Nearing the end of the #CryptoClimate series, getting through the last few but certainly not least of the Q&A features, Ransu Salovaara, CEO of Likvidi tells us the benefits of blockchain, like scalability trump the downsides, like emissions. Ransu’s startup offers tokenised carbon credits to corporates, small companies and individual investors.

Subscribe for free and head to #CryptoClimate for a full roundup, of what’s happened and a preview of what’s next in the final Q&A with Cofndrs that applies blockchain in sustainable finance beyond carbon markets.

Ransu Salovaara, CEO of Likvidi

What ‘watch outs’ would you give non-specialist investors for potentially low-impact startups, and how to spot the best of the rest?

Every VC and angel investor should learn about sustainability and prioritise that as it’s coming to the forefront of every sector, including blockchain. Whatever you are investing in or advising on, companies also have to keep sustainability in mind when decision making. In many sectors, for LPs, clients and consumers green credentials are already a priority consideration that are in high demand and one of the first questions asked.

With blockchains, the key is that the chain is proof-of-stake instead of proof-of-work like Bitcoin and Ethereum are. There are now probably five to ten good proof-of-stake blockchains that can pretty easily show efficient energy consumption and additional carbon offsetting strategies. For example, Avalanche and Near are already doing good stuff and there are the up-and-comings like Devvio building ESG-specific chains.

“The key is that the chain is proof-of-stake instead of proof-of-work… There are now probably five to ten good proof-of-stake blockchains that can pretty easily show efficient energy consumption and additional carbon offsetting strategies.”

What are the most promising sustainable, social and environmental uses for blockchain technologies?

Bitcoin was the first to go mainstream and is still revolutionising finance. Despite ongoing debate about its carbon footprint, the biggest cryptocurrency is still the best solution for democratising global finance. Bitcoin gives everyone access to banking services, for example, including lending and remittances.

Despite the fact a decentralised, ‘DeFi’ global financial system still has its challenges and will take many years yet to reach its full potential, the next big thing is sustainable finance and the voluntary carbon market in particular.  

Emissions and electricity consumption are currently at the centre of the debate but this has been solved. New, more efficient blockchains are coming to market that take one-millionth of the electricity that Bitcoin requires and then use carbon credits and offsets to cover the rest.

“Despite the fact DeFi… still has its challenges and will take many years yet to reach its full potential, the next big thing is sustainable finance and the voluntary carbon market in particular.”
Ransu Salovaara, CEO of Likvidi. Image credit: Likvidi

How is a carbon marketplace built on blockchain any better than what’s been around since the 90s?

Blockchain will make the voluntary carbon market easier to access, more transparent and more liquid as we turn carbon credits into blockchain tokens that are available for individuals and companies around the world.

By tokenising carbon credits, problems like double counting and a lack of transparency in offsets can be avoided. Data on blockchain improves the transparency of carbon credits with metadata that contains critical information for buyers like provenance.

Blockchain-based exchanges also enhance access. Blockchain creates a more equitable marketplace for carbon credit buyers and sellers that has been until now difficult or impossible for individual investors and small companies to access offsets.  

“Blockchain will make the voluntary carbon market easier to access, more transparent and more liquid as we turn carbon credits into blockchain tokens that are available for individuals and companies around the world.”

With all the criticism of Bitcoin’s emissions, how do carbon credit startups compare to the conventional markets?

Networks of computers usually consume more energy than just one centralised computer, but only marginally more, that is a cost of decentralisation. But the benefits, transparency, decentralisation and others usually outweigh the centralised solution as better for the world and society.

A better way to gauge overall benefit is to consider what blockchain does best, which is to open markets up to the global community at a rapid pace. We have to move fast now to limit climate change and the benefit that scalability of blockchains brings far outweighs concerns over emissions, especially now there are more efficient low-impact blockchains.

Blockchain provides rapid assistance, driving green finance into sustainable projects on a global scale.

“We have to move fast now to limit climate change and the benefit that scalability of blockchains brings far outweighs concerns over emissions, especially now there are more efficient low-impact blockchains.”

Subscribe for free to leave a comment below, follow Ransu on LinkedIn, Likvidi on Twitter and visit their website for more.

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