Blockchain offers innovative solution for disruptive energy consumption
By Armand Doru Domuta, CEO of Restart Energy
Lately, technology has been brimming with improvements that saw it undertake difficult issues and deliver commendable solutions. Blockchain distinguishes itself from technologies by offering the much-needed trust required to record important data whilst removing concerns regarding hacking vulnerabilities through its decentralized nature.
Although technological innovation in other areas has prospered, the energy sector still lags behind, and blockchain presents a much-needed disruptive technology. The future holds vast promise, due to the myriad of potential applications that blockchain holds, representing the key to revitalizing an ailing energy sector.
Despite being a relatively novel concept that was utilized as the primary technological platform underpinning bitcoin, the true potential of this conceptual gem has only recently been achieved, and companies are already making plans for refining and perfecting its numerous applications.
What makes it unique is that it provides a virtual consensus translating into a decentralized network that offers security and transparency for all actions performed on the network. Furthermore, the more recent addition of smart contracts to the ecosystem has introduced multiple opportunity vectors in nearly all fields due to the automated resolution capabilities and custom functions of said smart contracts.
In the energy business, blockchain's utility is broad indeed, reaching to and encompassing many areas of the market. Especially in the context of smart contracts tailored to reduce accounting costs and maximize energy efficiency algorithms, when coupled with endpoint-installed smart meters.
Blockchain models can properly function under the condition that all providers make transactions directly with their customers. As a side effect of this direct collaboration between suppliers and consumers, the intermediary parties previously operating in the market, such as wholesale energy traders, banks and other entities, might no longer be required or their role would considerably be diminished.
At its basic level, blockchain offers two paramount improvements to the standard model within the energy market.
Accounting-wise, smart contracts are akin to having an automated accountant being able to process the entirety of your data simultaneously. In more technical terms, editable smart contracts can instantly analyze and resolve according to pre-set parameters any function that has been set by the programmer. Vastly reduced accounting costs follow as well as having the benefit of a fully online ledger without any errors, each transaction being verified by multiple nodes, therefore making errors virtually non-existent. As an aside, currently, there is a new step in the technology being developed focusing on making any person able to edit and program smart contracts as opposed to the previous and still dominating-model of having smart contracts designed by programmers. This will vastly improve the amount of innovation due to an exponential increase in accessibility.
Blockchain-powered smart contracts coupled with end-point installed smart meters can achieve energy savings by more accurately predicting the energy demands of the system at specific times, as well as, coupled with local smart grids ensure that power is distributed and consumed locally as much as possible, therefore, ensuring efficiency within the system and minimizing losses due to long-range transmission of electricity.
As a decentralized digital ledger, the blockchain is very flexible and can use said flexibility to ease user amalgamation into the grid. Furthermore, it can enhance settlement of trades and hasten their clearing, simplify and modernize the handling of model portfolios, help with customer familiarization and understanding, and even alleviate conformity strains related to anti-money laundering. Blockchain technology has a vast array of benefits that can also provide aid in paying for fees through cryptocurrencies, digitizing contracts and handling digital content, substantiate transactions, and carry-out trades.
The aforementioned capabilities are quite vast and lead to many opportunities to do away with superfluous functions, diminished operational costs and increased chances to better customer and consumer experience. With such high capabilities it can be easy to overestimate the blockchain’s abilities and consider it to be more than enough to replace whole systems, but such an event is, for the time being, unlikely and it is more reasonable to say that it can empower infrastructures for new markets and accommodate information among current systems.
Food for thought
Blockchain contracts are starting to be in more demand, as it is becoming clear that future technological advancement can only improve it and make it more reliable than ever. Statistically, it seems very likely that blockchain will change the future of energy supply for the better. This statement relies on the fact that, as already stated, blockchain systems are decentralized and trades are performed directly between consumers and suppliers.
At its core, this is what makes blockchain technology potentially disruptive and so far it shows a lot of promise. Along with lowering trade expenses, which leads to cost benefits for consumers, all parties involved in a transaction can interact with one another in a direct manner, thus making sure that energy is always obtainable at the best possible price.
In the end, blockchain gives users everywhere the opportunity to benefit from a safe and secure system, with a potential for innovation that is virtually limitless. In addition, more money is being invested in them and a significant number of ever-growing users trust in it. As a result, we should not be surprised if transactions will be mostly done online in the near future.
Image via Istock.com.