the records (a system that is
susceptible to corruption), blockchain has no such authority. Instead,
blockchain systems work on
a consensus model, wherein once a transaction is completed, all the
computers in the network work simultaneously to derive the next block in the
chain, but only one will successfully do so, updating the blockchain when it
does, in a process called mining. Which computer does so is essentially random,
assuming processing power is approximately evenly distributed across the
network. Thus, any computer on the network attempting to malignantly alter the
blockchain by falsifying the data in the transaction (thus compromising the
blockchain) would have a very low chance of doing so, meaning it would not be
worth the effort for hackers to attempt to do so, unless they were somehow able
to control the majority of the processing power of the network (known as a 51%
attack). It is here again that blockchain restates its most powerful feature:
it becomes a more secure system with increased scale.
Combine all of the above, and large scale blockchain systems
are secure by virtue of being unappealing prospects to attempt to hack, and
with no central authority, cannot be easily corrupted.
A tool for the bioeconomy’s arsenal?
At first glance, it may seem like technology such as
blockchain may be far removed from something the bioeconomy would be interested
in. When one talks about “technology” in a bioeconomy context, it conjures
images of biorefineries and genetically modified organisms, rather than
computers. However, a look at the bioeconomy at a system-level shows how
blockchain technology could indeed be applied.
In any sustainable economy, credentials count: biobased
products will market themselves based carbon savings compared to
petroleum-based equivalents, biofuels will only receive government support if
they can demonstrate a better carbon economy than fossil fuels, and feedstocks
must be shown to not be contributing to indirect land-use change, offsetting
their carbon benefits by resulting in rainforest being cleared. In many cases,
it is in the hands of the producer of the biobased product to demonstrate to
the appropriate authority those credentials, and said authorities have strict
regulations on how this information must be reported, in an effort to prevent
falsification.
A blockchain system here would have obvious advantages: an
entire supply chain can be recorded in a single system, providing clear
evidence of emissions factors throughout – information that would otherwise
require an extensive life-cycle analysis to obtain. This would help to evidence
the carbon benefits of biobased products at a much finer level of precision
than would otherwise be feasible, reducing the need to “black box” sections of
the supply chain when reporting emissions. The same could be said of any
sustainability credential, not just emissions. This would benefit authorities
by reducing the amount of admin required to check compliance, and would also
aid other stakeholders by more clearly showing which areas of the supply chain
could most easily be improved.
Blockchain also has obvious benefits to sustainability
regulation systems that relying on market principles, such as the UK’s REGO and
RTFO systems, whereby producers of renewable energy or transport fuels are
awarded certificates that they can then sell to distributors. Since blockchain
is specifically built to handle transactions, authorities could be confident
that no accidental double-counting was occurring, and producers and
distributors could be safe in the knowledge that none of their competitors were
gaming the system, thanks to its security.
Concerns about scale and sustainability
However, while blockchain looks ideal for the bioeconomy in
theory, there are several concerns that must also be addressed, as is the case
with any new technology. The first is the obvious issue of scale. Good
blockchain systems retain their security by virtue of being too large to
reliably compromise. Bitcoin is supported by a network of millions of computers
worldwide: a scale that rival cryptocurrencies cannot compete with. Bioeconomy
stakeholders, however, don’t tend to be sprawling international enterprises
able to support networks of millions of computers, and so any blockchain system
developed within the bioeconomy is going to have inherently weaker security
credentials. This can of course be solved by outsourcing the blockchain technology
– as American biofuel producers Gevo have done – to third parties that can
provide the network scale required for peace of mind. Getting third parties
involved may trigger worries about security, but blockchain companies know that
they are only viable on the market if they can be trusted, and so employ strict
protocols of their own before computers are admitted to their networks to help
mine the blockchain. The other offshoot of the outsourcing problem is that all
members of the supply chain must be able to access and contribute to the
blockchain, or its inherent benefit is nullified. This, as with any industry,
is no mean feat when a supply chain spans multiple continents, and as with any
ledger system, blockchain is not immune from user error (but could make it
easier to track down such errors).
The second concern is a more oblique one, but one that must
be at the forefront of thinking for a sector like the bioeconomy which relies
on sustainability as a selling point. Since blockchain technology relies on
huge networks of computers running intense programming in order to maintain its
structure and security, this obviously requires a huge amount of electricity.
It has been widely reported that the Bitcoin blockchain has an annual energy
consumption in the tens of terawatt hours, eclipsing the energy consumption of
many countries, and this is just one such system (albeit among the biggest).
This, in turn, gives blockchain a large carbon footprint, which may well offset
any carbon savings that arise as a result of employing the technology. There is
a concerted effort from blockchain providers to address this problem, by either
making the mining system more energy efficient, or by changing the consensus
system from one that requires large numbers of computers to one that requires a
much smaller number of trusted computers. How blockchain providers overcome
this sustainability issue will no doubt have a large impact on how widely
adopted the technology becomes.
It is important to remember though that blockchain is a
relatively new technology, and one that was conceived as a foundation for
cryptocurrency, rather than sustainability tracking. New applications for the
technology are out there to be found, and so it is no surprise that bioeconomy
stakeholders have had their interest piqued: for a sector that relies so
heavily on reliable tracking and reporting, new technology to improve the
efficacy and security of this is always welcome.