Blockchain-based Carbon Credit

Carbon credits are certificates that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gasses. However, since the birth of carbon offset markets, fraud has been a severe problem, such as double spending of unretired carbon credits. When carbon credits are combined with the blockchain, tracking, measuring, and storing the output of carbon emissions is more efficient and transparent, while also allowing for autonomously trade or block quota transactions with the third party.

This emission reduction protocol provides a positive economic and social reward for reductions in greenhouse gas emissions. It creates an economic benefit, capital, and demand for emissions reduction opportunities and, ultimately, incentivizes change in both individual and group behavior. By taking advantage of the integrity and accountability that blockchain provides, the carbon trading market would make their carbon data emissions traceable and reliable. Low-carbon projects that reduce greenhouse gasses in the atmosphere, for instance, would receive carbon credits to be used as revenue for reducing carbon emissions or for sequestering carbon. Companies that produce greenhouse gasses would buy carbon credits to offset their emissions.

Carbon credits can be implemented as a currency or as tokens stored on the blockchain that contain unique information about each credit’s origin, authenticity, and additional data, including being a benefit or bonus from reforestation or renewable energy. Blockchain technology could also lower entry barriers while allowing carbon credits to be broken down into per-product or per-transaction quantities. As a result, consumers could be given the opportunity to offset their carbon impact for individual purchases in real-time.

Future Perspectives

By creating a financial pathway for incentivizing emissions reductions, proactive investment into climate projects, technologies, and policies would be stimulated. New peer-to-peer and business-to-consumer marketplaces would emerge, making it easier for everyone to participate in these new carbon markets.

The blockchain protocol could open up existing carbon markets and create a broader range of players, including smaller businesses and individuals. The public and transparent nature of the information could encourage international collaboration and strengthen trust in the system.

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