Blockchain 101
Last updated
Last updated
Simply put, a blockchain is a distributed database. Instead of all the information being stored in a centralised format (e.g. on a private company's computer servers), we can store the data in a public, immutable way with blockchain.
A good analogy of how blockchain works is mini-golf. Let's imagine there are five players and at the end of each hole, each person writes not only their score on the scorecard but also on all the other players.
Then the players exchange their scorecards so that each player can check what has been recorded on the other player's cards. Once they agree that what is written is correct, they sign their name next to each score, until everyone has checked and signed each scorecard to verify them.
Now let's imagine that two players conspire to change the scores on their cards to reflect better performance in their game than reality.
At the end of the day, these scores won't match the other three players nor have their signatures against them, meaning there won't be a consensus on their scores. The majority of the players have the signed scores and therefore the two other players' scores will be rejected.
This is how blockchains work, by consensus between everyone who holds the data or ledger. Ensuring that no one party can manipulate it for their benefit. You'll often hear that information is 'on-chain', this is a reference to the data being held on a blockchain.
Blockchains are most useful when you need to keep a public record of something. E.g. Bitcoin pioneered blockchain technology because it makes a lot of sense to store currency transactions in a public, verifiable format.
A similar situation exists with the current carbon markets, with much of the information stuck in individual 'data silos' or hidden behind paywalls. Recently, companies, such as Toucan Protocol and more recently C3 have started to make efforts to migrate the existing carbon markets onto the blockchain in order to improve access, traceability and efficiency.
On-chain carbon has been around for a while, however, it is fair to say that no other project has had the speed and size of the impact that Klima DAO has.
The term 'on-chain' carbon simply refers to carbon credits which have been brought on to blockchain, rather than residing in centralised, data-siloed storage.
