Blockchain and cryptoassets are booming, and with increased conversation around infrastructure investment, the question needs to be asked; how can blockchain enhance current and new infrastructure?
2019 Bloomberg Finance LP
While the conversation around blockchain and cryptoassets might seem to some as abstract or more conceptual than relevant on a day-to-day basis, the continuing debate around infrastructure investment and rehabilitation is more tangible. Regardless of what statistic is cited, there are concrete and quantitative benefits that come from improved infrastructure. These include reduced commuting time (and pollution), lower risks of failures during high stress situations, and adapting to climate induced changes. These benefits, however significant they are, tend to be focused primarily on the benefits of physical infrastructure investment; what about digital infrastructure?
Especially as the focus on green investment continues to accelerate, and the importance of digital infrastructure rises to prominence in a remote-first environment, developing a digital infrastructure framework is of critical importance. As has been seen time and again however, the security and data protection policies surrounding digital infrastructure and development have not kept pace with the sheer volume of information that is handled by these networks. Blockchain technology, as a digital technology tool developed to secure and transfer information between different network members, seems well positioned to anchor continued growth and development of digital infrastructure.
Let’s take a look at some aspects of digital infrastructure that can benefit from increased blockchain integration across the board.
Broadband expansion. When the term infrastructure is mentioned, what often comes to mind are highways, trains, and other physical structures. Important to be sure, but these are only a part of the broader infrastructure conversation. As digitization and remote work increasingly become part of every day life across the globe, access to reliable and secure broadband is critical to personal and professional success. Particularly in the era of data breaches and other network failures, blockchain has an important role to play in the continued development of the internet and equitable access to online resources.
The increased percentage of work, education, and personal lives that have shifted online during 2020 simply highlighted just how important access to secure and high speed broadband is for economic and societal progress.
Smart infrastructure. Much has been written, and much is anticipated, about the emergence of smart cities, smart infrastructure, and smart grids. Whether it is focused around the emergence of the Internet of Things (IoT), or simply augmenting existing infrastructure and technology tools, the idea of intelligent infrastructure holds significant promise. Building on the first point, however, in order for these benefits to materialize and manifest as promised, the underlying technology platform needs to be secure and scalable. The risks of bad information, whether intentional or not, being spread throughout a digitally-enabled infrastructure, is significant but is something that a blockchain-based system can assist in addressing.
Even simply having autonomous vehicles, which in and of themselves deliver economic savings and benefits, requires a virtual grid to be scalable, responsive, and secure in order to operate as advertised.
Solar power grids. The rise of solar panels, be it for environmental reasons or for cost savings reasons on the side of individuals and businesses that have adopted these tools, has generated wider interest in the renewable or green economy than virtually any other initiative. Peeling back the layers, however, and there are multiple issues that require an integrated, secure, and reliable solutions to operate effectively. Be it the process by which power is sold back to the existing grid, credits being issued for adopting solar panels, or simply monitoring and (hopefully) improving the performance of these panels, data integrity is essential. The green economy holds significant promise, but to operate in a manner that makes sense and is sustainable, having tools to help prevent green-washing is an imperative.
On paper the idea of selling electricity back to the existing grid, and having a more democratized power generation and transmission process, makes perfect sense. What this means, however, is that the already complicated process of power transmission and distribution will be further complicated, and the integrity of this process is absolutely essential.
Financing infrastructure. Infrastructure may be a popular ballot measure, and a go-to tool in the policy toolkit, but when it comes to paying for these projects, there tends to be less consensus. Funding usually comes from government sources via ballot initiatives, special fees and assessments such as charges for air rights, or some sort of public-private partnerships. These methods certainly will remain, but introducing blockchain to the wider infrastructure conversation enables tokenization to come to the forefront. The ability to tokenize and, in essence, crowdfund, certain infrastructure projects, opens the door to new investors seeking to capitalize on increasing interest and appetite for infrastructure projects.
Two of the hottest and most widely discussed topics and ideas in the modern conversation are blockchain and infrastructure, but the connection between these two topics have not – to date – seemed to be made in a high profile way. Infrastructure is a widely acknowledged economic stimulus, but has routinely been beset with inefficiencies, a lack of transparency, and an inability to consistently measure the impact and data generated by these projects.
Blockchain is not a magic solution to infrastructure issues, but by integrating blockchain-based or blockchain-augmented tools into infrastructure projects, the ability of said initiatives to deliver sustainable, quantifiable, and equitable benefits will only increase.