Video - Introducing Sno-Caps - The Peoples Cap-And-Trade 2014 MIT Award Winner

Sno-caps is a brand new idea (and current winner of the 2014 MIT Climate CoLab Contest - see link below) presented here for the first time. It is a system that combines Regulation by Reputation (i.e. ebay, uber, yelp) with Bitcoin's public ledger (accounting and smart contracts) to fight global climate change. Here is the elevator pitch: Using public ledgers we can launch a global cap-and-trade today that sidesteps government and gives equal shares to everyone on earth.


Hello, this is James D’Angelo. Welcome to the Bitcoin 101 Blackboard Series. Today, we’re going to be introducing something that we’ve been working on for a number of months and it’s called Sno-caps or the People’s Cap-and-Trade. Really, what it is it’s pitting. Bitcoin’s Public Ledger versus this enormous problem. This really tough and intractable problem called the Tragedy of the Commons. And this is a personal journey. It’s something I’ve been very close to for a good chunk of my life.

And because of that, I’m going to rewind and talk about when I first learn about Tragedy of the Commons which happen to be in university. But ironically, it wasn’t in class. I first learned about TOC or Tragedy of the Commons in my frat house. Because our kitchen looked exactly like this one, right here. And so, what exactly is Tragedy of the Commons? Well, if you put 15 guys in one house all sharing rent, problems immediately start to arise. In the common areas; the kitchen, the living rooms and in particular, your flat house bathroom. And this is just a very mild example of people writing notes because the toilet paper was always gone.

You might look up TOC in the dictionary or Wikipedia we thought it would be important to look at the definition of just one particular case and this is the tragedy of the frat house bathroom. Okay, this is an “Economics theory according to which frat boys too busy with their homework and partying, behaving in such a way that no one on earth will want to use their bathroom. It was such a TOFHB that none of the sophomores could even shower at home.” Too disgusting, too dirty and anything you left in the shower would immediately get stolen. If you read deeper, you’ll find that TOC happens elsewhere, as well. It’s a big problem with email and spamming, Wikipedia falsehoods, vandalism, office refrigerators both in terms of cleanliness and stealing, clogged hallways, etcetera, etcetera. Remember, it’s just a big problem of commonalities, common spaces, things that everyone can use. But our example talks about the frat house. Let’s talk about exactly what was going on in that frat house.

Because of TOC, housemates immediately started getting angry at each other. Pointing fingers and making signs that looked a lot like this. “Sadly, your mother doesn’t work here so, clean up your own mess.” And we all know the results of putting up signs like this, it does nothing. They don’t work. And so immediately you had a situation where between 15 guys, trust had started to erode. Okay so housemates hid their toilet paper and food. They locked their doors because they were hiding stuff in there. They stole things when they went into the bathroom because things were stolen from them. They started to actually not be able to use certain areas of the house. So, they had to eat in restaurants and shower in gyms. And here is another little sign, “Do not use, I spit in this and someone keeps using it. Thanks.”

Well, we know what happens, someone turned around and used it, or they peed in it. Pretty disgusting stuff as things start to erode. And every time you talk about this with people, you still get this big BS, which is that “You can make a difference.” Well, if you just started to clean up, others would see what you’re doing, respect that and start to clean up themselves. And that’s just not true, no matter how many signs you make, no matter how much cleaning you do, you cannot make a difference in a frat house. And what really happens is because the dirtier housemates hardened from all the finger pointing and the cleaner housemates start to evolve. This became the new me. Okay, so you become this pig. Where you’re just drop in your pizza everywhere, you got your laundry over here. And indeed because of common spaces and the mess in common spaces, you become worse than if you were living alone. After graduation, I often worked as a conservationist.

So, here I am in Gabon. This is elephant poop over here. This is a three-toed sloth here. We got dropped off at our camp that we were trying to return to the wild. One thing that was for sure is that the work involved lots and lots of rivers. So, here is the Amazon river; here are actually the beginnings of the Amazon river and the Andes of Peru. And as result of working a lot with rivers, you see a lot of TOC. As we know, it wasn’t so long ago, definitely this century, when rivers were still magical, adventurous places. Mark Twain based Huckleberry Finn in the rivers. Kids would go swimming all the time in the rivers.

People spend their lives in and around rivers. Indeed, at that time, this river seemed infinitely clean. There seemed no way to mess up this river paradise. But as we know, things have changed and this is a little video, right here, in Kathmandu, Nepal. It’s pretty painful to watch. But we see that we’ve treated our rivers in the last 100 years like we treat our frat house bathrooms. This isn’t something that just happens in Nepal. Okay so here’s the Mississippi river. But right here in Boston, we’ve got the Charles river which they’re trying to clean up desperately but still very, very polluted. And what we see here is all the types of pollutants that are being dumped into rivers. So, here’s a factory, here's toilets, septic tanks; here’s fertilizers being spilled into the river; animal wastes, chickens and pigs; fuels that run off from automobiles especially when it rains. And here’s the refineries down in the gulf coasts.

So, there’s really no great surprise. When you get down to the end of the river and to the Gulf of Mexico, the fish aren’t doing so well and neither is the fishing. But what’s important to understand is there’s a real tragedy here because you have a dilemma. If you’re actually working on the river. And say here's this factory, right here. And you decide to do something really good with your waste. You decide instead of dumping it into the Mississippi, that you’re going to put it through some sort of plant and clean it up. Then, you’re going to reuse that water.

Well, the trouble with that is that’s expensive. Okay so now, if you’re the only factory doing it, you’re now going to be at a competitive disadvantage to your neighbors. Who now have the advantage of not having to pay for treating their waste. And this is the heart of the problem. If you decide to do the right thing. You’ll find yourself having to charge more for your services than any of your competitors along the river. And that is where the real tragedy comes in. And so, if you’re in a frat house or if you’re working on a river, pointing blame is easy. Trust begins to erode and anger increases. You start playing this big blame game.

And so, for me, I saw this very clearly. Working as a local environmentalist, I started to see some problems with what I was doing. If I was spending my day trying to prevent poaching of gorillas or trying to prevent invasive species from ruining the jungle. But with climate change, global climate change, there was the possibility that all of Gabon, which is now a forest would end up in short order looking a bit like the Etosha Pan in Namibia. And here’s me on my computer actually thinking about that.

I got very scared. And so, we live in a world of strange ironies brought on by this tragedy of the commons. You have tragedy of the local commons like the tragedy of the frat house bathroom. And you see how it's -- it’s almost like a big fractal. The small problem and the big problem are exactly the same. First, I’ll clean my bathroom. And then I’ll take care of the earth. Yes, right, we know that’s not going to happen. And so, when you start to consider things like global climate change. You’ve really got the same problem. Tragedy of the frat house bathroom times a billion, two billion, who knows what, times a lot – a really big problem multiplied by really big numbers and growing. Okay and so, we’ve all seen these images Global carbon emissions, 1751 - 2014, we started to see it's taking off during the industrial revolution and then increasing exponentially into modern times.

Indeed exponential; anytime we see something exponential these days. Here’s the growth of Facebook or the growth of Google or growth of any of these big tech firms. Anytime we see this sort of exponential thing. We realized that there is sort of an exponential growth to tech. Especially with this capitalism meeting technology. And so, here we have growth of electricity usage. Here’s the growth of the telephone, the refrigerator, the stove, the radio, the car, clothes washer, clothes dryer, air conditioning, colored TV, computers. These are years down here,1960, 1945 and we see that these are all growths that are exponential. And the interesting thing about all of them, each one of them is that they put out a lot of CO2.

So, if you really doubt that it’s human created. All you have to do is look at the things that produce CO2 and see their exponential growth. Here’s the cell phone, VCRs, and here’s the internet which actually uses up a lot of electricity. All the drives turning at Google and all these search engines, etcetera. And so, growth is often exponential. Tech growth in particular is often exponential. And so, you go around and do your thing because you care. You start lowering your carbon footprint. You drive less, take public transportation, use less gasoline. Do all the stuff and what do you see? Well, you actually see that the destruction is continuing and it’s continuing exponentially. Your individual work is not even a blip on this growth curve. You start to realize that the biggest BS ever when it comes to frat houses is actually the biggest BS ever when it comes to global climate change. You cannot individually make a difference. It just doesn’t work. Then what really happens is you end up paying extra.

To be more environmental, often times, it means you have to process your waste. You have to do extra things or avoid certain things. And so, you end up paying the cost. And the question is “Will you go broke? While everybody who’s exploiting the environment is running off with the bags of cash?” And so, just like the frat boys getting angry at each other. You got people getting angry and scared. Pointing fingers at government, yelling left and right. You got the democrats drawing cartoons, making fun of the Republicans. But does all that finger pointing make people better? Well, actually it doesn’t. So, it sort of leads to entrenchment of ideas. It leads to conservatism of what you’re being made fun of for. And we’ve seen that through time. So, here are polled Republicans believes that climate change is really a problem. That it’s really occurring and over time; so here is 2008, 2007, so there’s probably like 1990's. You can see that it’s gone down. Okay so, they’ve entrenched in their ideas. While Democrats have gone up somewhat. And this is a real tragedy. This is the tragedy of the commons.

You see some groups hardening and other groups are changing. But what’s interesting here is that Republicans have given us the strongest practical tool to fight climate change. And that is Cap -and-Trade. And this goes back to the 90's. To George Bush Sr. proposed and signed a Cap-and-trade bill in 1990. And the amazing thing about it is it really, really worked. And the big problem then was Sulphur dioxide which was causing acid rain. And here you can see the signing of this bill and the reduction of Sulphur dioxide into the atmosphere. Worked gangbusters okay. And as a result, cap-and-trade has become the centerpiece of all environmental negotiations. So, if you look at what they were proposing Kyoto or Copenhagen, it’s all about developing some form of Global Cap-and-Trade where you actually cap or limit the amount of carbon that each country can produce.

You can start to trade the ability to emit carbon or pollute between the different countries. Realistically creating a tradable value around emissions. And this is such a great idea. Unfortunately, that’s where the good news ends. Ever since 1990, lots of problems have started to come out based on Cap-and-trade. Okay, Cap-and-trade has proven costly in two main ways. One is, it’s expensive to regulate. So, you’ve got to send out all these regulators to go about and measure the amount of carbon that’s being produced. That’s fairly expensive especially for governments who don’t do that thing very well. But it also creates the same idea that we were talking about. If certain countries do not sign on for the Cap-and-trade then it becomes expensive for your country to be doing a Cap-and-trade when the other countries are not. So, if you’re limiting your emissions and they are not. You find yourself in a disadvantaged situation. So, you get a competitive disadvantage. And so, we see here you know when we’re trying to recover from this big, economic meltdown of 2007-2008.

Well, the last thing anybody wants to hear is sort of this new expense of building a Cap-and-trade program. And this is really what we just said. Countries which adopt end up with an added expense and as a result they can be the ones that go broke while the other countries start doing really well. Because it’s just plain cheaper not to pay for your pollution. And so in all these environmental accords at Kyoto, Copenhagen, there’s lots of anger. People pointing fingers. It becomes political. If becomes divisive. You’ve got the USA pointing their fingers at China. You have the citizens of the US getting angry at the American government. Chinese angry at the Chinese government. And every possible combination in the middle. Big tragedy of the commons, a big blame game. And as we saw in the chart, Republicans have begun stepping back from anything to do with Cap-and-trade. And really anything to do with climate change.

But are they wrong? In this cartoon here shows how much should the government commit to stopping climate change? The big Republican guy over here says, “I’m a big fan of unrestricted and free.” Free meaning two things. Here but possibly the idea that he doesn’t want to pay for a Cap-and-trade program. And that’s why there's little character down here calls him a cheapskate. And so, we can see the big problem here. Because climatologists learning from the beautiful success of 1990 with George Bush, they’ve really grown to love this enormous top down solution. George Bush just signs a little piece of paper. And they’ve got their Cap-and-trade.

The big government comes in and tells everybody that if they pollute. They’re going to have to pay for it. I will cap and you will trade. And here is big business over here. We don’t even see the people because they’re not involved. The climatologists’ solution to public policy. And this is what climatologists have been doing since 1990. They’ve been following that same road, hoping for the same result. And as we’ve seen with the belief chart spreading. It’s not looking as immediately obvious that that’s going to happen anytime soon. But what’s interesting is that there are even bigger fundamental problems with how this is done. If the government is forming a free market. Well, that’s kind of an irony in itself. The government controlling the market makes it not free in general.

So, the Cap-and-trades that we hear about all the time kind of exists on a trapeze above the people’s heads. You have the big government, way at the top. Passing down the options to trade carbon to the big polluters, really the big companies. There are no people involved in this trade, at all. So, they formed a cartel above the heads of the voters. We begin to see the problem with that, right. Individuals cannot go online and start trading their own carbon emissions. By law, they’re left out entirely. Okay, so here is the government telling them," Stop trading. We are the free market.” The government and sort of the irony of it all.

They've said they’re upset having these little petty people involved in their project. But what they found is that if you leave the voters out. Really the only thing you’re offering to voters is belt tightening basically more expenses. They’re going to get disenchanted with your Cap-and-trade. And this is a big problem. Because as we know, the strongest social forces in history are incentivized masses. Okay if the people can all profit or get involved in the market economy. We find that it changes everything. So, here’s this kind of humorous picture of a highway in North Korea.

And here’s one in South Korea. And if you’re an environmentalist well this is the one that terrifies you. But what is really shown in this drawing is how incentivized people get out and actually do something. And can change the way the world works. So, you can sort of think of this as the current Cap-and-trade schemes over here. This one here is isolating all the people from being involved. No people can actually trade here. And you can sort of see the benefits if you can somehow allow the people to start trading the carbon themselves. So, when we look at the old way of doing it. We see that we’ve got a lot of disenfranchised voters. And as a result, all ideas of Cap-and-trade seem to be falling apart. That’s not good.

Okay, now that we’ve set up all these problems. We have now come to our mission. We need something that we can launch ASAP. Carbon emissions are not going away. They’re increasing exponentially. We love the idea of cap-and-trade but we want a truly free market. So, no cartels, small groups make for bad markets. We want something that is available to everyone on earth. We don’t want to have to beg and plead with our cheap and fickle governments. It’s not only not wrong to want a smaller government. It’s unrealistic to think that the separation of beliefs is suddenly going to coalesce and everyone is going to want a huge governmental approach to carbon emissions. It just seems unlikely.

Because of all the troubles with fairness and the big international accords we wanted to come up with something that is fair. If we can come up with something that is unarguably fair even better. Because all the arguing is really part of the tragedy. Whatever we do clearly must have real regulation. So, some party is abusing the limits or caps that are in place. There must be some global recourse in the system to those who are abusing the caps and limits of carbon emissions. Finally, and most importantly. We wanted to fight back against the Tragedy of the Commons. And we believe the way to do this is through the strongest social force in history incentivized masses. This has everything to do with ownership. If we can insert ownership into the problem of carbon emissions. We can change the game. And fortunately, this is now possible. It’s not a sure thing but it is now possible. And this is only possible because of the 2009 launching of Bitcoin with its beautiful public ledgers

So, with no further ado, we propose a new idea. New approach. And we call it Sno-caps. And it’s the people’s Cap-and-trade. And here’s the little elevator pitch using public ledgers, Bitcoin’s Public Ledger. We can launch a global Cap-and-trade today that sidesteps government and gives equal shares of carbon emissions to everyone on earth. And it’s important when you deal with such a big idea to start looking immediately at the difficulties of building such a project. And one of the first is say you launch the market today and you gave everybody on earth equal shares. Well, the price is going to be next to nothing or nothing at the beginning. And some big adventurist capitalist could see the benefit in this and go and buy up all the shares. So, here’s a fish who ate all the other fish in the pond. Then, they would control the entire market for the emissions. So, you really don’t have a good market. This whole idea of early market manipulation’s a problem but you’ve also created the same problem. If they buy all the shares, everyone sold for next to nothing. You end up with all disenfranchised people. They’re no longer excited about the idea, at all.

So, this is difficulty number One of four. And our solution to this is something that you could have never done before Bitcoin’s public ledgers. We’re going to make ownership lifelong. And all carbon emissions will be loaned to the big polluters. So, here's the big companies over here. And here’s the individual citizen with lots of carbon emission rights over here. And in our system, you can never completely sell your rights. You will always be able to pull your lease bucket anytime and release it to someone else. So, if you’ve entered into a lease contract with Wal-Mart and you want to switch it to whole foods you can do that at your beck and call. You are the landlord of your specific rights. So, you have lifelong rights. Very big change to how things are done. And only possible because of Bitcoin’s Public Ledger. And so, what you really end up with is a “cap-and-lease” and not a “cap-and-trade.”

Individuals are now given atmospheric ownership which is an idea that’s been talked about for a while. But it’s never seemed realistic to do. Governments didn’t know how to deal with enormous amounts of leases. So, you make the individuals, the citizens, this earth’s new landlords. This is key because as we know throughout history, ownership changes everything. If you can give people individual ownership in a specific market. Then that market changes entirely. We’ve seen that with patent ownership. So, with pharmaceuticals or anything else you can make a patent of. The amount that drives invention is just phenomenal. People are going in for themselves. And as a result, ended up making products that help the rest of the world.

We saw it also with Magna Carta which is in clause 39 suggested people have rights to their own property. There’s no question that the ideas of this created the industrial revolution fomented all of the growth of England made England this enormous power. Just by simply providing individual ownership. But why I think it’s actually one of the more interesting ones since I’ve sold a lot of music in my life is this idea of music ownership. If you write a song today. Your rights in the United States will stay with you for 75 years after your death. So, just like what we’re proposing you get a lifelong ownership. And with music, you actually get 75 more years.

Your family will profit off of your song. 75 years after you die. Music is also very similar because it’s very hard to track. You play music in a bar. You play music in clubs. And the bars and clubs actually pay for that. It’s not something they wanted to do. They hate paying for it and the bills are fairly-high. So, we see a lot of stories about this. And it isn’t the government that goes in and makes them pay for the music. It’s actually two big companies that you might have heard of. You have BMI and ASCAP. And these guys are the music police. These are third party organizations who chase down every single one of my songs on every radio, every club, everywhere on earth. I get a statement every few months showing me where that’s played.

Very similar to carbon. It could happen everywhere; very similar carbon. They’re counting it and tracking it and billing the individual companies for it. Again, this isn’t a government program. The government will support it simply by the fact that it agrees that you have those rights. These 75-years, which are arbitrary. These are arbitrary things creating real wealth and creating real individual incentive to produce music and control those musical rights. So, as we try to develop ownership. It’s key to see that it’s not unique. This is a very key idea throughout history. And has been ignored recently as climatologists are looking to cap carbon. It’s something that needs to come back.

Again, as we mentioned, before Bitcoin, it was absolutely impossible to do. Imagine forming a government branch to track ownership of 7 billion people on earth. And all their ownerships and leases of carbon and all that bouncing back whenever they want. That program, itself will be trillions and trillions of dollars, just impossible. But public ledgers which came out with Bitcoin in 2009 are the ideal solution for providing something like this. One private key. So, this user has one private key is all that’s needed for him to make thousands and thousands of leases. And he can go around and change his private key and lease out again and again and again. He or she will always have ownership of his private key and he or she will always have the ability to pull those leases back.

Nothing like this has ever existed before. And if we start thinking about the cost of setting something like this up. It turns out to be ridiculous. These are companies already out that provide this service for free. What you want 7 billion lease contracts? Or we just set it right up. There’s a very small transaction fee on each transaction and blamo. You’ve got the whole system; leases, selling itself, paying out to the right person. All working autonomously. You can do this today with Counterparty. Mastercoin is talking about another company called Ethereum. It’s supposed to come out in a few months. All based on these smart contracts. And computers are very good at taking one idea, of maybe one contract and multiplying it by billions and handling it with no problem. Contracts that turns out are very easy for computers to negotiate.

Okay, we step into difficulty number two. And this is a major these are major difficulties. The last one we kind of solvable. This one, we’re not so sure about, right. Signing up the entire world isn’t easy. Right now, we’ve got 7 billion plus people on earth. But the big problem is not all of them even have IDs. So, here’s a recent article that just came out a couple of days ago about 220 million children on earth who don’t exist. What it means is they don’t have any IDs. And growing up for them is very tough in these countries just because a lot of high schools and schools require you to have some sort of identification to get inside the system.

But the systems are so bureaucratic, corrupt, et cetera, that it’s very hard for them to get IDs. Fortunately, there’s a really big push to change this. So, we’re trying to give the world access to IDs. Now, you don’t need to have an ID if you don’t want one. If you just don’t want to exist on earth. You could probably get away with that. But if you want an ID and you want to become part of the global citizen or a global economy, et cetera. This option should be available to you. So, we see more and more people entering into the economy, having an online presence via Facebook. Facebooks now got 2 billion registered users and growing. But we’ve also seen companies like Circle now start to look at this as a possibility as well.

They haven’t even launched yet but they’re talking about trying to incorporate the world citizens into a financial system. And this company has a lot of financial backing and hopefully they’re going to take on leading the charging to this abyss. What’s clear is that you can start to build the system with the people who’ve got IDs. You can get people registered as much as possible. And over time, a system like a cap and lease can grow as people get involved in the system. And as soon as they get involved. Well, they can lease at the same rate that everybody else on earth is leasing at. So, it gives them an incentive of financial incentive to actually get their identifications. So, this might be a nice thing for them.

So, now, were here with difficulty number three. And this is a problem, right? If network effects take time any big network, Facebook, Google, Bitcoin itself takes a number of years before it develops to a point where it’s really changing the way things are working on earth. And so a system like Sno-caps would likely take a minimum of years before it really starts dropping carbon in any significant way at all. That would be the hope. And the trouble is in those five years, we’re losing. So, we’re actually polluting like crazy. We’re putting up carbon dioxide in the atmosphere which stays up there for a thousand years. And so we’re going to be paying the price for that in time. So, we’re left with the situation of sort of the rabbit, which is Congress. They could come down tomorrow and slap on the Cap-and-trade.

They could provide amazing regulation tomorrow or our system which is sort of the tortuous solution which would take a while five years maybe longer. The only good news about this is. It doesn’t seem immediately obvious that Congress is going to be doing anything in the next five years. We’ve gotten close to producing some legislation. But Congress has known about global climate change. They’ve know about carbon emissions for 30 to 50 - years. Any inaction there just continues. We’re not close to having any major policy today.

But remember, there are also issues with these enormous top down approaches anyways. They leave the people out. Okay so these systems that we’re kind of hoping for are imperfect at best as they are. We might be better off with letting a system grow and build service at grassroots. And then, letting government come in at the end. It’s always nice to have some help from all parties involved, government included. When government comes in at the end and not at the beginning. It often is much stronger. The legislation is better. The regulation is better. And the support is more effective. So, it might behoove us to actually let the network build which incentivizes voters, which incentivizes congress and letting government come in much stronger at the very end. Okay, we’ve looked at three of the four major problems.

This last one is the real problem. This is the real monster problem right here. The biggest of them all. And it has to do with regulation. Public ledgers have no police. Public ledgers just exist on computers. They don’t have any regulation. They don’t have any strong arm to go about and make sure that what you claim to be trading, selling, or whatever on your public ledger is actually happening. As it says here, public ledgers have no police. Well, Congress has the ability to pull the strings of police to actually move manpower to get things done. And this is why climatologists love Congress, right. The Congress can just be this big bully and beat these people up and say this is what happens when you don’t pay for your carbon emissions. And so, without regulation well really, it’s game over.

You don’t have the Cap-and-trade. You have just a trade. Yet, no real cap. You haven’t really stopped anything. So, we're really in search of the new idea or a new force to change the ways things work. So here is the old problem. So, we really need a new ‘POW’, a real whammy. And it will be nice if the thing we’re looking at is already been shown to work on some level.

And indeed, the thing that we’re going to talk about has worked already on a number of massive online sites. And it works quite well. What we’re talking about is Regulation by Reputation. So, if we go back to the previous slight. All of these sites have some form of policing done by reputation itself. eBay is a great example. If you’re selling a product on eBay or buying a product. You look very carefully at how many positive reviews and positive feedback they have. And if you’re unlikely to make a purchase or sale unless you’re looking on the order of 90 % or above. Because anything less than that you start to see there’s some risk. This is true with the selling on Amazon and even reviews on Amazon. This is true with YouTube. Where people will only watch videos if they’ve got enough thumbs up or enough view counts or etcetera. The same is true with Twitter, Facebook and LinkedIn. So, we’ve really seen a modern revolution of regulation by reputation. Such as the business world has really taken note.

Here’s an article “6 Steps to Managing Your Online Reputation.” Which can be really damaging for a company. If your restaurant is on yelp and you’ve got lots of bad reviews. You’re going to find your customer base is dropping. Here’s a little joke down here. “Where do you hide the dead body? Answer on the third page of Google results.” Basically, referring now, the fact that most people will find their search in the first page or two. And rarely do they even go to the third. So, they usually figure out what they’re looking for in the first couple of pages. If your bad news is on the third page. Well that’s probably okay. But if they typed in your company’s name and it’s there on the first page. You’re in trouble.

So, a Google search can be your best friend or your worst enemy. And we’ve seen this really coming to play with more and more newer companies. Where they’re really relying on this reputation to insert an online presence into things that had no online presence before. So, here’s negotiating hotel rooms in individual people’s houses. Something that seems so sketchy 10 years ago is now become so big that Airbnb is valued at billions and billions of dollars. The same is true with Uber. You can walk out in the airport and some person in a regular car will pick you up. All these things we used to be really afraid of are regulated by online reputation schemes. And so, if we think about something like carbon emissions, right.

If a company or a product is being made with sort of sloppy carbon emission standards. We could start to see responses from other companies. So, Whole Foods will not buy your product if it’s got certain ingredients. In fact, 54 % of the food sold at Wal-Mart, you will never see at Whole Foods because of their rules and regulations based on information they have on their product. These are very powerful market driving features as we’ve seen Whole Foods has really grown to a powerful market force in the last dozen years. So, this is a really important thing. It's ability to regulate by reputation. It's a major sea change with how humans are interacting on earth. And how products are being delivered and sold.

So, there’s a chance that we might be able to do some regulation of carbon emissions just by dealing with this very modern concept of online reputations. And so, we’ve already looked at the four major difficulties with coming up with such a scheme. Let’s look at some of the advantages that would really help drive sort of the market adoption or the user adoption of such a cap-and-lease cap-and-trade scheme. So, these are the big advantages of Sno-caps. We’re just going to run through this list today. In our next video, we’re going into detail. Each of these individual advantages, highlighting exactly how they could work to build the massive global adoption that is required for building a carbon emission’s cap-and-trade.

Okay remember, Sno-caps incentivizes the masses. Each person on earth could end up profiting by leasing their own rights. Their atmospheric rights of carbon emissions. So, you’re actually giving every individual on earth the chance to profit. That’s a fairly big incentive. And we’ve already spoke how we’re going to at least start by using a modern approach to regulations this idea of reputation. We’ve also mentioned how inexpensive this could be. Remember if we’re running this contractual system on Bitcoin’s public ledger. The expense of running this system is just the initial programming. It’s important to realize that Bitcoin was also launched for free.

Okay so, it's possible rewriting of all international finance is just humming along by itself. And it’s incentivizing many, many people. So, it produces incentives that are also very inexpensive to launch. Likely launched by one person who’d just press go on his computer. We’re hoping to do a similar thing with Sno-caps. And so, as a result, we can launch today or as soon as the software gets done. The key here is there’s no need to wait for Congress. There’s no need to create new science or make more insulting cartoons for the skeptics to change because they’re not going to change. They’re hardened. The only way they’re going to change is if they start to see something working or if they’re incentivized to join the system. So, no waiting for Congress really means no waiting for all the skeptics the Koch’s brothers, et cetera. So, we can do it for very cheap. And we can launch without having to convince everybody to jump on at the beginning.

Okay so, the next one. Inside of the system, we have two powerful feedback loops which drive adoption which we’ll talk about in the next video and regulation. So, we’ll get new forms of regulation not just the regulation form here. And we’ll get new forms of adoption that are not just based on the initial incentives to the masses. Alright these things can be accelerated by feedback loops. Which drive capitalism and all the exponentially up functions that we’ve been talking about. Wouldn’t it be great if we could use an exponential function to drive carbon emissions down? And that’s what we’re looking at here. Another thing that’s very, very important. If you’re going to launch a cap-and-trade scheme, is that it be transparent.

A lot of countries and a lot of individuals in every country are very skeptical, okay. So, they’re going to want to tear down your system. But if you could show that your system is fully transparent. Well, you’re going to eliminate a lot of that skepticism. And the beautiful thing of a Bitcoin public ledger that it’s never existed before is 100 % transparency. You’re going to look in and be able to see every transaction. You’ll be able float a penny inside the system and you’d be able to track it. That’s transparent. Fully transparent. Really -- really helps with global adoption because of all the cynics and all the critics and all the naysayers.

They’re going to be able to analyses the data. They’re going to be able to make moves themselves and see those moves happening inside the system, 100 % transparent. And we’ve touched upon it already but this is a very -- very important thing is that our system is fully voluntary okay. Congress isn’t coming down and forcing you to do it. You are choosing to sign in. Clearly, there are some big advantages of voluntary over forced. So, if people do come in because of all the incentives that they get. they’re going to be much more positive than if the government’s coming around with regulators telling them exactly what they need to be doing. And how much they need to be paying with no incentives but belt tightening for them. The other thing that’s really a key and we’ve barely touched on, is that one of the big troubles with Kyoto and Copenhagen is the idea of fairness. Should this country do more? Should this country do less? This country has been developing and polluting for a long time. So, maybe we should let the others catch up. Big, big issues of fairness. Part of this is because they’re drawing political lines and geographic lines. Our system tackles this from the opposite angle. We offer equal access to every citizen on earth. That’s a form of fairness.

That’s pretty hard to argue. So, every individual in the system that can sign on clearly has some issues with internet access and ID access and all that stuff. Right now, will have equal abilities in the system to benefit so very fair. Everyone gets a share or everyone gets 10 shares. So, it’s just an equal amount of shares. And another really important advantage is by actually putting a cap-and-trade out there that anyone can use. You are providing an option where in most places there is no option. If you’re living in most places in the United States. There is no cap-and-trade in there. There is nothing even close to being announced. If you’re living in most countries on earth. There is no cap-and-trade.

So, if you’re government now all of a sudden, you’ll have not only the option of choosing this one but you’ll be able to look at it and maybe model it and develop your own. Or you’ll have the ability to say “Well, I didn’t design it”, so you’d have some plausible denial but we’re going to use it. So, that you are responsible for all the fairness issues and all that. For some government people, it’s better to have systems they can just sign on to that are already built, that aren’t perfect instead of arguing all the time about what fairness is. And these things get really, really complex. And in these conventions, where all the countries and all these political leaders, the documents just grow, grow, grow, grow, grow. And the systems become so convoluted and complex that people just don’t know what they’re talking about anymore. Because we’re designing the system based on one user, one share, it’s as simple as it gets. It’s very easy to understand. But it provides an option for anybody out there who’s looking to get involved in a cap-and-trade. Sign on, start trading and have some fun, okay. So, that’s all we’re going to cover in this first part.

The next part we’re going to actually go through each one of these individually. And really look at how they could spur, adoption and really start lowering carbon emissions on earth. This would be great without Bitcoin it would be absolutely impossible. So, public ledgers have changed the game and we’re just hoping to apply it to this really intractable problem of frat house bathrooms, "The Tragedy of the Commons". And the beauty is carbon is countable. So, we can see how we’re doing. We can see how individual companies are doing. We can see how individuals are doing. And so as a result, it is an ideal thing to actually trade. And if you can cap it, people will definitely trade, okay. So, before we go, we normally say, “Please Like, Comment, Subscribe, et cetera on YouTube that would be great. Do all of that. But there’s something more important you can do right now.

We were kind of late in the game into this great MIT Climate CoLab Challenge. And we’re going to post the link below. But if you really like this sort of idea. If you really see the blockchain being able to tackle carbon emissions or at least give it a shot. Because it’s so inexpensive we might as well try. Then please sign on here and comment here. If you do Like, please go over here. Because right now, even though we came in late, we’re number two of about 40 submissions. We’d love to get to the point where we really get recognized. There’s not a lot of prize money here. But there is some recognition and some help with developing a program like this. And though something like this is fairly easy to code. It will still take a little bit of work. It needs some attention at the beginning to really get the ball rolling. And it would be really great to get that attention. So, again, Like, Comment, Subscribe. But we’re going to post the link to the Climate CoLab which will look something like this. Please click over there. And do what you can over here.

And again, if your comments aren’t positive, that’s fine as well. We’d love to hear them here. But if you do enjoy it we’d love to hear it here. And there is no thumb down. And I think there should be some sort of thumb down here. It’s a very positive site. So, you really don’t have the option if you do click, you’ll click over here. As we know Bitcoin comes so far from left field that it takes a lot of people a long time to understand. The same is true with an idea like this. This is so far from left field if you know nothing about public ledgers and their ability to rewrite how we do trading, ownership and contracts.

So, even the idea will take a little while. The develop take a little while to settle in. But with little luck, we might even be able to make initial launch later this year or early next year. And then let Metcalfe’s law sort of climb in. So, we’ll start maybe the first year with one trade and move up. And if it does move up. Well, that would be great because then we could drop CO emissions down. And we can make the planet a little but safer for my son who is now two and a half-years-old. Okay, so, remember, please Like, Comment Subscribe. But even more importantly, hop on to this page. You’re going to have to log on and give it some support over here and make some comments over here. The People’s Cap-And-Trade. MIT Climate CoLab Contest. Thanks again. And we’ll catch you at our next video.

Written by James DeAngelo on July 7, 2014.