Transcript
So what are some questions to consider about blockchain?
First, from a business perspective blockchain is just another type of technology, but it’s not a panacea to all business problems. So it’s important that you have the type of business problem that lends itself to a blockchain solution.
Now moving beyond that though there are other implications to consider. Blockchain has an impact on the environment, for example. Remember when we mentioned that blockchain is a distributed network, each node on the network is a computer that requires electricity. Each of those computers is engaged in “mining” — solving complicated mathematical problems to add blocks to the chain.
This is a level of security and a barrier to access, preventing people from adding things ad hoc onto the blockchain. The ramification of this, however, is that it takes an incredible amount of computing power and will continue to take more and more computing power as the blockchain becomes longer. Also, these mining rigs require lots of electricity to run the computers but also for the cooling to prevent the computers from overheating.
You may be surprised to learn, that a 2017 estimate stated that mining Bitcoin exceeded the electricity production of 159 other countries individually. So they say 30 Terawatt hours – whatever it means. It means a lot of electricity.
And that’s only for Bitcoin, you can see that the electricity consumption would be much, much higher if it also included the mining of other types of blockchain.
I realize this is a FinTech ethics book, so why should we be talking about the environment?
When we talk about the implications of these technologies, we are typically talking about the person-to-person transactional cost that they may have. E.g., loss of privacy or access to finance, and those are super important.
But what we also have to think about, and what we hope that you think about, is the broader social and physical – even geographical – implications of these things. When we include technologies like this, when we introduce these technologies, again, getting back to this concept of cultural lag, the technology has far outpaced our understanding of how to really deal with that technology in our real lives – in terms of its implications for the natural environment.
So there are good and bad examples of this.
In Canada for example, people are taking abandoned sawmills from lumber industries that have been shut down, and re-fitting those large facilities into mining farms. For some people this is good – it means more jobs and more income. But there’s a lot of negative ramifications as well. Noise pollution is very serious, and there’s obviously electricity consumption.
The vast majority of mining farms are in China, and the vast majority of electricity from China comes from burning coal. And so there are very serious ramifications both now and in the future for things like that.
But on the flip side, as culture catches up to technology, we are also starting to think more creatively about where to put these large institutions.
For example, again, in Canada, they are trying to use the heat that is generated from these mining computers to heat industrial complexes or maybe even other types of buildings.
So, for a technologist or an inventor or a bank, should they have to, or even want to, think about the environmental implications? Or should they just be focused on the technology in the business model that they have?
Science is telling us that we are at the precipice of some really fundamental changes that are happening or have been happening to the world. If we try to silo ourselves off and say – what I’m doing is not directly related to that – I think we will find ourselves in a place that we didn’t intend to be. So, irrespective of industry, the impact that industry is having on the environment is important to consider.
In later module, we will talk about some positive uses of blockchain. Blockchain can be used to track diamonds, making sure that they are not conflict-diamonds or blood diamonds as they are sometimes called. It can track people who don’t have a government ID like refugees or people like migrant workers, who potentially are at risk of human trafficking and slavery.
So, one of the things that we want you to constantly think about: how to strike the balance between the positive ramifications of introducing these new technologies and the unintended and possibly negative consequences that can come from them? Not only now, but in the future. If we are not thinking about those things, then by time we get to that point and we see them right in front of us, it might be too late.
