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Big Blue has announced that it will partner with Veridium Labs to issue a cryptocurrency, called “Verde” on the Stellar Lumens blockchain. Veridium is an environmental, fintech startup and the coins will tokenize carbon credits. The goal will be to enable companies that pollute or otherwise release gases and chemicals into the environment, to offset their carbon footprint by reforesting a 250-square mile section of rainforest on the island of Borneo in Indonesia.

Private carbon credits that exist outside of governmental frameworks are not a new concept. However, traditional methods of recordkeeping and determining value have had poor results. The developers of the Verde token seek to solve these problems, using a fungible asset that may be traded on the public Stellar network, and possibly on the various cryptocurrency exchanges.

Todd Lemons, CEO and co-founder of Veridium stated, “For years, we’ve been trying to mitigate environmental impacts at every point in the value chain, however previous solutions still presented significant complexities and costs.” According to Lemons, Verde is designed to help companies to mitigate their environmental impact, and to hedge their potential impact on the environment in the future.

Such an initiative may well appeal to companies that have both environmentally conscious goals, and goals in innovation. A carbon credit would enable such a company to maintain a zero-carbon footprint without stifling innovation that may produce pollution in the short or long term.

With IBM’s involvement in the project, it can be assumed that it is much more than a proof-of-concept. IBM partnered with Stellar in October 2017 to develop cross-border payments solutions. In this way, the company already has infrastructure on the platform, and may utilize it to accelerate adoption of Verde’s tokenized carbon credits on a global scale.

The challenge with this model is of course, enforcement. Reforestation requires work, separate and distinct from people’s activities with the digital tokens. Veridium Labs will no doubt need to provide proof to their investors that the appropriate environmental activities are taking place in Indonesia, at a volume that matches people’s expectations. This may be in the form of online video and other content, which if shared, may lead to the tokenization of other environmentally-conscious activities.

Veridium Labs considers itself to be a “natural capital marketplace.” The ecosystem is built on the Stellar blockchain, rather than the more popular, yet slower and more expensive, Ethereum blockchain. Besides IBM, other collaborators include EcoSmart Labs, Brian Kelly Capital Management, IDEAcarbon, Everland and CBL Markets. The company claims to have created a net-positive environmental social impact offset token, using proprietary blockchain protocols.

Blockchain technology has been adopted at an incredible speed. The idea that something like carbon accounting may be decentralized presents a free-market solution to a problem that is important to people on a global scale. Rather than relying on the force and inefficiency of government beaurocracies to solve this problem, IBM and Veridium Labs have taken the initiative to provide an alternative that others pay choose to participate in voluntarily.