While it’s great to beat the drum of sustainability, it must be tracked and certified to be an effective way to combat GHG emissions. Distributed ledger technology (DLT) is a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places at the same time.
DLT is a secure and immutable tool that allows tracking of data with a product and the transactions associated with the product. Originally developed as an underlying branch of blockchain technology, DLT will let Verity Tracking attach the key metrics for sustainability to any product, and therefore enable a “sustainability” assurance that has not yet been seen.
Blockchain and Distributed Ledger Technology
At its core, blockchain is a distributed decentralized public ledger. The data associated with certain key metrics for measuring sustainability are suitable for being digitized through blockchain, and now those attributes can be documented and verified. DLT will enable Verity Tracking to sort out how sustainability is truly valuable in the end market, assign the correct value to it, and then set up market mechanisms to share value upstream in the value chain. Eventually, this will help create a system that rewards the value chain for improving sustainability.
Blockchains are, to simplify, a kind of database, only they store data in units called “blocks” that have limited capacity. Once the block is filled, it is encrypted and chained to the previous block, and shared across all the computers, known as “nodes,” stored on its peer-to-peer network.
Data contained within the block is “hashed,” or turned into a string of numbers and letters, and timestamped, so if either the hash or the timestamp don’t match up, that will raise a flag. Each block contains the data itself, as well as a hash of the data, and the hash of the previous block. Hypothetically, a node that is hacked or a block altered by anyone, whether it’s a nefarious actor with bad intent or someone making an innocent mistake, the rest of the network could easily pinpoint the discrepancy and correct it. A block that doesn’t agree with the rest of the chain is undesirable and, if not corrected, becomes valueless.
Distributed Ledger Technology Explained
Because blockchain is a computer program that establishes a transparent, public, append-only ledger, it’s a mechanism for creating consensus. When used among distributed parties who don’t need to trust each other, the mechanism creates the necessary trust. The trust aspect is critical, since blockchain depends on a challenge, coupled with the fact that no one actor on the network can solve the challenge consistently more than anyone else on the network. Because it randomizes the process, no one party can force the blockchain to accept a particular ledger entry that other with which other parties disagree.