The Cambridge Centre for Carbon Credits chose to build its reforestation project on a blockchain that "is global, is decentralized, and is independently verifiable."
The University of Cambridge is building a decentralized carbon credit marketplace on the Tezos blockchain.
The newly launched Cambridge Centre for Carbon Credits, or 4C, is to "establish a global framework to issue trusted carbon credits that can finance independently, verifiable and accountable nature-based solutions" that will support projects like rainforest conservation and reforestation, said Anil Madhavapeddy, an associate professor of computer science at Cambridge, at the project's launch.
"Trusted" is the key to 4C's success, Madhavapeddy said, as the project hopes to funnel billions of dollars into the environmental fight by attracting corporate carbon offset buyers. That means the marketplace must be somewhere that "purchasers of carbon credits can confidently and directly fund trusted nature-based projects," he added.
One part of building that trust is using technology like satellite imagery and drones to prove that the credits are actually protecting and regrowing forest land on a large scale — from space rather than shoe-leather surveys, Madhavapeddy said.
Another part of building that trust is ensuring that the marketplace "is global, it's decentralized, and it's independently verifiable in such a way that the carbon offsets issued cannot be spent twice, and every project can only issue a fixed set of credits based on the satellite observations," he said.
Which is why the project chose to build on a blockchain, Madhavapeddy said, adding that smart contracts could use oracles to provide proof that landowners have met the conservation and reforestation goals needed for a payout.
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Why Tezos?
For one thing, Tezos does not use the Bitcoin-style Proof-of-Work consensus mechanism that has made mining BTC more power-hungry than the Netherlands — according to the Cambridge Bitcoin Electricity Consumption Index.
And, Madhavapeddy said, Tezos' XTZ cryptocurrency is widely available on exchanges around the world. This is important, he said, because it's "remarkably difficult" to cheaply convert donated funds into the local currencies small landowners need.
Then there's longevity. Madhavapeddy said:
"We have to make sure that any schemes we fund can be supported over the course of decades and Tezos is unique among blockchains in that it supports a built-in self-amending mechanism via distributed governance ... This means that the technology we choose will not be left behind, but it will continue to evolve and grow with the needs of the transactions happening with the network, which as I mentioned before, I hope will dramatically increase as the size of the voluntary carbon officer market increases over the next decade."
