BitCoin was an experiment to build a digital currency outside of the mainstream banking system. The goal was to minimise the transaction fee of buying and selling online, whilst also providing a truly open and democractic payments service that can be used anywhere in the world. Basically, to take money and control away from the banks and governments and give to it to the people. A noble democratic vision. However, things didn’t quite turn out this way. To understand why we need to understand how Bitcoin actually works.
Basically, the bitcoin founders built an application that processes and displays digital transactions on the internet in way that makes it impossible to erase a transaction once it has been processed. This application is then hosted across a network of computers distributed across the world. Anyone with access to a computer, electricity supply and an internet connection could participate in hosting this application, renting their computer’s processing power to the network.
The founders of Bitcoin were extremely concerned that they would be shut down or taken over by a government. Therefore they built specific protocols that incentivised their users to become ‘miners’, which basically means renting your computer’s processing power to the network. They designed a mechanism where the more processing power a miner contributed to the network the greater their share of the overall commission would become. They also established a democratic voting system where the community of miners would be able to influence changes to the protocol. Basically, the miners became the banks and eventually as Bitcoin started to grow in value the miners became greedy.
The entire Bitcoin operation could actually be run efficiently in one central location with a few powerful computers and minimal energy usage. However, due to the protocol miners are incentives to continue to add more unnecessary computational power to the network in order to get a larger share of the commission and also the vote. Soon mining became a business operation with a few miners creating a monopoly and then using their influence to change the protocol in their favour.
What started out with good intentions ended up being no better than our current financial and political system. What Bitcoin managed to do it prove that hundreds of thousands of people were willing to transfer their real money into a digital currency. What they failed to do is to build a community around their vision and purpose. Greed and ego got in the way. Carboncoin solves this problem by removing the profit motive from the miners and replacing it with an environment and social purpose. 90% of all profits made by Carboncoin will be donated to an environmental charity dedicated to restoring our natural ecosystems and contributing towards the fight against climate change.
Without the profit motive, Carboncoin will be able to run much more efficiently than Bitcoin, using literally a millionth of the energy supply and computational power.Ultimately, Bitcoin was an experiment. Like all experiments some things work out and some things don’t. Carboncoin not only builds on the technical successes of Bitcoin, but it also addresses some of the longer term cultural and political challenges too. With carboncoin we can use the power of alternative currencies to make a healthier and safer place.