A Carbon-backed national digital currency (CBNDC)?

-climate change/disruption/heating/chaos
Reports and their observations and predictions are generally getting gloomier all the time -from Arctic Summer sea ice extent shrinking to Greenland/Alaska/Antarctica/Himalayas etc melting of icebergs, glaciers, snow caps; ocean/sea level rise, deforestation, biodiversity loss (the world's '6th great extinction event'), superstorms, abrupt weather changes, extreme flood events, mudslides, clathrates already melting nearby the Arctic tundra etc etc
A 6-8 degree increase or more by the end of the century if business as usual doesn't change. Taking into account the heat latency effect in the climate system, even a 2 degree warming event compared to pre-industrial global atmospheric temperatures would be catastrophic for the South Pacific and many other places, not to mention an acceleration of all of the events mentioned above.

-Paris accords
Apply to most countries (even the US might still get on board) and legally binding.
As mentioned before, 2 degrees average global temperature increase from pre-industrial levels is 'too high'.
Needs new Carbon-based sustainable industries to accelerate progress towards meeting Paris accords goals and obligations.

-Gold standard
Worked for a while but involved ecological destruction such as destroying native forests, displacing entire villages, high water consumption, arsenic leaching into groundwater and rivers, often corrupt business relationships. Quality control was it's advantage - you could test the purity, weigh it, transport it, trade it but it needed to be secured which was probably problematic for many countries - Carbon doesn't face that problem.

-fiat currency
Now relies on trust with Federal/Government reserves at a time when trust in quasi-Government and Government institutions are falling.
Becoming redundant - checks and balances for inflation no longer as effective as it used to be...can be abused by printing more money which has happened in many countries such as Bolivia (they used wheelbarrows to cart the money to do their groceries) during it's financial and political collapse and more recently in Venezuela, where more trust is now placed in cryptocurrency than in national fiat currency. There's been a huge uptake of individuals mining cryptocurrencies since their inflation rate is currently 1600% and rising and their national currency is good for starting fires.
Why is it banks print more money when growth slows down and inflates?? Is it to increase cash flow?
In this scenario the value of money depreciates and ultimately goods and services become even more expensive. Between controlling currency value and changing interest rates, the growth rate is at the mercy of global influences/globalisation. What if degrowth, which is the only sustainable option, could be accelerated without changing amounts of currency in circulation and manipulating interest rates?
In an ethical degrowth world, job growth and sustainability can occur simultaneously aka green collar jobs. I call this transition 'Contraction and Emergence' i.e. 'Contraction' of the fossil fuel based economies and an 'emergence' of Carbon-backed technologies and economies. 

 

In a CBNDC, the amount of currency in 'circulation' would be fixed, in line with other cryptocurrencies like Bitcoin. The main lever left then to control inflation would be interest rates - which might also become increasingly insignificant, though inter-related, as we move into a renter economy. As the value of Carbon-backed industry increases, so will the value of the CBNDC as happened with the Gold standard, though Gold was probably more prone to fluctuate with international prices (unless there became a global market for CBNDC's). Using the 'Precautionary Principle', I would suggest doing a trial of the CBNDC first, decoupled from the national fiat currency. Down the track, if a trial was successful and Carbon-backed industry 'emerged' (with digging up coal as an exclusion), the CBNDC could be traded with other CBNDC's and possibly other cryptocurrencies like fiat currency can be traded with other fiat currencies - though Australian citizens might want to hang on to their CBNDC for a while!  Furthermore, non-Australian citizens would be likely to buy our CBNDC if we go first, which would add value to both the currency and the Australian economy including the transition to Carbon-backed technologies and industries.


*Enter cryptocurrency*

'Proof of work' (POW) eg. Bitcoin
Increasingly massive computer energy usage solving maths problems for encrypting the decentralised ledger and therefore increasingly high Carbon footprint.
By 2030 blockchain mining will consume the equivalent of all the power consumed in Denmark (or so they say). High Carbon footprint, has initiated a technology arms race in cryptocurrency mining. This will result in the undermining of the democratic and decentralised peer to peer principles upon which it is based eg. first generation of quantum computers will take over using artificial intelligence (AI) in the form of neural processing units (NPUs) in large server farms then eventually personal quantum miners with AI and NPUs will begin to catch up on the game. This all assumes engineers will find a way for quantum computers to efficiently 'hash' the blockchain - which they probably will.

'Proof of Stake' (POS)
eg. IOTA and next gen of Ethereum - requires much less computing power and Carbon footprint. Security of the decentralised ledger will increase as more people get on the network. In other words, as more and more Australians use the CBDNC, the security of the currency would be increased. Though not ideal, moderators can be used (provided by the Federal Government), such as the IOTA example, until there are enough users/consumers to secure the network.

-Carbon-backed national digital currency
National digital currency would still have some centralised control by relying on IT security experts to partly secure it though becoming increasingly redundant but what if secured by a decentralised commodity that will create new industry and new jobs aka Carbon-sequestration that will meet or exceed Paris accords obligations? Throw in POS and we may have hit the best of all currency models - minimal Federal Government regulation, minimal Carbon footprint, empowerment of consumers/users, quantum-proofing of network attacks.
Problem will be standardising Carbon technology eg. biochar production units/kilns/ovens/stoves etc., reforestation, Carbon-negative construction etc etc and its resultant sequestration amounts but much work has already been done with Carbon accounting instruments (eg. http://americancarbonregistry.org/) when the Carbon tax was being considered and prior to that with Carbon accounting work done on Carbon credits, both in Australia and around the world. Taxes, especially new ones, are unpopular anywhere - not just Australia.

 

Carbon rationing would be unpalatable to the (Australian) public though can be scientifically modelled with increasing accuracy using supercomputers that are rapidly getting faster and more powerful and are now moving into the quantum domain  i.e. Planetary modelling can make predictions about how much Carbon is 'safe' from one year to the next in the climate system - this would translate into rations for each country and allocated on a per capita basis but would struggle taking into account historical responsibility of Carbon pollution. 'Cap and trade' is gamed and hasn't drastically cut down Carbon pollution and probably never will.  Carbon credits don't go far enough and can be traded on the stockmarket and also gamed. Could the CBNDC be gamed? Maybe make more acacia/bamboo/hemp biochar? Graphene storage for the renewable energy systems already in place and coming online in the future? Implement more holistic models such as 'Carbon farming' (well described by Eric Toensmeier)? Could all of this be the 'Tragedy of the Commons' in that if one nation doesn't go first to create a CBNDC no nation will? Carbon utilitarianism? When it comes to currency, isn't that utilitarian anyway?


If a CBNDC used the blockchain, then the Carbon-backing could offset the Carbon footprint of the blockchain encryption and then some but would face an ever-increasing Carbon footprint.
If a POS approach was taken for the CBNDC, it would be Carbon-negative permanently (assuming it never crashes but if it did at least the Carbon-backed economy would be kickstarted) - a 'positive' positive climate feedback loop for a change - much needed. There's always good ol' fashioned bartering if all else fails!