Carbon Credits Storage: A Comparative Multifactor Analysis of On-chain vs Off-chain Approaches

Data management with blockchain technology has significant implications for supply chain management, healthcare systems, finance, and government. Carbon credit systems, often referred to as the emissions reduction mechanism, are one of the areas impacted by blockchain which is a sector that seeks to reduce the levels of greenhouse gas emissions. The transparency, verifiability, and reliability characteristics of blockchain technology make it easier to track and audit information efficiently and reliably. On-chain and off-chain are two terms commonly used in the context of blockchain data management. The term ”onchain” refers to transactions that are explicitly documented on the ledger. Off-chain, on the other hand, refers to transactions that occur outside of the blockchain network. In this paper, we investigate blockchain-based solutions that are related to carbon credit systems and focus on both on-chain and offchain approaches. Moreover, we evaluate their performance and applicability based on the following main metrics: security, scalability, latency, and cost. In addition, we run a comparative analysis to assess these systems, identify their strengths and limitations, and suggest future directions for researchers to follow.