Bitcoin- Kruger et al.(2007), proposed that in the future

Bitcoin- Based Decentralized Carbon
Emissions Trading Infrastructure Model

 

Abstract:
This paper discusses an architectural
model for a Decentralized Carbon Emissions Trading Infrastructure(D-CETI) with
emphasis on privacy and system security goals. In order to find solution to the
problem of trading carbon emissions anonymously among the trading agents, this
structure and behavior are employed. The main requirements behind the
architecture of D-CETI are privacy and security of the trading agents.  What makes the D-CETI different from the
conventional carton trading schemes are its decentralized structure and
distributed behavior.  D-CETI is based on
Bitcoin and Open Transactions. The architectures of D-CETI and five other
carbon emissions trading platforms are discussed and compared.

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  Keywords: Decentralized Carbon Emissions Trading
Infrastructure(D-CETI), Bitcoin, Systems
of Systems,

Introduction

  Main objectives behind carbon emissions
trading are sustainable environment and reduction of climate change impact.
Through Carbon emissions trading, trading agents who could not reduce their
carbon emissions, can buy carbon reduction credits from those who have attained
their optimal carbon emissions reduction goals. their carbon reduction targets.

Bitcoin,
a direct decentralized currency platform helps facilitate trading without
disclosing any identities of the trading agents, which helps hesitant
participants adopt and use monetary instruments. There is a need to develop an
infrastructure that will provide sufficient privacy and security to attract the
hesitant participants. The major part of this paper discusses the D-CETI
architecture model in detail and how it focuses on meeting its privacy and
security goals along with providing the required level on information to
support efficient trading activities.

 

Background
& Related Work

 Carbon Emissions Trading

  Various carbon emissions trading approaches
based on cost minimization and total carbon emissions abatement have been
proposed and applied in recent years. Kruger et al.(2007), proposed that in the
future carbon emission trading directions should emphasize on cost effectiveness,
trading fairness, easy adaptation, and obedience incentives. Arava et al.(2010),
gave a solution to the assignment of carbon emissions credits problem. Jonas et
al.(2010), acknowledged that all exchanging parties will get more profit than
ever when uncertainties are considered. Dikeman(2008), used Green cards as a
general term for all electronic representations of a certified carbon emission
reductions, production of energy from renewable resources, and efficient energy
usage.

Bitcoin
Platform

  Bitcoin is a decentralized crytocurrency that
does not have a central authority(a central bank or middle-man) to manage its
money processes and transactions. These transactions are signed electronically
and then added to a long continuous block of blockchain. All transactions are
public to avoid double spending and for easy verification of ownership. No
transaction is valid until it is verified by the Bitcoin network( by miners).  Bitcoin uses a distributed time-stamping
method that to trace the history of transactions. The problem of developing a
complete decentralized currency system was discussed in Laurie(2012, 2011),
which suggests the use of multiserver nodes for providing transaction
information rather than using Bitcoin’s peer-to-peer network.  Perfect anonymity features are not listed
among the core design goals of Bitcoin.

Open
Transactions Library

 Open transactions wiki(OT, 2014), is a software
library which makes the use of cryptography in crypto currencies and finance
easy. OT offers financial instruments that enable management of digital
resources without getting traced. So the main key features of OT are untraceable
contracts, accounts that can’t be forged and a huge number of trading
instruments. OT libraries implement a number of instruments for financial operations
such as receipts, cheques, vouchers, trading contracts etc.

 

Decentralized
Carbon Emissions Trading Infrastructure

 D-CETI serves as a decentralized cooperative
marketplace for all kinds of carbon emissions traders. This platform allows
carbon credits to be traded independently from their underlying protocols. The
stake holders of D-CETI  the buys and
sellers are not required to show their identities in order to carry out
transactions. This anonymity helps individuals, companies or governments to
participate in this trade and reduce carbon emissions. 

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