The same technology that powers bitcoin and other cryptocurrencies could unlock the holy grail of real time pollution monitoring as Silicon Valley pitches the power of blockchain to environmental regulators.

Using blockchain for environmental monitoring is still in its embryonic phase, with actual examples of users adopting the data storage technology few and far between. But entrepreneurs are formulating plans to use the technology to change how society keeps track of air pollution, water quality, and even renewable energy generation.

“It’s a new paradigm of computing,” Anna Poberezhna, founder of the London-based startup Smart4Tech that works on water rights trading applications, told Bloomberg Environment. “It’s a technology that allows you to do things cheaper, faster, and better.”

Blockchain can store and encrypt voluminous numbers of transactions on multiple different computers across a system, instead of storing all of this data on one central server.

Because the data is not housed in any one location, and because each transaction is cryptographically linked to every other transaction, blockchain ledgers are often described as nearly impossible to hack. The decentralized, transparent nature of storing information in a blockchain removes the need for third-party verification.

And that could revolutionize how businesses report their pollution or track flows through pipelines, allowing faster transmission of data by speeding up the verification process.

Quest for the Holy Grail

The “killer app” tantalizing everyone in his field is the potential to use blockchain to collect and store data in real time from pollution sensors, said Louis Sweeny, an environmental IT consultant and former Environmental Protection Agency staffer.

“I know those kinds of conversations are happening,” Sweeny told Bloomberg Environment. “I don’t know if any solid business models have emerged.”

As often happens at this stage of a nascent technology’s development, it’s far from clear exactly how, or even whether, blockchain will spread into the environmental monitoring field.

“Clearly it’s going to be a transformative technology, but that doesn’t mean it’s going to transform everything,” said Rebecca Bratspies, an environmental law professor at the City University of New York, who focuses on technology.

Neno Duplan, CEO of the Silicon Valley-based information management company Locus Technologies, said blockchain will be most useful in managing the deluge of data that will be generated by internet-connected pollution sensors of the future.

Managing Large Amounts of Data

These future pollution monitoring devices would be part of the “internet of things,” in which devices ranging from tractors to refrigerators to air conditioners are outfitted with internet connections.

But Duplan said it would be far too labor intensive to use internet-of-things environmental sensors without blockchain. “They’re unmanageable under current internet structure,” he told Bloomberg Environment.

Today, a company that installed an internet-enabled air sensor outside its factory would need to employ people to verify the data it generates and then submit that information to the EPA or another regulator, Duplan said. But by using blockchain, this data could be securely transmitted to the regulator the instant it gets generated.

‘Opportunity to Simplify’

“It creates tremendous opportunity to simplify what is now an extremely complex process,” said Duplan, whose company is working with the Energy Department and other federal agencies on blockchain projects.

With blockchain providing the ability to securely store vast amounts of data, one limiting factor is the ability to manufacture sensors that are cheap and energy-efficient enough to be economically viable, Duplan said.

Bratspies told Bloomberg Environment another factor that could limit the value of all this data is how it gets turned into easily understandable information.

“What the blockchain really adds for most things is permanence and a guarantee that it won’t be tampered with,” said Bratspies. But “raw data is often not particularly useful to people. What they need is the data to be synthesized and analyzed.”

Eliminating the Middleman

Evan Caron, co-founder of the Swiss emissions tracking startup Swytch, said blockchain could theoretically eliminate the “rent-seeking middlemen” who currently package a company’s pollution data and submit it to regulators.

With blockchain, “every time a generator generates an electron or a molecule of gas, you’re able to track that all the way back to creation,” Caron, a former Wall Street energy trader, told Bloomberg Environment. “That’s very powerful because you can trust the data and trust the information. You don’t need to have a third party validate that or attest to that.”

Sam Dibble, a Silicon Valley-based attorney with the firm Baker Botts who works on raising capital in the tech industry, said drilling companies are also looking into using blockchain to track the oil and gas they send through their pipelines at every step of the process. He said blockchain could allow these companies to store more data securely than had previously been conceivable.

Transferring Trust?

These drillers are looking into ways to track their product “from the actual drilling or other extraction through the pipelines and through the other end and then onto final use,” he told Bloomberg Environment. “It’s either happening or people are working hard to figure out how to make it work.”

But Bratspies said it would be a mistake to assume that data encoded with blockchain is by definition secure. She said it’s true that, once a block has been created, the technology’s encryption and interconnectedness would make tampering nearly impossible. It would not be hard, however, to imagine data being corrupted before even entering a blockchain, she said.

“The cryptography is probably unhackable,” she said. But “you’re putting a lot of trust in those who are maintaining the blockchain that they’re doing it accurately and with integrity. ... There’s all this rhetoric about replacing trust, but it seems like it just transfers the placement of trust.”

‘Why Wouldn’t We Use It?’

Of course, predicting how blockchain will be used in the environmental world assumes that businesses and regulators will want to use it.

This is a problem for Chris Richter, co-founder of the tech startup WaterBot, which is working on a monitoring device that, with the help of blockchain, can sample water quality once a minute. The Milwaukee-based entrepreneur said some of the cities WaterBot has targeted as potential clients told him they worry real-time water monitoring will unearth problems they’d rather not know about.

But Richter said he thought this “ignorance is bliss” attitude will slowly fade away once blockchain becomes more widespread and consumers start to demand it.

“The technology is there for real-time monitoring,” he told Bloomberg Environment. “Why wouldn’t we use it?”