Cryptocurrencies are no different from traditional currencies (or indeed any other commodity) in that their value is governed by supply and demand. If supply is unlimited then unless demand is also unlimited the underlying value would be very low. So, one of the mechanisms by which cryptocurrencies can achieve a positive value is to restrict supply. Bitcoin and others require ‘miners’ to solve an increasingly complex mathematical problem. Others, such as Chia harvest coins following ‘Proof of Work’.
Solving a complex mathematical problem to restrict supply will soon be unworkable, probably within the next few years. This will happen as soon as a stable quantum computer able to support, say, 512 qubits arrives. All of the outstanding Bitcoin will be mined in a few days and the price will crash. Ethereum does not have a similar restriction on the number of Coins that can be issued but still, supply will go through the roof. So, the Ethereum price will drop to approaching zero.
The proof of work concept is economically more durable in that it requires a given number of steps to generate a coin. A faster processor and more memory will increase the generation rate but the ‘work’ still has to be performed thus restricting supply. The issue I have with the proof of work model as it currently exists, is that the ‘work’ does nothing useful in the real world. It’s only purpose is to restrict supply.
Perhaps the greatest challenge of this century is to address greenhouse gas emissions. Reducing the production of carbon or methane by, say, one thousand tons could certainly be considered ‘work’. It has the additional benefit of helping with a real-world problem. It is the ‘proof’ element that requires blockchain technology.
From an economics perspective such a currency checks all of the boxes. Demand for proof of reducing greenhouse gasses is extremely high. The actual process requires time and effort so the ‘supply’ side of the equation is restricted. The market is effectively unlimited (lots of emissions to reduce) and anyone can get involved so the number of potential users is also unlimited.
It is also quite reasonable from an economics perspective for there to be a value in a carbon reduction of, say, 1000 tons. That 1000 tons (or multiples thereof) could be reduced quickly but involve lots of work; think decommissioning a coal power plant and replacing the output with solar panels or over time- a residence putting up rooftop solar, for example.
If each coin represented 1000 tons of verified reduced emissions the owner of that coin would absolutely be able to claim responsibility for that reduction. Given the nature and increasing urgency of the climate crisis the value of that verified 1000 tons of reduction is likely to increase, especially in the commercial sector. All members of the Global Fortune 10,000 are desperate to show their ‘green’ credentials.
The crucial problem to solve is the ‘verified’ part of the equation. This is solved in two steps. The first is an application that is capable of supporting a large number of concurrent users each one of which is generating a large number of transactions and which can be modified to incorporate blockchain technology. The application must be capable of supporting any given recycling scenario. This we already have in RecycleSoft.
We are currently developing a Wallet, a world class website, a trading platform and an API all for launch on Jan 1st 2024.
Imagine the following real world scenario, recycling aluminum cans. The beginning of the chain is a consumer of a can which they throw in the trash. It is unlikely that this user would log into their RecycleCoin app to record this but there is no reason they could not. The trash eventually ends up at a municipal recycling center where any cans are separated and eventually baled. This is the likely point at which the blockchain would begin. A bale of crushed aluminum cans is entered into a downloaded app RecycleSoft. Prior to this, the user had to register with Recyclesoft. As part of the registration process the user would tell Recyclesoft exactly what the outputs from that facility are, so baled aluminum cans and where they go from there. This is a one-time setup. Assume we crush around 10 bales per day and we know each bale weighs roughly 200 lbs. In the app we click the image of an aluminum can and enter 2000 lbs. The app ‘knows’ where it is (geolocate) so RecycleSoft now has the data that 2000 Lbs of aluminum exists at such and such facility.
The municipality wants to be credited with the carbon value of that 2000 lbs. So, they tell their downstream processor of the cans to download the app. If the downstream also wants the carbon credit they need to register, if they don’t, they just need the app. Eventually the bales are either shipped out or picked up. The municipality has already told RecycleSoft where cans go. Through innovative use of GPS, RecycleSoft can deduce that the cans were shipped out or they can be ‘shipped’ via the app. The app generates a timestamped, geolocated and blockchain verified Bill-of-lading.
Consider what has happened here. We know the carbon offset of a pound of aluminum cans. For the record an average beer can takes 0.131 KG C02. So, from shipping out 2000 lbs of cans we can calculate the carbon equivalence that left their premises and verifiably so. The municipality just farmed 10,480 KG or around 5% of a coin if a coin is represented as being 1000 metric tons.
Should the downstream elect to register, they would likely be carbon neutral as the weight of the cans they get in will equal that going out but they would get a credit for processing. Each commodity has a ‘difficulty’ to process at any given stage. This translates into how much ‘work’ it takes. So, although they are not rewarded for the aluminum itself, they are rewarded for processing it. Unlike Chia, where the ‘work’ doesn’t actually do anything productive, this is real world helpful and verifiable.
This project could, if properly promoted, provide a convertible currency that could reward recycling activity globally and at all levels. At the same time, those Global Fortune 10,000 would finally have a real time reporting facility for all of their recycling activities and to have those activities blockchain verified.
RecycleCoin has the potential to be the world’s first independent ‘Carbon Exchange’ verified through blockchain technology. The RecycleCoin value would be established through the usual forces of supply and demand.
There is increasing pressure on companies to show a reduction in their carbon footprint. One way of doing this is to actually reduce the quantity of greenhouse gasses they generate. The RecycleSoft suite provides a blockchain verified platform to quantify and prove these metrics whilst generating RecycleCoin in the process. Another option would be for them to simply purchase RecycleCoin on the open market.