New global payment platform enables communities world-wide to directly participate in the fight against climate change. 

Stellenbosch leads the world in demonstrating a new monetary system where economic growth creates environmental wealth.

The platform introduces a new digital currency (the toco) where each unit in circulation represents 1 tonne of credible carbon dioxide equivalent removed from the atmosphere.

Asked what they hoped to accomplish with the initiative, the co-founders – Niel Schoeman, Johan Pretorius and Paul Rowett (Founders of Vumatel and Lobster Ink respectively) – listed five main goals:

• To help prevent climate change by accelerating carbon reduction activities
• To fix the current economic model so it places a value on the environment
• To unite a global community who share the belief that carbon reduction has intrinsic value
• To bypass the institutions that are failing us and give communities the power to act
• To collectively invest in environmental assets to create environmental wealth for all

Launched in Stellenbosch, it will become available globally soon. Schoeman says, “We decided to start in our backyard, but the platform is open to everyone. We invite communities everywhere to adopt the currency and join this initiative. We will lead the way here in South Africa to show the world how we all can agree that removing carbon has intrinsic value and that the simplest way to demonstrate such agreement would be to use carbon removals as a means to base our money on.”

Michael Jordaan (founder of Bank Zero and former FNB CEO) has been an early investor to the initiative. He says, “This is a profound concept. It can completely transform how the world thinks about money, the economy and the environment. This is money 2.0. It can democratise the carbon markets and enable communities to take part in the battle against climate change.”

Toco Quick Reference Guide:

• The unit of trade, the toco (short for tonne of OCO, the molecular formula for carbon dioxide) represents one tonne of carbon dioxide that has been credibly removed from the atmosphere. 

• The carbon dioxide is removed through a wide range of activities including direct carbon capture, reforestation and soil sequestration, to name only a few. These carbon removals, when verified by independent accredited third parties, become tradable certificates (a.k.a carbon credits, carbon offsets or carbon mitigation assets).

• In the case of the Toco payment platform, each unit of toco in circulation is represented by such a carbon mitigation asset which is held and owned centrally by The Carbon Reserve.

• The Carbon Reserve is an independent non-profit foundation set up specifically for this purpose and is regulated in Switzerland. It is responsible for toco issuance, purchases and custody of the carbon assets. It is mandated to maintain the convertibility of tocos to carbon assets and to responsibly grow the toco supply and expand the voluntary carbon market.

• It has a similar monetary framework as the more traditional gold standard where the money in circulation was linked to the gold held in a nation’s central reserve. The central reserve’s function was to ensure that this relationship was maintained and that the convertibility of the currency into gold was maintained at a fixed rate per ounce of gold. In the carbon standard adopted by toco, the relationship is maintained as 1 toco per tonne of carbon reduction achievable.

• The platform is available to users on web, Android and iOS and can be downloaded from the respective app stores. The app is free.

• Users can exchange Rands for tocos or tocos for Rands at the prevailing exchange rates via the Toco app. The app allows users to make peer-to-peer payments, online payments and in-store payments at participating merchants in toco.

• There is a 1% transaction fee levied on each transaction. No other account, transaction, recurring or merchant fees apply. The transaction fees are used to fund the activities of The Carbon Reserve and the operation of the payment platform.

• The payment platform is a custom built permissioned blockchain that is mobile capable, can process large transaction volumes, quickly settle transactions with finality, and complies with regulatory requirements in terms of KYC, AML/ CTF.

• Toco is designed to be used as a store of value (saving in carbon reductions), a means of exchange (paying with carbon reductions) or as a unit of account (counting carbon reductions achieved).

• Toco is therefore a new form of money where the available money supply is based on the available carbon asset supply.

• The more people choose to use toco for their daily money needs, the more demand is created for carbon assets which, in turn, stimulates and incentivises investment in carbon removal activities and projects.

• In this manner it is possible for people to turn their everyday money needs (such as transactions) into climate action.

• Every toco in the toco economy is one tonne of carbon dioxide removed. By collectively growing the toco economy, carbon reduction is accelerated.

The toco payment platform is built using blockchain technology. The creators of the platform chose to use the distributed ledger technology (DLT) for two reasons. 

The first is its ability to scale. Rowett explains, “If you want to build a new transactional economy and unite the billions of citizens who will share it, it is essential that you have a cost-effective global payment system that scales easily. With blockchain we can turn every mobile phone into a point of sale.” 

The second reason, he says, is transparency. To create and maintain trust within the toco community, it is vital that everyone can at any time query the quantity and quality of the carbon credits held in The Carbon Reserve, and also see the amount of toco circulating in the economy. 

Schoeman underscores the importance of not confusing it with cryptocurrencies: “We like the tech but worry about the philosophy. The only thing we have in common is the blockchain technology for transaction settlement.”

The toco blockchain is non-anonymous and permissioned. All toco wallet users undergo customer identification and verification, while transactions are monitored for anti-money laundering purposes – similar to opening a bank account. 

Schoeman adds, “The integrity of this initiative is too important to risk its unlawful exploitation. We recognise that consumers of financial services and payment networks need to be protected and we support the authorities charged with this. The development of a global payment system and financial infrastructure based on environmental assets such as carbon reductions, is a massive undertaking. Its success depends on its trusted and safe integration with the existing financial system and the protection of the community who uses it.”

It is widely acknowledged that climate change is one of the greatest existential threats to humanity. CEO of the platform, Paul Rowett, says, “We are simply not reducing CO2 levels fast enough to meet the Paris Agreement’s 1.5°C target. The gap is much more significant than people imagine.”

Pretorius explains that this failure to address climate change arises from a classic collective action problem. He cites the inherent disparities that exist in the economic welfare and ambition among different nation states; the question of how to allocate the costs of historic emissions; dealing with the variation in the planetary impact felt by different countries across the globe; and the inter-generational nature of trading immediate economic benefit for future environmental costs.

While he recognises these challenges as legitimate concerns of nation states, he says they create a perfect storm where, despite irrefutable facts, governments fail to take the kind of collective action required. 

“Our governments and institutions are simply not equipped to deal with this,” says Pretorius. “We will need to bypass them and come together as civil society to fix this.”

He goes on to add, “We need a solution that gives every person on this earth the ability to take climate action and transmit their climate needs. We need a global community united behind a single shared value: that carbon reduction is a valuable product for us all, and that anything that creates carbon reduction – whether it is a forest in Brazil or a direct air capture factory in Iceland – is a valuable asset for humanity and the economy, and should therefore be rewarded for that activity. Toco is a means to do just that.”

Rowett, who is currently driving the Stellenbosch initiative, concludes: “We are getting massive buy-in from businesses in Stellenbosch. They get it. It is money. But reimagined, responsible and digital. Taking care of business suddenly also means taking care of the planet.”