A Beginner's Guide To Crypto Carbon Credits: Understanding Cap & Trade, Mastering VCMs, And Realizing How Tokens Can Help Solve The Climate Crisis

Crypto has a problem: Too many think it's horrible for the environment.

New York recently passed a Bitcoin mining bill & more crypto-climate regulations are on the way. But what if Web3 could be used to fight climate change?

Carbon Credits & The "Cap & Trade" System.

To understand how Web3 can help solve the climate crisis, let's start by understanding carbon credits & the "Cap & Trade" system. Carbon credits are a permit that represent 1 ton of carbon emissions removed from the atmosphere.

Once a credit is created, its bought & sold on a marketplace, which is has 3 participants:

  1. Buyers: Companies or Individuals wishing to reduce their carbon footprint
  2. Project Developers: The creators of carbon reducing projects (think tree planting)
  3. Traders & Brokers: Those buying & selling carbon credits for potential profit.

There are 2 types of carbon credit markets:

  1. Compliant - Companies forced to participate due to government regulations (think Paris Agreement)
  2. Voluntary - Companies that want to be "zero emission" not because they have to, but because they believe it's good for business.

Interestingly, Voluntary Credit Marketplaces (VCMs) are growing rapidly. Turns out consumers want to buy products from green companies. To be a green company, you may need to purchase carbon credits. The VCM market is expected grow from $1B today to $100B by 2030. So, what does this have to do with Web3 & Crypto?

Voluntary Credit Market (VCM) Shortfalls

VCMs have 3 main issues:

  1. Illiquidity - many markets trade "over the counter", which means middle men, fees, etc
  2. Top-Down - small investors are often crowded-out by the large institutions
  3. Opaque - No one really knows what they are buying. These issues are stunting growth.

These shortfalls are creating friction and stunting the growth of the VCM market. But what if there was a better way? What if we could use the power of the blockchain to reduce friction, grow the VCM market and make the world a better place?

Flowcarbon's Goddess Nature Token (GNT)

Flowcarbon is a new company trying to solve an old problem, namely climate change & VCM inefficiencies. Their GNT token represents a bundle of carbon credits that can be bought and sold, via the blockchain.

GNT has 3 advantages:

  1. Democratization - anyone can buy and trade GNT, leading to a larger market
  2. Liquidity - GNT tokens are easily bought & sold, leading to price discovery
  3. Transparent - smart contracts are on-chain, anyone can inspect what they are buying, creating more trust in the system.

Crypto Can Help Solve The Climate Crisis

  • To fight climate change, we need to fund environmentally friendly projects.
  • If we want to fund projects more quickly & efficiently, we need VCMs to grow & prosper
  • If we want VCMs to grow and prosper, we should use the power of Web3 to make better markets.

Flowcarbon's Goddess Nature Token is the answer to our climate change & VCM questions.

Subscribe to Greg Younger
Receive the latest updates directly to your inbox.
Mint this entry as an NFT to add it to your collection.
This entry has been permanently stored onchain and signed by its creator.