Blockchain and circular economy intertwined, representing sustainable technology.

Can Blockchain Fix the Circular Economy? Experts Weigh In

Soraya Malik in Climate & Environment December 2025 • 4 min read.

"Discover how blockchain technology could revolutionize sustainability, or if it's just hype. Uncover expert insights on its real-world applications and limitations."

The circular economy, with its promise of minimizing waste and maximizing resource utilization, has captured the attention of businesses and consumers alike. Simultaneously, blockchain technology, known for its security, transparency, and decentralization, has been touted as a game-changer across various industries. It's natural, then, to wonder if these two powerful forces can combine to create a more sustainable and efficient world. However, beneath the surface of exciting proposals, lie complex challenges and assumptions that need careful examination.

While the potential benefits of integrating blockchain into circular economy initiatives are clear -- enhanced traceability, increased trust, and improved resource management -- the real-world feasibility of these integrations remains a significant question. Are we placing too much faith in blockchain's capabilities? Are we overlooking its limitations? To address these critical questions, a recent Delphi study engaged eleven prominent blockchain experts to analyze the technology's integration across various facets of the circular economy.

This article unpacks the findings of this study, offering a balanced perspective on the potential and limitations of blockchain in the circular economy. Instead of dwelling on theoretical possibilities, we will explore the expert insights that reveal which integrations are likely to succeed, which face significant hurdles, and what conditions are necessary for blockchain to truly drive circularity. Get ready to cut through the hype and dive into the realities of blockchain's role in creating a more sustainable future.

Blockchain and the Circular Economy: Untangling the Hype

Blockchain and circular economy intertwined, representing sustainable technology.

The core idea behind leveraging blockchain for the circular economy is to enhance transparency and trust among all stakeholders. For example, imagine a system where the origin, composition, and journey of a product are immutably recorded on a blockchain. This could empower consumers to make informed purchasing decisions, incentivize companies to adopt sustainable practices, and facilitate efficient recycling and reuse.

However, the experts in the Delphi study highlighted several critical assumptions that need to be addressed for these integrations to be successful:

The Oracle Problem: How can we ensure that the data entering the blockchain is accurate and reliable? Blockchains themselves cannot gather data from the real world; they rely on external sources (oracles) that can be vulnerable to manipulation or error.
The Stapling Problem: How can we create a secure and trusted link between a physical product and its digital record on the blockchain? This is especially challenging for products that are disassembled, recycled, or transformed during their lifecycle.
Scalability and Cost: Can blockchain networks handle the high volume of transactions and data required for circular economy applications without becoming prohibitively expensive or slow?
Data Privacy: How can we balance the need for transparency with the need to protect sensitive business information or consumer privacy?

These challenges underscore the importance of a nuanced approach to blockchain integration. Simply applying the technology without carefully considering its limitations and the specific context of the application can lead to disappointment and wasted resources.

The Verdict: Where Does Blockchain Truly Shine in the Circular Economy?

The Delphi study ultimately painted a realistic, rather than utopian, picture of blockchain's role in the circular economy. While some proposed integrations appear unlikely to succeed in their current form, others hold considerable promise if specific conditions are met. Ultimately, the key lies in understanding both the strengths and limitations of the technology and applying it strategically to address specific challenges within the circular economy framework. By focusing on transparency, data integrity, and incentivizing sustainable behavior, blockchain can contribute to a more sustainable future.

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This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1016/j.jclepro.2024.142781,

Title: Investigating Assumptions And Proposals For Blockchain Integration In The Circular Economy. A Delphi Study

Subject: cs.cy econ.gn q-fin.ec

Authors: Giulio Caldarelli

Published: 21-12-2023

Everything You Need To Know

What are the main benefits of using blockchain technology to support a circular economy?

Integrating blockchain technology into circular economy initiatives offers several potential benefits. These include enhanced traceability of products and materials, increased trust among stakeholders in the supply chain, and improved resource management by providing a transparent and immutable record of a product's lifecycle. However, the Delphi study emphasizes that these benefits are contingent on addressing key challenges such as ensuring data accuracy and linking physical products to their digital records securely.

What are the key challenges or 'problems' that need to be solved for blockchain to effectively support circular economy models?

The Delphi study highlights several critical challenges. The first is 'The Oracle Problem,' which concerns ensuring the accuracy and reliability of data entering the blockchain from external sources. Next is 'The Stapling Problem,' which involves creating a secure and trusted link between a physical product and its digital record. Additionally, there are concerns about the 'Scalability and Cost' of blockchain networks to handle the high volume of transactions, and the need to address 'Data Privacy' concerns while maintaining transparency.

What is the 'Oracle Problem' in the context of using blockchain for the circular economy, and why is it important?

The 'Oracle Problem' refers to the challenge of ensuring that the data fed into a blockchain from the real world is accurate and trustworthy. Blockchains cannot gather data themselves; they rely on external sources, known as oracles. If these oracles provide false or manipulated data, the entire blockchain record becomes unreliable. Addressing the Oracle Problem is crucial because the transparency and traceability benefits of blockchain are entirely dependent on the integrity of the initial data input. Without reliable data, the blockchain's ability to support a circular economy is severely compromised.

How does the 'Stapling Problem' impact the use of blockchain in the circular economy, especially for products that are recycled or disassembled?

The 'Stapling Problem' describes the difficulty in creating a secure and trusted link between a physical product and its digital record on a blockchain. This is particularly challenging when products are disassembled, recycled, or transformed during their lifecycle. Maintaining a verifiable connection between the physical item and its digital representation is essential for tracking its journey, verifying its composition, and ensuring proper handling. Without a robust 'stapling' solution, it becomes difficult to accurately track materials as they move through the circular economy, undermining the potential for improved resource management and waste reduction.

Considering the Delphi study, is blockchain a guaranteed solution for creating a circular economy, or are there limitations to its effectiveness?

The Delphi study suggests that blockchain is not a guaranteed or universally applicable solution for the circular economy. While blockchain offers potential benefits like enhanced transparency and traceability, its effectiveness is highly dependent on addressing critical challenges and applying the technology strategically. The experts emphasize that simply implementing blockchain without careful consideration of its limitations and the specific context of the application can lead to disappointing results. Therefore, a realistic and nuanced approach is necessary to leverage blockchain's strengths while mitigating its weaknesses in the pursuit of circularity.