So, could you explain a bit about what Circularise is? What do you do?
Well, in the most literal sense of course, Circularise is a start-up, based in The Hague, in the Netherlands. We started off as a spinoff project from Delft University of Technology, which is where I earned both a bachelor’s and master’s degree in Industrial Product Design. Throughout my studies, I was very much intrigued by the idea of the circular economy – and this was maybe 7 or 8 years ago, when the circular economy was quite novel. Most people didn’t know what it was and even within the university it was a new concept. It became my focus, and as a result, indirectly the topic of my master’s graduation project, in which I studied issues in the European economy, such as critical materials and scarcity, how to become less dependent on certain resources and how the circular economy might help. One of the conclusions of this research was that in supply chains, there is a strong lack of information-sharing, or transparency. This prevents us from establishing efficient recycling systems, for example. For efficient recycling, recyclers need to know what the final end-of-life product is composed of and how it was produced. If too much effort is required to get this information, it may well be cheaper for the recycler to send it to the incinerator. In fact, a direct correlation was found between sharing more information and being able to recycle more efficiently. Having identified this problem, we - Jordi de Vos, the co-founder of Circularise, and I – thought it was one that could be tackled with blockchain technology. We therefore decided to found Circularise in 2016. It first started out as a university project, but later became a more serious venture as a company. Which brings us to the blockchain space. The big difference with most blockchain projects, is that instead of looking at the technology and thinking: “what can I do with it?”, in our case, we had a problem that we wanted to solve, and blockchain very naturally presented a solution. Why? Because a blockchain enables trust, basically. It enables trust where trust is usually lacking, in a very easy and non-human-intervention way. That’s how Circularise got started and what it is.
How did you get involved with plastics?
Blockchain, digitalisation, transparency and the circular economy. These are the key concepts to understanding what Circularise is about. Even back when doing my research in Delft, plastics played a very important part. One of the largest and most complicated waste streams in the world is electronics – and huge amounts of plastics are used in the electronics industry. What makes it so complicated is that many types of plastics are used with all kinds of additives, which are important to know about for efficient recycling. So plastics was a focus of ours. And then we were also lucky: we met our contacts at Covestro and Domo, about a year and a half ago. At that time we were still focusing on our technology, and were very industry agnostic. But by working together with Covestro and Domo we slowly started to shift our focus more heavily towards plastics. We are developing an open standard for sustainability and transparency in the plastics industry, that will enable the industry to communicate on sustainable practices and make the plastics supply chain fairer, more transparent and profitable. It’s a massive undertaking and we’ll be occupied for some years to come. But we see a lot of potential – despite the bad rap, plastics have many good properties, it’s just that they are being used in the wrong manner. That needs to change. We need to create a system where we can actually get these plastics into the economy over and over again – and with plastics, it’s possible. Theoretically, we’ve done it, we now have to make it work in practice and develop the systems around it. It is definitely an impactful, large and important market for this technology.
Would it be possible for you to explain what a blockchain is? It is a concept that can be difficult to grasp!
We could explain this in a very complicated manner and go into the technology, but at the end of the day, what it does is it creates digital scarcity. And why would you want that? Well, before the blockchain and the bitcoin and the Ethereum era, if you did something online or on the internet, there was no scarcity. Digital information could be endlessly replicated across networks. Digitally it’s a simple control C, V and you have a copy. It is extremely easy. I could send you an image, but I would not have the ownership of that image, to create scarcity. Hence, something like money is difficult in a digital system, which is why the first blockchain application was the bitcoin – digital money. Blockchain creates scarcity in the digital world. Previously, the only way to create this was with a trusted party – like a bank, where a central authority does the balance-keeping. But trusting a central authority to create scarcity in the digital world is asking a lot of your customers, whereas with a blockchain, we can do this by design. There is no one who is the central authority and this enables a lot of use cases. Imagine trying to create a transparency solution for plastic materials, and having to go to Covestro and BASF and all the rest to say: “Here’s our platform. It allows full traceability of all your materials - but we are the administrators”. We would be in big trouble if we made a mistake, or someone hacked the system, or caused harm in any other way. Theoretically, we could even do that- we could change any numbers we wanted. The point here is that we would be a high-trust central party at that stage, as everything that goes into the system would go through our systems. With a blockchain, no central authority is needed.
Why is that important?
It’s important for us because if we want to bring transparency to a supply chain we cannot sell the idea that all these companies need to trust us – at the end of the day we are still a small company: we’re not Google or IBM – and even then, would these companies trust a company like Google or Microsoft with all their information? Give them the central role of trusted authority? What blockchain enables is to decentralize all this power: now everyone has access to this information and nobody is in control. You control your data, I control my data – whereas in the real world, right now if I were, say, the bank I would have access to your data, and to everyone’s data which I could manipulate, sell, or give access to someone else to play around with. So the blockchain is a decentralised system of data communication or information sharing. Jordi and I asked ourselves: “What can we do if we can have a source of truth without a central authority - what new interactions can we enable?” And we saw that we could create systems like ours, where competitors in an industry can be connected together and share information in a very trusted way about how much material they buy, where, or how it was produced without anyone being able to cheat with this information – for example, to make themselves look more sustainable - but also without having to trust one central authority We didn’t invent blockchain – it was already there, we just connected the right technologies to create the application.
How does it work?
It’s one thing to track money. It’s a whole other thing to track sustainability. The way we prove sustainability can be demonstrated with an example of the way we prove the use of recycled content – after all, if you can prove you’ve used recycled content in your material, that’s one example of proving you have done something sustainable. The way we do this is by working with supply chain partners to create a digital version of their material. Why? So that the brand owner using a particular material, for example, sustainable polycarbonate, knows both that it actually comes from the producer in question – say, Covestro – and how it was produced. They are many tiers between producer and brand owner; for example, car makers have thousands of suppliers, each with their own suppliers as well, so there are a great many people to trust.
So what we do: for every kilogram of material produced by a producer, we create one kilogram on our system. One token on our blockchain represents this kilogram and to this we can also attach information as to why this is sustainable - information provided by auditors, certificates and other proof points. So for every physical kilogram, there is a digital kilogram on the blockchain. And, like in the case of bitcoins, this one kilo digital token cannot be altered when given to the customer. This means that scarcity, that ownership has been created of that digital material. Now, if you trust that Covestro has done a good job and that the auditors have done a good job, you don’t have to trust the thousands of other suppliers – because they cannot lie. Every supplier after Covestro would need to show they have access to these tokens. This is how blockchain can help prove the sustainability of the supply chain. We are not making it sustainable: we are making it very easy to communicate about sustainability. And very, very hard to lie about sustainability.
What makes your approach different from the rest?
The thing that makes us unique is that we have a very open approach in which privacy is preserved. We have opted for an open system: all the information is on a publicly accessible blockchain. There are examples of closed blockchains in the industry, which can only be accessed by certain companies. However, there is still some sort of central governance in those systems. The issue with choosing an open system is privacy. If everything is open, how do you deal with the fact that everyone can see all the information in it? This can be extremely concerning if all the transactions of a company are visible. For this reason, others have opted for a private system. Instead of a closed system, we have added a technology on top that allows us to keep the information on the blockchain private, even though it is on a public system. It took very complicated mathematics (known as zero knowledge proofs), but at the end of the day it allows us to show statements on a public blockchain without showing the data behind these – the best of both worlds. Why make it so difficult? A private, closed blockchain cannot become a standard. A private blockchain is still in the hands of the companies that created it. And for our purpose, with the thousands of suppliers all over the world – this needs to become an industry standard for it to work. That’s why an open public system is so important.
Is your technology patented?
It is patented, and we are working on establishing a foundation that will make the standard, and ultimately we will donate a large part of the patents to this foundation.