Crypto and Carbon: How Kyoto connects two high-growth markets

crypto and carbon

With positive market sentiment for cryptocurrency returning, spurred on by the increase in Bitcoin's value, the market is beginning to wake up again. Here is how the growth of Bitcoin and cryptocurrency benefits Kyoto and how, in turn, Kyoto can support the cryptocurrency market.

Bitcoin’s market cap recently rallied to $774B, a 137% appreciation in the last year, representing the steadily increasing consistent adoption of digital currencies as an alternative investment to a growing audience globally. The growth of the cryptocurrency markets, predominantly fuelled by Bitcoin, increases exposure and liquidity to more exotic digital currencies. 

Ethereum, the second largest cryptocurrency by market cap, has experienced a price increase of 77% YTD, with a growth of over $100B in the same period. With the two market leaders, Bitcoin and Ethereum, owning 70% of the $1.53T crypto market, the remainder is shared by thousands of smaller projects. 

The increase in value and liquidity in the last year coming from Bitcoin and Ethereum surpasses  McDonald’s and Coca-Cola’s entire market cap combined, and the cryptocurrency market cap recently surpassed that of one of the world's largest companies, Amazon. This increase benefits Kyoto by unlocking more liquidity and users as the audience for digital assets grows. 

Kyoto connects a fundamentally bullish, high-growth market to crypto. The Voluntary Carbon Market (VCM), currently worth an estimated $2B and forecasted to grow to $50B by 2030, is digitising for improvement. This means an expected $48B in market growth is coming to the blockchain as more carbon is commoditised. Our technology aims to onboard a significant portion of this forecasted market growth. 

How does Kyoto compare to Ethereum? 

Often hailed as digital silver, Ethereum is one of the fastest-growing technologies in history, with Bitcoin known as the digital gold equivalent. 

The Ethereum network hit $10B in revenue in just seven years, beating Microsoft by over 13 years. Since launch, early investor returns have been astronomical with Ethereum, returning over 78613%. Despite Ethereum hitting $10B in revenues, it is still experiencing high growth due to the large wave of adoption in the digital asset market. 

Ethereum was launched in 2015 when speculation about Bitcoin and market maturity were still in its infancy. A revolutionary technology designed to improve the utility and scalability of decentralised finance and blockchain, the Ethereum Virtual Machine incorporated the introduction of smart contracts hosted on its native blockchain. 

The founders of Ethereum created the toolkit and technology to enable future builders to build on and utilise the blockchain as a consensus and settlement mechanism. This enabled the explosive growth of Ethereum.

Creating technology to scale a high-growth market

Although the crypto market was underdeveloped at the time, Ethereum was launched when there was enough of a Bitcoin community to buy into the vision of a new approach with a new cryptocurrency.

If we compare Kyoto directly to this, considering Bitcoin as digital gold and Ethereum as Digital Silver, what about Kyoto as Digital Carbon? 

Kyoto is a blockchain-derived climate technology solution that interconnects Ethereum networks and Web3 users with the unbanked at a time when world leaders are meeting at COP28 to address how to meet NetZero commitments.

To meet NetZero commitments,  we need to improve global carbon markets. One aspect of this is harnessing digital to reduce market restrictions and improve transparency.  

Currently, there is no comprehensive carbon credit supply chain solution specifically designed with a primary focus on blockchain integration. Kyoto fills this void by helping companies meet offset targets in a revolutionary way while helping project owners bring the next $48B of carbon credits to the blockchain. 

Building value on-chain 

Ethereum and advancing decentralised finance capabilities led to the explosive growth of crypto assets on the Ethereum blockchain. Interestingly, the Ethereum network now holds over $6B of Bitcoin in WBTC, just eight years after raising $19m in Bitcoin. 

The rapid growth of the cryptocurrency markets is not without volatility. Mini-crypto recessions have occurred during its short existence, each time evolving the way crypto communities invest. Ethereum is the value peg for the network, and when market volatility hits, the entire ecosystem values are debased. Although this can benefit projects built on Ethereum when the markets are on the rise, when markets retrace 80%, it can destroy many businesses that cannot sustain such a drawdown. 

The VCMs are adopting blockchain to host carbon credits more transparently, and Kyoto aims to become the blockchain infrastructure market, absorbing a portion of the forecasted growth over the next seven years. 

Bringing a digital-first carbon credit to the market

The Kyoto blockchain is built with the same development language and is compatible with all Ethereum applications, including all EVM  blockchains such as Avalanche, Polygon, and Fantom. The Kyoto chain will have all of the DeFi functionality of Ethereum but with the added utility of Kyoto’s Infrastructure-as-a-Service (IaaS).

IaaS is a complete toolkit to scale the VCM. Onboarding a project, measuring carbon sequester, tokenising carbon sequester, and recording the entire lifecycle of a carbon credit. Unique approaches include utilising live data with IoT for dMRV for more accurate carbon accounting,  interoperable and open-source carbon registries, and intuitive trading marketplaces.

Can carbon credits be compared to DeFi? 

When comparing Ethereum to Kyoto, DeFi and Carbon credits can be used to compare the future growth of both projects. 

The total DeFi value locked is currently $50B, which is a metric to measure the active market value of DeFi, previously peaking in 2021 at $181B and is forecasted to surpass $300B by 2030

The current market size of the VCM is $2B and is expected to grow to $50B by 2030.  

DeFi and carbon credits are unknown to the broader retail demographic but have strong fundamentals that will carry both into the broader market, similar to Bitcoin. 

Concrete fundamentals and growing utility are the main contributing factors to the mainstream population's continuing rise of digital assets. As each generation becomes more digitally savvy and attention goes meta, digital assets on blockchains have a prosperous future. Kyoto will bring a new digital asset class with its first digital carbon credits. 

How can Kyoto contribute to the growth of the cryptocurrency market? 

For as long as Bitcoin and other cryptocurrencies have existed, scepticism surrounding whether these digital assets serve a purpose or can be considered a store of value has also existed. 

The maturing cryptocurrency market has proven many sceptics wrong. It has now led the world’s leading companies to notice blockchain and crypto and harness the technology and markets. In fact, 81 of the top 100 public companies now use blockchain technology

Kyoto connects the cryptocurrency market to the VCM, combining the power of two rapidly growing industries. Bridging Ethereum networks,  DeFi, and cryptocurrency to the VCM will help accelerate both markets' adoption, liquidity, and utility. As the world’s leading companies familiarise themselves with blockchain, the natural progression is to use service providers that use blockchain. Kyoto will unlock billions of dollars from companies looking to offset carbon emissions via carbon credits in improved, modern methods. 

The supply chain involved in creating carbon credits and subsequent transaction monitoring of carbon credits is vastly improved with Kyoto’s IaaS. Carbon economies are created by funding projects that create carbon sequestration, calculating the amount, and selling the accredited amount to companies or individuals looking to offset emissions. Typically, these economies have a pipeline that is often broken between intermediaries, making a lesser impact and reducing funding to unbanked or impoverished communities. 

By improving carbon economies, Kyoto also improves economic growth, social inclusion, and environmental protection, appealing to companies looking to implement the three pillars of the UN’s Sustainable Development Goals (SDGs)

COP28 is currently on the world stage. Governments, world leaders, and innovative technologies connect to address climate change. Public sentiment constantly varies, and the question remains: is enough being done? 

Companies are being increasingly targeted in how they measure, report, and offset greenhouse gas emissions to offset operational damages. Some companies have their own projects, protecting biodiversity, afforestation, or direct carbon capture. Many companies globally opt for the ease of use of carbon credits as the offsetting mechanism of choice. 

Over the years, carbon credits and the general markets attached to them have been scrutinised. Companies using certain carbon credits have become victims of miscalculated sequestration false claims, leading to a greenwashing backlash from the public. As companies are forced to meet offsetting obligations, and as many opt voluntarily to do so, Kyoto offers a data-driven, digital approach to a fast-growing but antiquated market. 

Our approach not only provides both markets with utility but connects the world's companies with a reliable and immutable method of offsetting carbon emissions, free from any counterparty risk;  ensuring that once a company offsets, the carbon offset is always as stated.  

What is next for Kyoto? 

The last year has been a significant one for Kyoto.  The team recently planted over 1 million trees, creating 80+ jobs in Kenya and Tanzania in the process. Meanwhile, several key leadership appointments have been made. The focus is now geared towards the release of the highly anticipated Testnet.

Testnet will be released on December 15, and we invite our readers to participate in a significant milestone for us as a project and community. 

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