*Perspective Chapter: Cryptocurrencies Effectiveness for Nature DOI: http://dx.doi.org/10.5772/intechopen.106493*


**Table 1.** *Blockchains and tokens assessed.*

### *Perspective Chapter: Cryptocurrencies Effectiveness for Nature DOI: http://dx.doi.org/10.5772/intechopen.106493*

projects, especially in tropical forests, are generally the result of indigenous and/or local populations efforts to protect the forest, thus, being the human presence, part of the solution, and included in the conservation efforts with a combination of social, environmental, and economic results for a responsible project for nature. Blockchains and coins related to nature tend to overview all social roles and indicators related to nature conservation. Their essential offer tends to be resumed to viable tokenomics.

The related distant relationship between cryptos and their nature objects is also well observed in games and NFTs3 for animals, images and other nature related objects. The gaming market has grown exponentially in the second decade of the twenty-first century. Estimates are that already 3 billion people are addicted to games, moving an industry of above U\$170 billion in 2020 to reach an expected value of U\$ 315 billion by 2026, doubling in size. The industry is no longer restricted to a niche, since it has become a global sector with economic dynamics that go way beyond the game's limits [9]. Some digital currencies and tokens include games as a mean to attract and retain investors to buy and stake the coin, with additional rewards coming from games, many of them related to nature objects. In this case, it is clearly observable the profile of gamers playing to win rewards with nature and fauna icons, however, with a distant relationship and effective support to effective nature objects. The "play-to-earn" mode uses nature and animals as a market attractiveness to engage players in the game, but the flows of funds to effective nature conservation projects resulting from games are to be further observed.

### **3.1 Blockchain and the commodification of nature**

As observed, the coins and blockchain solutions for nature tends to be over appreciated and the reality of their nature related purpose, only measured by figures—stored in a blockchain—not really indicative of the complexity of a forest or natural resource situation, combining social and environmental issues. This issue is supported by a study entitled "Smart, Commodified and Encoded: Blockchain Technology for Environmental Sustainability and Nature Conservation" [10], providing complementary assessments to this issue.

This study framed a group of 27 blockchain technologies for conservation and environmental policy, part of them, here also analyzed (**Table 1**). The study reveals that a an outstanding characteristic of blockchain initiatives is "that their technical savvy, financial wizardry, and ingenious entrepreneurship are not always matched by a sophisticated understanding of the issues they support. This lack of understanding produces framings which then require blockchain-based interventions". They argue that the studied coins and blockchains represent more of "blockchain solution" than an effective solution for their related objects. Another perspective to frame this situation would be placing an intermediary activity, such as administration and finance above the effective purpose of a given project. For instance, the forest conservation activities and all issues related to nature and people involved. Blockchains for nature are likely to provide finance solutions to the forest without effective forest management and people attention. Such situatuon is also related to the issue of the "commodification of nature", which introduce a simplistic vision of nature related projects placing important technical interdependencies within the environment and the relational character of environmental goods, and it "twists the perception of the environment from systems preservation to items use or transformation" [11].

<sup>3</sup> NFTs are tokens that may be used to indicate ownership of one-of-a-kind objects.

### **3.2 Carbon credits and cryptos**

Worldwide climate emergency actions to meet the 1.5°C target for global warming, according to the Paris Agreement and following UNO conferences of the parties, imposes severe reductions on fossil based energies and carbon sequestration, and future release avoidances. Carbon markets fulfill a relevant part of these actions towards a global greenhouse gases (GHG) reduction. Carbon credits, purchased voluntarily, enable organizations to compensate or neutralize not yet eliminated emissions by financing the avoidance/reduction of emissions from other sources, or the removal of greenhouse gases from the atmosphere and thus meaningfully contribute to the transition to a global balance of low carbon emissions. The projects generating these carbon credits can be broadly grouped into two categories: (1) GHG avoidance/reduction projects, such as renewable energy or avoided deforestation; and (2) GHG removal/sequestration projects, such as reforestation or technology-based removal [12]. The international carbon market facilitates the exchange of carbon credits. Prices have risen from nearly U\$11 per ton in 2018 to U\$63, as of May, 2022, or U\$26, for the California market. The World Bank has estimated that the price needs to be closer to U\$106 per ton by 2030, in order to meet the 1.5°C target. The value of traded global markets for carbon dioxide (CO2) permits grew by 164% to a record U\$ 805 billion in 2021. The rise has been followed by voluntary carbon markets, where companies, for instance, trade carbon credits generated from projects to reduce emissions, presently exceeded U\$1 billion. These are voluntary, not necessarily compliance-based, markets for carbon credits, expected to reach U\$50 billion in volume, by 2030 [13].

Crytocurrencies and Blockchain transaction platforms have rapidly taken the trading and transactions registry opportunities of voluntary carbon markets. This study assessed a sample of coins and blockchains linked to carbon credits, generated by standing forests, tree planting, fossil fuel substitution and many others. Generally, the issue of carbon credits assurance retired in the voluntary market is issued by independent standards (e.g., VCS, Gold Standard, ACR, CAR). If a Coin project linked to a forest conservation concern does not have such assurance, the carbon credit may not be trustable, becoming liable to double accounting effects, where a same object may be "credited" two times from different concerns.

The ideal logic between a cryptocurrency tied to carbon credits should aim at measuring the carbon balance of its object. Take a forest carbon project, for instance. It is observable the concerns of some forest tokens projects informing the issuance of carbon credits from qualfied environmental projects, for instance, in the Amazon Forest (projects that emit, certify and sell credits) and that avoid or capture CO2 emissions to the atmosphere. These credits are traded in a digital platform using a blockchain platform. The observed concept indicates a measured and trustable nature object related to the coin. Nonetheless, a more accurate observation indicates that a forest must be measured by its transitioning balance towards being a carbon sink or a carbon source. A certain financial value can be attributed to the fact that the forest is a sink or a source. For instance, the forest can be a sink with a carbon capture capacity of one million tons, or a source with a capacity of negative one million tons. An effective coin associated to forest carbon storage must be supported by physical observations that indicate that the forest is moving towards being a sink or a source. For instance, negative observations such as traces of fire, tree's cutting and other disturbances indicate that the forest may me decaying, and positive observations such as biomass and forest preservation actions, indicate the forest will maintain its

*Perspective Chapter: Cryptocurrencies Effectiveness for Nature DOI: http://dx.doi.org/10.5772/intechopen.106493*

carbon sequestration patterns. Such information is key for a trustable forest carbon project. Overall, most coin based projects linked to forest coverage have not clearly outlined these concerns. They only show a piece of land, registered and bounded by GPS positioning, thus ensuring its existence. That is a fundamental issue to assure the existence and particular allocation of its carbon sink function, however, it does not secure the sink/source flow, thus, its real environmental service and carbon account.

Finally, the issue of double accounting of carbon credits, especially in the voluntary markets, poses a relevant question to all blockchains and coins related to nature projects. The absence of central databases and governance for all voluntary carbon credits does not assure a buyer using digital currencies or not, that his/her credit has not been traded elsewhere. Solutions come with the development of a shared digital data protocol across standards with an open source digital infrastructure to create an operating system for all planetary carbon trades [14]. This data protocol should be tailored to specific project types by defining necessary project data fields and procedures to protect the integrity of the verification process. In this perspective, shared digital data protocols should explore the use of satellite imaging, digital sensors, combined with blockchain distributed-ledger technologies (DLT) to further improve speed, accuracy, and integrity. Implementation of the digital data protocol could be a first step towards broader end-to-end life-cycle and value-chain tracking of all carbon credit data [14].
