Cointelegraph By Guest Authors
United Nations Secretary-General António Guterres estimates trillions of U.S. dollars per annum is needed to achieve the 2030 Sustainable Development Goals. The question is: “Where would it come from?” Official development aid, philanthropy and public finances cannot suffice, which means the needle is moving toward private capital to fund sustainable development projects.
Related: The UN’s ‘decade of delivery’ needs blockchain to succeed
But the gap between financing and the environmental impact does not exude the confidence of private investors to fund development projects. India, a center of sustainability risks and innovative interventions, offers an example of this gap. Between 2014–2015 and 2018–19, corporate social responsibility, or CSR, spent by the approximately 1,100 listed Indian corporates grew at a rate of 16%, while India’s score on the United Nations Development Programme’s Human Development Index grew by roughly 1% compound annual growth rate, or CAGR. Ironically, most CSR spending by Indian companies goes to education and health — the very sectors the HDI index focuses on.
It is time for blockchain tech
Can blockchain technology be a workable solution? It can because development projects conduct measuring, reporting and verification, or MRV, processes measure the outcome and impact of projects. Most readers are aware that distributed ledger technology stores data batches in blocks on the network, and the need for independent verification from the network’s users makes the records transparent, secure, verifiable, and immutable. These are the very attributes by which blockchain can improve the MRV processes, thus improving data auditability and reducing misreporting/fraud of data. This can incentivize private capital to consider investing in this space.
Moreover, if we must identify the precise activity of a typical development project where blockchain technology can be leveraged, then it would collect and time-stamp project-level data for monitoring purposes. The challenge is many resource-crunched development projects, especially in developing countries, still collect field data by hand, which can lead to inaccuracies, mistakes and fraud. With a blockchain, such data can be collected and reported in a secure, transparent and verifiable manner.
What also adds adverse effects is the local institutions in the developing countries that implement such projects often lack the systems to ensure the data they report is verifiable. Weak regulations in such countries make it difficult to hold such local institutions to account. Add to this the distance between foreign investors and these local projects, and it becomes harder to stay on the same level.
Blockchain can reduce the data risks of local-level institutions, improve the validity of the data they report for impact, and instill confidence in foreign private donors/investors to fund such development projects.
Blockchain and MRV processes
What this implies is more financing flow can be committed to the local level. Back in 2017, the International Institute for Environment and Development estimated that only 10% of the $60 billion in public and private climate finance is directly committed to the local level, which is partly due to such perceived data risks. Using blockchain to improve MRV can facilitate greater access to capital for local-level institutions.
With blockchain enabling local projects to report verifiable performance as part of their MRV processes, local development institutions can gain a greater supply of capital. The Amazon in Brazil is an example. The Rainforest project uses blockchain and the Internet of Things to record and transfer data from electrical meters, robotic appliances and emission monitors on the environmental impact. Remote sensing satellites independently verify the status of patches, upon which blockchain smart contracts directly reward the farmers who preserve their rainforest patches. The outcome data is verifiable, and the exclusion of intermediaries while transferring incentives minimizes administrative costs and the siphoning of funds.
Blockchain-enabled MRV processes help disintermediate the intermediaries in a social or sustainability bond issuance, thus reducing issuance costs and making it possible for small enterprises to access the bond market or aggregate smaller assets into bonds. Already, leading Spanish bank BBVA uses blockchain to structure green bonds and loans.
As long as limitations such as internet capacity and technology literacy can be overcome, blockchain’s revolutionary role in improving the MRV processes around data can mobilize more private capital investments for development projects executed by local-level institutions in developing countries.
This article was co-authored by Sourajit Aiyer and Jae-Hoon Kwak.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Sourajit Aiyer is a consultant at South Asia Fast Track Sustainability Communications. Previously, he worked with traditional and sustainable finance organizations. He has written three books, over 160 articles for 60 publications, given over 30 guest-talks at various universities and conferences, and curated 20 webinars with over 50 international domain-experts.
Jae-Hoon Kwak is the CEO at Pan-Impact Korea, a company focusing on social impact via innovative technologies.
As NFT market cools, a chance to learn lessons from its explosive growth
Cointelegraph By Connor Sephton
What a difference three months makes. Back in March, there was a jubilant atmosphere when Beeple’s mega nonfungible token sold for $69.3 million. You didn’t have to look far to find bold proclamations that crypto art was the next bold frontier in culture — offering opportunities to fledgling creators and transforming the way we interact with masterpieces.
Things look a little different now we’re in June. All-time highs for Bitcoin and Ether are a distant memory, and sobering figures published by Protos suggest that NFT sales have plummeted by 90% since their peak in early May. (Some have questioned this data).
It’s a good time to reflect on how far we’ve come, and where we are going next. Endless column inches are now being devoted to the death of NFTs as an asset class — drawing eerie similarities to the hundreds of articles and tweets that have warned Bitcoin is heading to zero ever since its inception. (One of them came in September 2020, not long before the cryptocurrency’s dramatic bull run began).
Although the crypto markets are rather turbulent right now, those catastrophizing over NFTs might be rather short-sighted.
Just look at what Beeple — real name Mike Winkelmann — told CNN back in March: “NFTs as a technology are super exciting and a lot of people are comparing it to the early days of the internet. With the early days of the internet, you had a lot of hype and you had a lot of speculation, and then there was a bubble, and the bubble burst. But it didn’t wipe out the internet, people kept using the internet.”
Essentially, his point is this: NFTs that have real utility will continue to endure. And indeed, it’s worth noting that the Protos research stresses that crypto collectibles such as CryptoPunks have managed to remain resilient during this bearish downturn. (Indeed, Sotheby’s sold a rare CryptoPunk for $11.8 million just last week — what it described as a new world auction record).
The NFT sector might have taken a beating in the short term, but this doesn’t detract from how these assets are unique, provably scarce and indivisible — transforming the notion of ownership entirely. There are use cases for nonfungible tokens that haven’t been dreamed up yet, and development and innovation in this industry is still at a nascent stage.
Explosive levels of growth in this industry have led to obstacles arising. At times, there has been very little oversight when it comes to the verification process. Congestion on the Ethereum blockchain, the birthplace of NFTs, has also stymied development.
One way of helping the NFT sector bounce back from its current malaise is to increase public awareness about the opportunities that these tokens bring — and make it far less expensive for creators to mint their very own tokens. Right now, digital artists who are just starting out risk overspending on minting NFTs because of Ethereum’s high transaction fees and gas costs — and they may fail to recoup these expenses if their art doesn’t sell.
Creating an environment where nonfungible tokens are easy to discover and inexpensive to buy and sell is nothing short of crucial.
One platform that is vying to make NFTs more accessible to all is MOVE Network — a developer-friendly blockchain that is energy efficient and well secured. Its end-to-end NFT aggregator brings digital assets together in one place. Gas fees are currently being waived for all users, and the ecosystem gives them a chance to easily tokenize their digital content with minimum expense.
This is coupled by a gamified experience that injects fun, intrigue and excitement back into the NFT space. Through the use of “blind boxes,” rare and valuable tokens are going to be hidden, waiting to be discovered. The project hopes that this will offer a new element of surprise for being a part of the MOVE Network community.
Some of the main focuses for MOVE Network include ensuring that these assets can be traded with ease and setting the foundation for NFT tickets — an innovation that could achieve a newfound level of sentimental value for fans who attend events, all while ensuring that tickets can only be resold under certain circumstances and eliminating the risk of counterfeits entering circulation.
The past 12 months have seen MOVE Network completing a beta test, enabling its platform to be used for demonstrative purposes. A collaboration has been established with the H Collective, a corporation that regularly works with top producers and talent in Hollywood. It’s hoped that this partnership will pave the way for NFTs to revolutionize the film industry. Meanwhile, the platform has also successfully closed a $1.5 million seed funding round to fuel its global expansion, and development of the blockchain technology that fuels its ecosystem.
Movie mogul Sid Ganis — who has worked as a top executive at studios including Sony Pictures, Lucasfilm and Warner Bros — has also joined MOVE’s advisory board. He said: “The film industry is constantly changing and innovating. I have been lucky to be a part of those changes for many years. Now movies and content are moving into the crypto marketplace via NFTs, which is another major shift into the 21st-century world of global entertainment. I am very happy to bring what I know to the process.”
MOVE’s NFT marketplace is scheduled to launch in the third quarter of 2021, complete with “blind boxes.” A MOVD token sale will also take place, with the cryptocurrency set to be listed on a major exchange thereafter. Later in the year, additional entertainment industry partners are set to be unveiled — with a decentralized NFT trading platform due to launch on Binance Smart Chain.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.
South Korean crypto exchanges banned from handling coins they issued themselves
Cointelegraph By Greg Thomson
The increased regulatory scrutiny that befell South Korea’s cryptocurrency space in recent times appears to have extended to include exchange tokens.
Exchange tokens are tokens issued by a cryptocurrency exchange that usually offer some benefit to the holder, either through reduced trading fees, regular token burns or other means.
According to a report by Arirang on Thursday, cryptocurrency exchanges are being prohibited from handling any coins or assets issued by themselves. The law also extends to any assets issued by family members, spouses or distant relatives, and is expected to come into effect on June 26.
Businesses which fail to comply with the new regulations could have their operations suspended and face fines of up to $88,000.
South Korea’s Financial Intelligence Unit (FIU) recently contacted 33 cryptocurrency trading platforms to inform them of an upcoming field consultation due no later than Sept. 24. In the week or so since, one Korean exchange, Upbit, delisted a handful of coins, and issued strident investment warnings on another 25 assets, representing 14% of all coins listed on the exchange.
Moving forward, Upbit no longer accepts inbound deposits for the 25 coins mentioned in the warning and has said it will further review the assets to decide whether or not to delist them completely. The deadline for its final decision on the tokens is Friday, June 18.
Related: Korean banks will need to classify crypto exchange clients as ‘high risk’
South Korea’s attempts to tighten its grip on the cryptocurrency industry within its borders has seen regulators demand Information Security Management System certificates from crypto trading platforms, essentially acting as a license to operate. Of 20 exchanges with the certificate, 11 have already either delisted tokens, or issued warnings similar to Upbit’s.
Given that many exchange tokens don’t operate on a proprietary blockchain, the legal definition of what it means to “handle” tokens issued by an exchange may be stretched in the coming days and weeks, as South Korea’s coin clean-up continues.
Bitcoin miners can prove green potential by undergoing ESG ratings check
Cointelegraph By Rachel Wolfson
Environmental concerns regarding the energy-intensive, proof-of-work (PoW) mechanism that Bitcoin (BTC) uses to produce new coins and verify transactions have been front and center lately. Debates regarding Bitcoin’s energy use particularly surged following a tweet sent out by Tesla CEO Elon Musk in May saying that his company would no longer accept Bitcoin payments due to the network’s “increasingly rapid use of fossil fuels.”
Since then, a number of ways Bitcoin mining companies could go green have been discussed, many of which include using 100% renewable energy sources. For example, El Salvador president Nayib Bukele recently disclosed plans for a geothermal power company, letting Bitcoin miners use its facilities to ensure clean mining.
Proof of green potential through ESG ratings
While innovative, these initiatives may be easier said than done. Moreover, if these mechanisms were to be achieved, proof of Bitcoin’s green potential may still be required to show its impact.
In order to demonstrate true energy conservation, Bryan Bullett, CEO of Bit Digital — one of the largest publicly listed Bitcoin mining companies — told Cointelegraph that the company recently submitted for a third-party environmental, social and corporate governance (ESG) review. Bullett noted that the international ESG framework is used by many companies and favored by institutional investors to track and verify companies’ environmental standards and adherence.
Sam Tabar, chief strategy officer of Bit Digital, further told Cointelegraph that the firm may be the only Nasdaq-listed miner that has engaged an independent ESG firm:
“Our ESG rating will be provided by Apex Group ESG Ratings & Advisory, a well-known ESG specialist. Apex met our requirements for an independent process to ensure relevance and consistency surrounding ESG and shares our commitment to creating ESG transparency for investors.”
According to Tabar, once completed, the ESG report from Apex will allow Bit Digital to draw meaningful conclusions to better understand the firm’s ESG performance against international standards and its peers, and then identify areas for improvement, all while tracking progress over time.
It’s important to point out that Bit Digital’s ESG rating is not yet available, as Tabar added that he is not sure when the firm will receive the score. “It’s not up to us, but we are willing to be reviewed. Our miner fleet has been running on a majority of carbon-free energy mix on average, so we expect that will be reflected in our score.”
Will ESG ratings become an ongoing trend for miners?
Although Bit Digital may be one of the first mining companies to undergo an ESG review from a third-party firm, other miners may also choose to do the same.
For example, Rob Chang, CEO of Gryphon Digital Mining — a clean energy Bitcoin mining company — told Cointelegraph that the company is using 100% hydroelectricity to mine Bitcoin. While Chang noted that Gryphon has already achieved 100% carbon neutrality, Brittany Kaiser, chair of the board of directors at Gryphon, explained that an ESG rating will be performed upon the launch of the company’s first mining machines, which is set for the beginning of August. “We have not seen ESG rated yet, as we are pre-operational. However, our electricity source is 100% renewable and we have purchased more than 250x more carbon credits to offset the delivery of our mining machines than the footprint it will create.”
Tabar additionally pointed out that it’s important for publicly listed mining companies to undergo ESG ratings for their shareholder’s knowledge:
“Institutional investors increasingly require transparency on, and compliance with, international ESG standards. Therefore, to attract institutional investment, miners face an imperative to operate sustainably, and to provide consistent ESG metrics to the market.”
While the case for ESG ratings is clear, it may be challenging for Bitcoin miners to obtain an ESG score, as a lot of data must be disclosed. Andy Pitts-Tucker, ESG managing director for Apex Group, told Cointelegraph that the ESG rating process varies based on the provider in question. “For listed businesses or funds, companies are evaluated based on publicly available information such as media sources and annual reports, with scores given for each ‘E,’ ‘S’ and ‘G’ category, alongside an overall score.” He added, “For private companies and their investors, data must be provided by the companies themselves.”
Pitts-Tucker further added that an ESG rating specifically provides a consistent standard against which a company’s ESG performance can be measured. As such, he noted that ESG ratings really gained attention last year, as the global pandemic renewed the world’s focus on risks of all types, including non-financial and ESG factors:
“Companies are now facing increasing pressure from investors, employees and customers to disclose their ESG credentials. Companies now not only want, but need, to show their ESG credentials and compliance as their hands are forced by the implementation of regulations.”
Is Bitcoin an ESG disaster?
Although a recent decarbonization report from Big Four firm KPMG reinstates that ESG ratings are quickly becoming a best practice for companies, some traditional financial service firms consider a Bitcoin ESG to be near impossible.
For example, Benefit Financial Services Group, a registered investment advisor for both institutions and individuals, recently published a blog post on the challenges of obtaining a Bitcoin ESG score. Unsurprisingly, the post mentions that by nature, Bitcoin mining is an “undeniable environmental offender.” As such, the entire document slams Bitcoin for being unethical and harmful toward the environment.
Related: Fortunes turning? Specialized GPUs and SSDs come to aid crypto miners
While this may be a common opinion, Sam Wyner, cryptoasset services director and co-lead at KPMG, told Cointelegraph that in some cases, Bitcoin mining operations may be better positioned than larger organizations for an ESG score since they are typically smaller, more focused and, therefore, more agile:
“They will face the same challenges any corporation trying to obtain an ESG rating would face: Organizational maturity, when it comes to ESG and availability, and granularity of the data needed to support the rating. This is something even the largest corporations currently struggle with. And, like any corporation going through this for the first time, there is always the risk that the rating comes back less favorable than desired.”
Bitcoin3 days ago
Within five years, US hedge funds expect to hold 10.6% of assets in crypto
DeFi3 days ago
Tim Draper Says Bitcoin to Hit $250K in 2022
Ethereum2 days ago
Shiba Inu and Chiliz jump 33% and 26% on Coinbase Pro listings
Bitcoin2 days ago
New Bitcoin bull market hodlers are refusing to sell at $40K, data suggests
DeFi2 days ago
China to Kick Out Bitcoin Miners and Most Are On Their Way to Texas
Regulations2 days ago
Regulations drive Korean exchanges to delist, warn against high risk coins
Blockchain3 days ago
‘Tiger King’ star and convicted animal abuser Joe Exotic to launch NFT from prison
Blockchain2 days ago
New DAO launches after $230M funding round including Peter Thiel, Alan Howard