3FOOD

Third Industrial Revolution Consulting Group
In this field, we find bockchain technology sitting at the intersection of three aspects: green
bonds, green microfinance and crowdfunding. 269 For one, blockchain-proven data can be the
basis upon which bonds issued to finance environmental projects are priced, since investors will
demand integrity assurances. Distributed-ledger technology will mediate the flow of
information and money, which in turn will foster new, negotiable energy and finance
instruments. These include contracts backed by low-scale “prosumer” generation capacity and
new equity-like carbon-trading assets whose dividends are based on the environmental benefit
and cost savings delivered by the underlying investment. Such investments can in turn be
bundled into smart contract-managed securitizations that also depend on a blockchain to
manage a decentralized securities exchange, creating opportunities for large asset
management firms, as well as for individuals, to participate in microfinance and crowdfunded
investments.
As the recent revelations about abuses at U.S. fintech firm Lending Club show, it won’t be
enough to cut out middlemen in crowdfunding and other “peer-to-peer” lending platforms;
these big public markets for this vital new infrastructure need the kind of distributed exchange
systems enabled by blockchains and the device identity model. In effect, to accommodate all
these new actors and asset categories, the securities industry will move toward distributed
equity and bonds markets in which settlement and clearing occur in real-time, peer-to-peer
over a blockchain.
Given Europe’s commitment to a continent-wide conversion to renewable energy, these new
asset classes may quickly evolve into very large, liquid and more democratic markets for most
sought-after investment instruments in the world. If Luxembourg leads the way, and embraces
the blockchain infrastructure that will secure them, it can become a global hub for the
origination, collateralization and trading of these products.
The overarching goal of these initiatives is a seamless, Europe-wide, integrated network of what
are otherwise decentralized energy markets, with localized generation and consumption
monetized through the sale of both contracts and power across borders. Given the public bond
funding structure, the Blockchain will be essential if trust is to be instilled in the data emanating
from the EU’s 28 different countries and 350 different regions, each defined by local conditions,
standards and regulations. Blockchain-based smart contracts can be used to design derivatives
269 As a supplemental note, in many ways what we now call green or climate aware financing, green finance and
crowdfunding might be equally called Economic Performance Financing (EPF) through more traditional Economic
Performance Bonds (EBP). In other words, and as already suggested, we need to engage in both a higher level of
performance and climate change mitigation and adaptation practices. If we don't achieve that multiple objective,
we may (or may not) achieve some environmental goals, but we may short-change the social and economic goals.
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