Former FNB CEO Michael Jordaan has invested in Toco, a new global payment platform that enables communities worldwide to directly participate in the fight against climate change.
The platform was developed by Niel Schoeman, Johan Pretorius and Paul Rowett – founders of Vumatel and Lobster Ink.
Launched in Stellenbosch this week, Toco will become available globally soon, say the founders.
“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,” Schoeman says.
“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.”
Jordaan, who is also founder of Bank Zero, is an early investor in the initiative. “This is a profound concept. It can completely transform how the world thinks about money, the economy and the environment,” he says.
“This is money 2.0. It can democratise the carbon markets and enable communities to take part in the battle against climate change.”
Climate is new gold
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 founders explain.
They add the carbon dioxide is removed through a wide range of activities, including direct carbon capture, reforestation and soil sequestration. These carbon removals, when verified by independent, accredited third-parties, become tradable certificates (aka 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.
According to the founders, 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.
They note the central reserve’s function was to ensure 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 one 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 and it 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.
The founders note there is a 1% transaction fee levied on each transaction. No other account, transaction, recurring or merchant fees apply, they say, adding the transaction fees are used to fund the activities of the Carbon Reserve and the operation of the payment platform.
The toco payment platform is built using blockchain technology. The creators of the platform chose to use the distributed ledger technology 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 crypto-currencies: “We like the tech but worry about the philosophy. The only thing we have in common is the blockchain technology for transaction settlement.”
He notes 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.”
Global reward
It is widely acknowledged that climate change is one of the greatest existential threats to humanity. Rowett, CEO of the platform, 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 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.
“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.”
To watch how toco works, click here.
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