Since cryptocurrencies such as Bitcoin shook the financial world, everyone has been interested in blockchain. The technology on which Bitcoin is based is also ideal for decentralized and regional eco-projects.
The scene for sustainable and fair trade products and services is as colourful and diverse as a weekly organic market. Whether it’s a farmers’ cooperative, potato combine, repair workshop for electrical appliances, bike sharing or organic beekeeping – every provider has their business idea and does their own thing. You can also use crypto to play online blackjack.
But looking closely at the concepts, you will recognize a few similarities. They are all independent of large corporations, rely on decentralized structures and concentrate on their region for both the manufacture of their products and their suppliers. This is what consumers who are interested in sustainability also want. It is even better if the products on offer are also transparent, i.e. if you, as the buyer, know exactly when and where the organic honey was harvested, to name just one example.
In the digital age, in which goods and services are organized online or via smartphone apps, the question arises as to whether such innovative business models are also possible online.
The answer is that it already exists. The keyword here is blockchain. Tech blogs, financial portals and business magazines contain articles about the latest internet hype.
The advantages of blockchain
Blockchain is an Internet technology that can organize transactions of all kinds (money, goods, services). It works independently of corporations and large companies, is organized decentrally, and is transparent for providers and customers. Blockchain platforms are also considered to be very secure. Every transaction is stored in a way that cannot be manipulated at a later date. The technology is also ideal for regional offers.
The technology has become mainly well-known thanks to the hype surrounding the cryptocurrency Bitcoin, which is based on this technology.
Blockchain also fits in well with the internet because it revives the basic idea of the World Wide Web from the early days—namely, the idea of a decentralized infrastructure that cannot be controlled or shut down.
But how exactly does the technology with the “blocks on the chain” work? If you read the numerous information pages on the subject, you quickly realize that the technology is complicated and not really easy to understand. There is talk of hash values, Merkle trees, proof-of-work, or the problem of Byzantine generals.
In principle, this is only understandable for specialists and IT nerds – so here is an attempt to make the whole thing more straightforward.
How blockchain works
The first step with blockchain is for several or many participants to join together on an equal footing to form a project to regulate the transaction of data, goods, services, or values. No central authority sets all the rules and is responsible for the project.
Of course, every transaction is carefully documented, just like in a cash book, budget book or bank statement. However, the principle that everything is decentralized applies here in particular. The cash book is not stored and controlled by a central authority; instead, it is managed and controlled jointly by all participants.
Blockchain systems log all transactions, such as the trade of fish. The corresponding file with all entries is therefore also stored on the computers of all participants. I.e., it is available in multiple copies. This is what makes the system so secure. If you wanted to manipulate an entry, for example, the transfer of money, you would have to do this on all computers at the same time. This is virtually impossible.
Each new transaction or group of transactions is stored in encrypted form in a block comparable to a new page in the cash book. Now, you must ensure that the latest page in the cash book belongs to this book.
To do this, a checksum is generated that inextricably links a new page with all previous ones. Hence, the name blockchain is a chain of inextricably linked blocks. This means all transactions are securely documented and accepted by all members and cannot be changed retrospectively. Another advantage is that the blockchain platform is transparent for all users, as everyone shares one system.
