Carbon Credits…but on the Blockchain

The Theory vs. The Reality

Yesterday it was reported that WeWork’s Adam Neumann has a new startup, this time in crypto. Flowcarbon describes itself as

“the leading climate tech company built on sophisticated blockchain technology, dedicated to creating climate change solutions through carbon reduction.

Each Goddess Nature Token (GNT) uses a two-way bridge, backed 1:1 with unretired nature-based carbon credits that maintain their off-chain

(I’ll refrain from commenting on the choice of name for the token).

Going beyond the buzzword heavy description, it appears that what Flowcarbon is doing is not exactly innovative. Brazilian company Moss was founded in 2020, basically doing the same, with a different token. You can buy their token on Coinbase for example.

My take on “carbon credits on the blockchain”: a good idea in theory, not so great in practice, for now.

Let me say first I only know this market superficially, I’m in no way a specialist.

The biggest potential buyers of carbon credits are institutions. Large tech companies like Microsoft and Amazon for example. Putting them “on the blockchain”, while conceptually makes sense (because of the verifiability and rastreability) makes it actually more difficult to sell to these companies.

Retail crypto investor wants crypto returns. Aside from unsustainable ponzinomics, the returns from carbon credits are pretty boring compared to crypto.

So, for now, carbon credits on the blockchain remains a solution too complex for institutions and not attractive enough for individuals crypto investors.

Either there’s a way to create non-speculative retail demand, or the market will underperform other crypto projects.

See you tomorrow.

“Primavera” by Botticelli