The atmosphere is everybody’s property

In an article that appeared yesterday on Dollars & Sense as well as, Jim Boyce of UMass Amherst first breaks down all the climate policy we talk about into demand-side (encouraging energy efficiency, subsidizing renewables, investing in mass transit) and supply-side (putting a price on carbon emissions) approaches to reducing emissions. Then he does a really good job describing the latter: a carbon tax and a cap-based system, what they might look like, and how they differ. If you have trouble grasping these so-called ‘market-based’ climate solutions, this article is for your understanding of that debate. And if you already know all that stuff, the way Boyce explains it will probably be interesting and may even give you a new perspective on some aspects (it did for me).

A tax sets the price and allows the quantity of emissions to fluctuate. A cap sets the quantity and allows the price of emissions to fluctuate.

Then the piece goes on to advocate for a market-based policy that treats the atmosphere in a manner consistent with popular opinion: it’s a global commons — we all own it, so nobody should accumulate private wealth by profiting from using it as a waste dump. Even as we reduce emissions, there are huge profits to be made from burning fossil fuels. Let’s share them equally.

Notably, Boyce argues for applying the pricing system when fossil fuels “enter the economy” — when oil gets on a tanker or changes hands to slip into a pipeline; when coal leaves the mountaintop-removal operation or the strip mine; when natural gas leaves the fracking well. This method of pricing takes the costs straight to dirty energy companies and spreads them around the economy from there, such that goods whose production, distribution, or use involves a lot of carbon emissions will get much more expensive. So high-consumption wealthy regions can’t escape the economic costs by simply sending polluting industries to poorer areas. Instead, they might be forced to grapple with the big C: Consumption, the economic boogeyman we’ve been so reluctant to address.

In a world where emissions are ‘capped’, reducing consumption in rich nations would leave more atmospheric space for poor ones to consume and emit while they work to meet material needs and provide basic human rights. And if we split the revenues from auctions of limited carbon permits on an equal per-person basis, the least well-off members of society will benefit the most, since they contribute so little to climate change. Furthermore, over half the population would gain income greater than their increased expenditure from paying for the carbon in their lives, because shares of the global carbon footprint skew so heavily toward the wealthiest few.

Don’t take it from me. Read the damn article!

SolarCoin and social equity, part II

This is the sixth post in the Electricity-Backed Currency blog series — check out the SolarCoin page to learn the basics and link to the first four posts in the series

Originally posted at Triple Pundit on June 24, 2014

Our energy systems must transition away from fossil fuels to avoid catastrophic climate chaos. What’s more, this shift to carbon-free energy has to happen fast — even more quickly than the rate at which renewables are currently replacing oil, gas and coal.

SolarCoin-accepted-here3SolarCoin is a novel strategy for accelerating investment in solar power. If it scales up – meaning that people begin treating SolarCoins as money — then it could work toward achieving the clean energy economy we need to save the climate.

But it’s not inherently socially equitable. In fact, as I show in SolarCoin and social equity, part I, SolarCoin has the scary potential to contribute to accelerating the growth of wealth inequality.

Getting SolarCoins

There are two ways to be eligible to claim SolarCoins: you can have a roof or yard with solar panels or you can own a solar project with capacity greater than ten kilowatts (kW). (The cutoff was set at 10 kW to distinguish household solar systems from commercial arrays.) Each megawatt-hour (MWh) of solar electricity generated earns one SolarCoin.

Beyond claiming SolarCoins for generating electricity, there’s a third method for getting some of the digital money: you can trade for them in online currency markets.

All three ways to acquire SolarCoins for your digital wallet present substantial barriers to the poor. People with no roofs, no yards, no access to credit, and no dollars to trade (nor experience using the interwebs for currency exchange) stand to benefit most from holding SolarCoins, especially if they get them while they’re cheap and the currency gains value in the future. Yet society’s least wealthy populations have scarcely any chance to put up solar panels, own a solar power installation, or trade for SolarCoins online.

Fortunately, there are ways to increase access to SolarCoins through each of these pathways.

Residential solar

The explosion in leased solar power systems means more people have access to earning  dollars and SolarCoins for producing solar electricity. Graph: Climate Policy Initiative

The explosion in leased solar power systems means more people can earn dollars and SolarCoins for producing solar electricity. Graph: Climate Policy Initiative

For residential solar systems (under 10 kW capacity), SolarCoins are earned by the resident of that property, not the owner of the solar panels. This way, the solar leasing boom gets SolarCoins into the hands of all the people using that power, instead of just piling up digital money in the coffers of companies like Sungevity and SolarCity that put panels on homes and rent them to the residents.

Each solar generating facility has just one ‘claimant,’ yet it is plausible that multi-family dwellings with rooftop solar could split SolarCoin claims. If apartment communities team up to lease solar panels, they can share the revenues from selling power and the earned SolarCoins.

Also, granting SolarCoins to more people increases the value of the digital currency (think about how the value of US dollars is supported by its worldwide acceptance as valuable money). A new currency only works as useful money for transactions if lots of folks have it and businesses accept it, which will be the case if they can use it to reward customers, pay employees, or buy inputs.

So with policies that facilitate multi-family solar projects, a growing number of people can become residential solar electricity producers. These groups can earn SolarCoins, which in turn benefits the entire SolarCoin community by increasing its exchange value. But only the wealthy can own large solar installations, right?

Solar ownership

Community solar projects extend the opportunity to own a share of a large solar power installation to a wider population — those with roofs unsuitable for solar because of shade or unfortunate tilt; renters and condo-dwellers who don’t control their roofs; and those who can only afford a small investment in solar. Below I propose a new way to spread SolarCoin-earning investments to even more people, but keep in mind that the same benefits apply to any community solar project that decides to split SolarCoin revenues among those who share ownership.

Mosaic, a solar project crowd-funding platform, helps address unequal access to solar investment opportunities. The minimum investment to finance a Mosaic project is $25.

Here’s how Mosaic works: A ‘borrower’ seeking to finance a solar energy project uses Mosaic to connect with investors looking for a steady return. After the installation starts producing electricity, the revenue from selling that power pays back those who invested in it, plus interest.

Mosaic helps solar installations get built by connecting small and large investors with projects seeking financing. If those investors earned SolarCoins in addition to the return on their investment, everybody wins -- the investors, the borrowers, the SolarCoin community, Mosaic, and our global climate. Image: Mosaic.

Mosaic helps solar installations get built by connecting small and large investors with projects seeking financing. If those investors earn SolarCoins in addition to the return on their investment, everybody wins — the investors, the borrowers, the SolarCoin community, Mosaic, and our global climate. Graphic: Mosaic.

SolarCoins could provide extra incentive to invest in solar power for anyone with $25. The borrower of a Mosaic-funded installment (who owns the array) could claim SolarCoins for the megawatts of electricity produced and then distribute them to investors in proportion to their share of the project’s up-front costs.

This way, Mosaic investors would earn a rate of return and SolarCoins. Three main benefits would arise from this arrangement.

First, everyone who loans to Mosaic projects would get a bigger reward. Beyond the fixed monthly payments that return their principle investment plus interest, Mosaic investors would be paid in SolarCoins.

Second, people without large sums of money to invest could earn SolarCoins for their ownership stake in large installations. Finally, growth in the SolarCoin economy means growth in the money value of SolarCoins.

A mutually beneficial partnership between Mosaic and SolarCoin would mean additional incentive to join both communities — the former could promote more returns to investors, and the latter would see an increase in value as more people hold and transact the currency.

Online exchange

But what about rich folks’ inherent advantage in accumulating SolarCoin through online currency trading? Anyone can turn dollars into bitcoins into SolarCoins, so people with lots of dollars can pile up stacks of digital money.

This problem is a harder nut to crack — it’s difficult to dream up any new currency that doesn’t favor the already-wealthy. But one invention exists that allows anyone with web access to get some SolarCoin in their digital wallet, for free.

Third-party charitable faucets, like this site, give away small amounts of SolarCoins in order to grow SolarCoins’ value as a means of exchange by spreading the currency into more hands. From a social equity standpoint, faucets give cash-strapped regular Joes and Janes the chance to take part in this new social economy.

Yet plenty of room for innovation remains in the quest to grow the SolarCoin community with less bias toward well-off people. What if we could each receive one SolarCoin for signing a petition advocating progressive legislation that favors low-carbon energy (or burdens fossil fuels)?

How about everyone with zero dollars invested in fossil energy companies gets ten SolarCoins? Poor people would be able to cash in immediately, and folks with investment portfolios would get a SolarCoin bonus for joining the global movement to divest from dirty energy!

SolarCoin could provide an extra push toward choosing to divest from fossil fuels by rewarding anyone with no money in dirty energy stock. Graphic: Ekavi Beh.

SolarCoin could provide a push toward choosing to divest from fossil fuels by rewarding anyone with no money in dirty energy stock. Graphic: Ekavi Beh.

Money for good

These ideas barely scratch the surface of possibility for digital (and physical) currencies to make our money economy more socially just and environmentally mindful. And remember, strategies for getting a new currency into more people’s hands can increase that currency’s value, as long as its supply remains reasonably scarce overall.

Thus, for the SolarCoin community, measures like a reward for divestment are not only progressive but  self-interested. The same can be said for partnering with Mosaic or creating multi-family collectives to help more people become solar power producers.

In summary, growing the SolarCoin community to include people who can’t get solar panels easily will not only offset or reverse some of the currency’s built-in unfairness; it will also increase its value — which in turn drives investment in solar power.

The next post in the series will explore one more way that cryptocurrencies like SolarCoin promote social equity and benefit some of our society’s hardest-working and least-compensated members. Stay tuned!




SolarCoin and social equity, part I

This is the fifth post in the Electricity-Backed Currency blog series — check out the SolarCoin page to learn the basics and link to the first four posts in the series

Originally Published by Triple Pundit on June 12, 2014

SolarCoin rewards solar power producers. The early adopters of a technology that helps slow climate change and brings clean electric power to new people deserve a reward, right?


Well, sort of. Handing out digital cash to people with solar panels can benefit our electricity systems and the environment, but there are more equitable ways to incentivize clean energy.

Getting SolarCoins

New SolarCoins enter the online “money supply” when they’re granted to the residents of a property with a solar installation or to the owners of a large solar project. In essence, a new piece of electronic money is created and then given to someone who has enough money to own or lease a solar system.

SolarCoins offer a new source of income — and eventually wealth — that can be accessed most easily by those who already have plenty of income or wealth.

For people without solar panels or investments, on the other hand, the only way to get some of this newly created value is by exchanging another currency like dollars or Bitcoin for SolarCoin in an online currency exchange. As yet, there’s no way to turn dollars or any other national currency directly into SolarCoins; one must get bitcoins first and then trade for SolarCoins.

Exclusionary opportunity

As SolarCoin scales up and increases in value — assuming that it does in fact become popular – opportunists, cryptocurrency fans, and clean energy advocates will earn income just by holding SolarCoins. Digital currencies are a means of exchange as money, yet in these early days they are more like assets than stable stores of value .

Bitcoin's volatility has made it a poor store of value. Holding bitcoins is a risky but potentially profitable investment, whereas holding most currencies is simply a good way to lose just a tiny bit of real value per year as prices rise.

Bitcoin’s volatility has made it a poor store of value. Holding bitcoins is a risky but potentially profitable investment, whereas holding most currencies is simply a good way to lose just a tiny bit of real value per year as prices rise.

Yet access to SolarCoin, like so many of the most lucrative investment opportunities in today’s economy, is exclusive to those who are already at least somewhat well-off. SolarCoin grantees have a solar-paneled roof over their heads or an ownership stake in a solar project, pieces of capital that earn plenty of income just from electricity sales.

For those who do not have sufficient wealth or access to capital to become solar power producers, getting SolarCoins requires extra money with which to buy them. Those who must spend all their income on food, rent, cell phone service, electricity, transportation, heating fuel, and modern life’s other necessities don’t have cash lying around to turn into SolarCoins.

In addition, it takes some degree of technical competency to get your hands on any ‘cryptocurrency’ — even the widely popular Bitcoin. Exchanging bitcoins for SolarCoins requires further knowledge and training to navigate complex online currency markets like Bittrex, a site whose esoteric charts and unexplained tables appear quite foreign to someone not versed in trading currencies or assets on the web.

Accelerating inequality

In short, wealthy people with leisure time have an distinct advantage in filling their digital wallets with SolarCoins. In a society where the vast income chasm separating high earners from the rest of us grows every year, introducing another instrument that make the rich richer deepens the problems that threaten capitalism instead of working toward fixing them.

Without mechanisms for extending access to the means of producing solar power to poor people neglected by the private banking system, SolarCoin speeds up the rate at which wealth concentrates among the fortunate few. Yet there are some promising developments that can counteract this troubling phenomenon.

The next post in the series – SolarCoin and social equity, part II – will explore existing and potential strategies that make SolarCoin accessible to everyone.




Sustainable smartphone revolution from Google?


Getting rid of our phones every time better software and features launch isn’t ecologically intelligent, but I have a Verizon upgrade to get a free iPhone

modular phoneThe need to make our cellphones last longer is finally getting some attention. Now Google is taking on the challenge of making a phone to withstand the annual onslaught of new state-of-the-art hardware and software. With Google’s super-customizable modular phone concept, Project Ara, we may soon be able to take advantage of smartphone technology’s weekly breakthroughs without ditching our like-new phones when 6G is released and 5G becomes old hat.

Of course, there are good reasons not to own a smartphone at all. They contain rare-earth elements, plenty of toxic mercury and chlorine, and conflict minerals mined by wage slaves and sold by warlords and corrupt states to fund violence and maintain repression. And the constant upgrading of electronics pollutes the climate thanks to global, emissions-intensive supply chains. On the downstream side, our throwaway culture has created a huge e-waste problem, since electronics recycling isn’t yet widespread

Getting rid of our phones every time better features launch isn’t sustainable (even if new, clean methods for extracting the precious metals from old phones with ‘shrooms scale up). Yet right now, Verizon will give me a brand-new iPhone 4. For free. I’ve never had a smartphone, and that’s a pretty tempting offer. Yet, I would far prefer to buy one used or refurbished for environmental and social reasons. Too bad those options cost money.

Turns out I’m not the only one facing these destructive incentives. Verizon offers every customer a deeply discounted or free phone every two years, as do most service providers.

Enter Ara, a project of the big G’s advanced technologies and projects (ATAP) group, tentatively scheduled to debut around this time next year. Wired calls it an endeavor to reinvent the cellphone:

Instead of a slab of glass and metal that you have no ability to upgrade, save for buying a new device, it’s an attempt to launch a phone where all of the main components are interchangeable via modules that click in and out, attaching via electro-permanent magnets.

If Google can create hardware and support systems to keep pace with continual software advances, Project Ara may liberate us from the endless succession of planned obsolescence that rules today’s gadget world — and slow the ecologically vicious resultant cycle of resource throughput. What’s more, we’ll be able to pimp out our phones with whatever contraptions and accessories we think are essential or sexy. The device will be a platform to personalize.

SolarCoin: accelerating solar investment

This is the fourth post of the Electricity-Backed Currency blog series

Originally Published by Triple Pundit on May 5, 2014

To review: SolarCoin is a digital currency designed to reward producers of solar power. One SolarCoin is granted for each megawatt-hour (MWh) of solar electricity generation.

SolarCoin is valuable because, like any computer-based currency with a block chain public ledger, it provides a trustworthy way to transact money online without an intermediary charging fees and exposing your information to vulnerability. Moreover, unlike other digital forms of money, SolarCoin represents the physical production of clean, useful energy.

Information on how to get SolarCoin is included in my introductory post, the second piece of the series describes the currency’s inherent value, and the most recent post contains more details about how SolarCoin can become popular and gain exchange value.

Granting this new currency to people with solar panels at their residences and owners of large solar installations shows that SolarCoin users agree that renewable electricity from the sun is a good thing, but how does using SolarCoin actually contribute to prosperity for people and ecosystems?

More solar

Photograph: Gary Chamberlain

Photograph: Gary Chamberlain

In short, SolarCoin will drive the implementation of solar electricity projects. All else equal, more solar power equals less global warming, less air pollution, less freshwater consumption, slower depletion of natural resources, and greater energy freedom.

As more people and business recognize SolarCoin as useful money, its value will rise and stabilize. Therefore, as the quantity and variety of goods and services that SolarCoins can buy expand, the incentive to generate solar power grows in tandem.

Adding SolarCoin as an extra reward for solar electricity producers will increase solar power production in two ways.

Increased benefits

First, SolarCoin offers added benefits to solar electricity projects, which means more solar investment.

With SolarCoin, solar electricity production can earn standard money (dollars) and digital money (SolarCoin), adding to the benefit side of of any potential installation’s cost-benefit comparison. As a consequence, some ‘on-the-margin’ prospective installations whose costs would outweigh the future revenue in strict dollar terms may become good investments thanks to the value of the SolarCoins that they will earn.

Put another way, SolarCoin is another cash flow for solar power producers. This extra benefit above and beyond the money earned from selling power to electric utilities or using it to offset energy bills will increase the number of potential solar projects that make economic sense.

Decreased costs

As we install more solar, it gets cheaper to do so. Source: GTM Research/SEIA U.S. Solar Market Insight: 2013 Year-in-Review

As we install more solar, it gets cheaper to do so. Source: GTM Research/SEIA U.S. Solar Market Insight: 2013 Year-in-Review

Second, by increasing the number of projects undertaken, SolarCoin will speed the price decrease for new solar installations.

Solar projects get cheaper as we become better at making efficient panels, putting them up, and using them to capture the sun’s energy. Economists call this price drop ‘experience curve effects‘; as we gain more experience with solar power, it becomes more cost-competitive with — and ultimately less expensive than — fossil-fueled electricity.

Remember, SolarCoin makes more potential solar installations worthwhile investments because it offers additional benefits to the producers of solar electricity. The extra reward for solar power increases the rate of solar proliferation, which speeds up the ‘learning-by-doing’ process that brings down costs.

Positive feedback

By way of summary, SolarCoin offers an added reward that can increase the number of solar electricity systems built. As solar expands as a source of electricity, the price of a solar system in dollar terms goes down, further accelerating investment.

This positive feedback loop may strengthen the boom in solar installations that is already underway. In 2013, total installed capacity of  photovoltaic systems in the US increased by 41 percent. According to Solar Energy Industries Association President and CEO Rhone Resch, more solar generation capacity has come on-line in the US over the last 18 months than the previous 30 years combined.

More good

As more electricity is generated from the sun, less is needed from fossil fuels. Hence, increasing the rate of new solar investment also speeds up the decarbonization of the electric grid and protects communities from the harmful effects of burning coal and natural gas, in terms of both local air quality and global climate stability.

Researcher Carol Olsen of the Netherlands’ Energy Research Center offered some concrete numbers in a New York Times article: “Compared with electricity from coal, PV electricity over its lifetime uses 86 to 89 percent less water, occupies or transforms over 80 percent less land, presents approximately 95 percent lower toxicity to humans, contributes 92 to 97 percent less to acid rain, and 97 to 98 percent less to marine eutrophication,” which is the excess release of nutrients that harms freshwater ecosystems.

2011 fuel shares of global electricity generation. **Other includes geothermal, solar, wind, biofuels and waste, and heat. Source: International Energy Administration, 2013 Key World Energy Statistics

2011 fuel shares of global electricity generation. **Other includes geothermal, solar, wind, biofuels and waste, and heat. Source: International Energy Administration, 2013 Key World Energy Statistics

We can agree that solar panels make electricity with a smaller environmental trade-off than burning fossil fuels, which still accounted for 68 percent of world electricity generation in 2011, according to the International Energy Administration. Since SolarCoin has the potential to accelerate the shift toward solar, it seems clear that the digital currency will contribute to human and ecological well-being as it scales up.

Yet as we look at the way that SolarCoin drives the uptake of solar technology, an equity issue emerges. The currency is granted to the residents of a dwelling with a solar system and owners of large solar installations, which implicitly penalizes everyone who doesn’t have a roof or yard for panels nor enough money to invest in a solar project.

The next post in the series will explore SolarCoin’s implications on inequality and wealth distribution. Stay tuned!

SolarCoin: scaling up sunshine-powered currency

This is the third post of a blog series on Electricity-Backed Currency

Originally published by Triple Pundit on April 23, 2014

Dozens of new digital currencies are jockeying for a spot on the swell of popularity that Bitcoin is riding — and arguably created. Currency trading market lists well over 100 ‘altcoins,’ with new types of online money popping up nearly every week.

But very few have caught on. Most of these currencies – StoopidCoin, GamersCoin, DigiByte, GermanyCoin, — are worth mere fractions of a US cent.

You see, a currency has value only if a large community uses and accepts it as payment. For SolarCoin, the new digital currency designed to promote solar electricity production, this need to scale up is the primary barrier to gaining value as a form of money.

In other words, if SolarCoins are going to be able to buy goods and services, then the currency must become popular.

SolarCoin primer

SolarCoin-accepted-here3Each SolarCoin enters the ‘money supply’ when the SolarCoin Foundation grants it to the resident of a property with solar panels or the owner of a large solar array. It is given as a reward for producing one megawatt-hour (MWh) of electricity. A solar power producer can claim SolarCoin in addition to — not instead of — the money paid by the electricity’s buyer (usually an electric utility).

From there, it can be traded person-to-person over the internet, securely and without a bank or credit card company charging middleman fees. My intro to SolarCoin has the details on how it works and how to join in.

SolarCoin is intrinsically valuable because it’s based on a fixed amount of clean electric energy, something we can all agree has value. Last week’s blog post illustrates how the electricity-backed digital currency benefits human society and the global ecosystem, but as far as useful value, a more practical question remains.

What can we buy with it?

Need for scale

The short answer is not much, yet.

Sure, SolarCoins represent trust thanks to a public transaction record (the block chain) and stable unit of value (1 MWh). In addition, they encourage the goodness of carbon-free, renewable electricity. However, to reiterate my first point, a large community must start to trade SolarCoins like money for them to gain monetary value.

People, organizations, and businesses need to accept them as payment, which will only happen if they have confidence that their SolarCoins will be useful elsewhere. A merchant won’t let consumers pay with SolarCoins unless those SolarCoins can purchase goods from suppliers, pay employees, or be traded for dollars on a currency exchange.

Means of exchange

Fortunately, SolarCoin can gain widespread acceptance rather easily. If many people value something, then by definition it is valuable. Simple as that.

A business or charity can begin accepting SolarCoins as payment by downloading a wallet here and then displaying their unique address or QR code prominently on their website or a physical sign. Treating SolarCoins like cash will be a way to show that an organization agrees with the premise that the benefits solar power provides to society and the climate are greater than the price of electricity in wholesale markets. (Disregarding certain subsidies, which vary drastically across states and countries, electricity markets do not naturally differentiate between sources of electricity like coal-fired power, hydropower, nuclear, or solar, since the product — electric power — is the same.)

As more businesses accept SolarCoin as tender, more people will recognize the cryptocurrency as useful money. As demand for the currency increases, its value will rise and stabilize.

Once one SolarCoin trades at a stable exchange rate relative to US dollars for an extended period, we can declare it a mature form of money, since dollars are the most widely accepted currency in today’s world (whether or not they deserve to be). At that point, any person or retailer would be silly not to accept SolarCoins, because they could be turned into any other currency almost immediately, at zero to very little cost.

Store of value

Trading in a currency is one thing, but of course holding SolarCoins will remain somewhat risky, in the same way that using any currency as a long-term store of value involves trusting that its value will not change dramatically overnight. For example, if the US Federal Reserve prints billions of dollars today, then all our savings will be worth a lot less as soon as prices adjust upward to reflect that money is less scarce.

Yet by holding our money in US dollars, we show trust that the Fed won’t devalue the dollar with rapid, inflation-causing increases in the money supply. With SolarCoins, we can trust that they will only be granted as fast as solar power producers generate power and claim their reward.

Since a period of ‘hyperinflation’ in the 1980s, consumer prices in US dollars have increased between 2 and 4 percent most years. Relatively steady, predictable inflation rates give people and businesses confidence to hold savings in a particular currency. Data: US Bureau of Labor Statistics. Figure: Knoema.

Since a period of ‘hyperinflation’ in the 1980s, consumer prices in US dollars have increased between 2 and 4 percent most years. Relatively steady, predictable inflation rates give people and businesses confidence to hold savings in a particular currency. Data: International Monetary Fund. Figure: Knoema.

When a currency offers a more stable representation of value than other currencies, it becomes useful  for keeping money for retirement or a rainy day, not just for everyday transactions. Generally, this happens when its inflation rate — the rate at which one SolarCoin becomes less valuable over time, much like a dollar today is less valuable than a dollar three decades ago — is relatively steady and very low, perhaps one percent per year.

Right now, however, one SolarCoin is getting more valuable over time, since it is only beginning to gain popularity. Technically, this is called deflation, but you can think of holding SolarCoins as an investment in a start-up currency.

Driving solar 

As SolarCoin gains popularity, and thus exchange value, the extra reward for solar electricity producers becomes a bigger and bigger incentive. If SolarCoins can be spent nearly anywhere, or traded for a significant amount of an official (or alternative) currency, then they will effectively serve as an additional money payment to generators of solar power.

Cash incentives for any behavior encourage more of it. So we can expect SolarCoin to contribute to the ongoing solar boom, once it scales up.

The next post in the series will discuss SolarCoin’s potential to drive solar power investment and speed the de-carbonization of electric power. Stay tuned!

My digital wallet does not yet hold any SolarCoins other than the fractions (SolarCents?) I’ve received at charitable faucets. As long as I’m writing about their inherent value and the need to become popular, I should get some skin in the game. Help out a poor writer! Send SLR to: 8Rs7YHL4z5jeNenpMD3X4BnaMZstx7QwEk

SolarCoin: trust and goodness in a digital currency

This is the second post of a blog series on Electricity-Backed Currency

Originally posted by Triple Pundit on April 15, 2014

SolarCoin is a decentralized digital currency that we can trade person-to-person over the internet, without PayPal or Visa playing middleman and charging fees. Each SolarCoin represents one megawatt-hour (MWh) of solar electricity generation.

In my first blog post on SolarCoin, I describe the two ‘proofs of work’ that back the currency: a cryptographic proof of work that secures the online currency and verifies transactions, and a proof of solar power production. That introductory piece also explains how one can claim or trade for SolarCoins, but leaves unanswered the question of why one would want to do that.

So, is SolarCoin valuable?

Money value

SolarCoin is a digital currency intended to reward producers of solar electricity. Image:

All currencies, including U.S. dollars and Euros, are valuable as long as a network of merchants, people and other organizations consider them valuable. But unlike the currencies with which we are required to pay our taxes, digital currencies must provide value as a complement to national currencies.

For SolarCoins to succeed as a means of exchange, we need to begin treating them like money. They must be in people’s hands — or digital wallets — and they must be used for purchases and exchanges.

This is how Bitcoin gained value. The first famous cryptocurrency provided a decentralized, free-flowing way to do business on the internet, so people started trading it like cash.

On a fundamental level, something has value if we think it’s important.

SolarCoins not only offer the trust associated with a block chain transaction database, but also the goodness of fossil-free, renewable energy. I think we can all agree trust and goodness are important.

Decentralized Trust

To understand how digital currencies create decentralized trust, just think of the way you know trust is defined. Trust is the firm belief in the reliability, truth, ability, or strength of someone or something, according to Merriam-Webster.

In this case, it is the firm belief that SolarCoins are reliable and secure, and that the online community that holds and trades the currency cannot cheat you out of your SolarCoins or devalue SolarCoins by creating too many.

It’s decentralized because we need no central authority. Money can change hands person-to-person, and there’s no way to cheat the system — each SolarCoin or other digital currency is a unique piece of digital property that simply moves from one digital wallet to another within minutes of a transaction.

A public ledger — the block chain — records every transaction ever made in SolarCoins, which makes it impossible to get away with double-spending. This digital database enables us to make trustworthy purchases and trades over the internet without entering credit card data or going through a bank. As a result, online transaction fees can drastically decrease.

Physical Trust

SolarCoins are backed by physics, not just the computing power necessary to create and secure them. Each one was originally granted to a producer of one MWh of solar electricity — a unit of energy whose value to society stays relatively steady over time.

By contrast, other digital currencies carry little intrinsic value beyond the mutual agreement that they have monetary worth. Bitcoin’s price has fluctuated wildly over the past several years in part because bitcoins are not tied to anything stable (though there are other good explanations for the currency’s volatility, detailed in this Washington Post article arguing that Bitcoin’s value will stabilize in the future).

Advocates of the gold standard – a system in which a currency’s value is based on a set amount of gold — believe that a tangible asset is essential to ensure long-term price stability of a currency. But unlike a precious metal, the commodity represented by Solar Coin provides real value to society. Electric power from the sun benefits the environment and raises standards of living in energy-poor regions.

Earth goodness

To elaborate the concept of goodness, SolarCoins may soon be worth something in part because of the environmental and energy benefits they represent.

Solar panels in Hanover, Germany. Photograph: Christoffer Riemer

Solar panels in Hanover, Germany. Solar power is worth more than coal power or nuclear power and SolarCoin monetizes the benefits of cleaner air and a cooler climate. Photograph: Christoffer Riemer

One MWh of electric power produced by solar photovoltaics releases no greenhouse gases other than the emissions from manufacturing solar panels, while burning fossil fuels like natural gas or coal releases 1,500 pounds or more of carbon dioxide-equivalent emissions per MWh generated — not counting the upstream emissions from extracting, refining, and transporting the fuels. Beyond reducing climate-changing carbon emissions, generating solar power does not cause air or water pollution.

Because solar panels produce electricity without side effects to human and ecosystem health solar energy can be produced right where it’s used. Consequently, thousands of tiny solar ‘power plants’ can make the electrical grid more resilient by reducing our reliance on massive, polluting power plants connected to cities by inefficient, expensive, and vulnerable transmission lines.

Energy goodness

Electricity availability is closely tied to prosperous living. In areas without widespread access to energy, solar panels can bring power to the masses.

Solar electricity often replaces energy sources like kerosene lamps, diesel generators, and wood-fired stoves when it’s installed in places without a dependable electrical grid. This transition allows communities to stop purchasing and burning costly fuels, increasing quality of life with reliable power and protecting human health from harmful emissions.

Scaling up

In summary, SolarCoin has inherent value in trust and goodness. It facilitates transactional trust between strangers, rewards producers clean energy, and frees everyday exchanges from the banking system.

Now SolarCoin just needs a huge network of people holding and using the currency. Check out last week’s blog post for instructions on how you can join the open community.

Next week’s post will show how SolarCoin can gain the popularity necessary for the currency to achieve significant monetary value. Stay tuned!