Tokenizing carbon credits involves converting traditional carbon offset certificates into digital tokens on a blockchain. This process allows for the representation of carbon credits as unique digital assets, facilitating easier tracking, trading, and verification. By integrating smart contracts—self-executing agreements with the terms directly encoded—transactions can be automated, reducing reliance on intermediaries and minimizing transaction costs. This approach addresses common challenges in the carbon credit market, such as lack of transparency, double counting, and fraud, by providing a decentralized and immutable ledger for all transactions. The paper “A Blockchain-based Carbon Credit Ecosystem” outlines a comprehensive framework for digitizing carbon credits using blockchain technology. It details mechanisms for securely creating, distributing, and trading tokenized carbon credits, emphasizing the role of smart contracts in automating and ensuring the integrity of these processes. The study highlights how this ecosystem can bring transparency, accessibility, and standardization to carbon markets, effectively mitigating issues like over-crediting and double-spending.
