Blockchain is a distributed ledger technology that records transactions across multiple computers in a way that ensures security, transparency, and immutability. In the context of carbon credits, blockchain's key strengths lie in its ability to provide an auditable and transparent record of every transaction. Experts like Gregory Keough mention that by utilizing smart contracts and tokenized carbon credits, blockchain allows for a more efficient and trustworthy carbon offset system.
Each carbon credit, representing one metric ton of CO2 emissions removed from the atmosphere, can be tracked in real time on the blockchain. This provides participants in the carbon credit market with an accurate and immutable record of the credit's origin, ownership, and subsequent transfers. The traceability offered by blockchain minimizes the risk of double-counting or fraudulent claims, which have historically been concerns in the carbon credit market.
