Why should we choose blockchain?
Blockchain stands out from other technologies because it offers us the trust we need to record data of importance, as well as eliminate any worries regarding possible fraud or deception that might occur thanks to its decentralized nature.
Technological improvement continues to prosper, and although the energy sector might be a bit behind as of now, blockchain can deliver a helping hand it this regard. Blockchain’s future could be regarded as virtually limitless, especially due to its potential to disrupt the energy sector and rejuvenate it, despite the fact that it is still considered a new technology. However, its true potential has yet to be tapped, with plans to advance and perfect it currently underway.
Blockchain is also set apart from other types of technology through its ability to provide a decentralized network, which offers security for all operations performed on it. Recently smart contracts were added to it, bringing with them a plethora of opportunities thanks to their automated capabilities.
The benefits of blockchain in the energy sector
When it comes to innovating the energy market, blockchain’s use can be implemented in many areas, thanks to the trustworthy environment it creates.
Smart contracts play an important role in the energy sector as well, being used to significantly reduce costs and facilitate, improve, and increase energy distribution efficiency – especially when coupled with smart meters. The best scenario for utilizing blockchain is one where consumers are able to trade directly with their energy suppliers. This will result in some public functions becoming more or less unnecessary, especially third parties such as brokers and perhaps even banks at some point.
Blockchain has the potential to refine the energy sector in more than one way though. Through the introduction of smart contracts, the processing of data will become automatic and can be filtered at very high speeds without sacrificing quality, whilst being fully in line with the programmer’s set parameters. Since data will be computed by an online ledger, it will ensure fewer costs that will be coupled with the reality of no margin for error, due to the fact that nodes will verify each other in order to reach consensus – if one fails, it will not affect the system and will not be taken into account or used, thus preventing any errors from infiltrating the larger ecosystem.
Smart contracts could create even more efficient smart grids, when being used in conjunction with smart meters – saving due to a more precise prediction of energy consumption patterns; vastly diminishing energy waste. Furthermore, smart meters combined with blockchain would provide energy consumption feedback to suppliers on an hourly basis if needed (they would be evaluated by smart contracts in order to create a better assessment and prediction of future consumption needs, tailor-made for each individual). This will lead to the creation of a highly efficient and updated data register, containing constant and up-to-date energy readings, whilst leaving little room for error or energy dissipation.
Due to its decentralized digital state, blockchain features a profusion of capabilities suited to familiarize new users with the grid. One such capability is the possibility to handle invoices or any other payment types through cryptocurrencies, whilst providing transparency, anonymity, and security. The aforementioned benefits apply to all digital contracts that go through the ledger, as well as all transactions made.
Blockchain will be able to strengthen whole infrastructures in energy sectors by alleviating some of the more dispensable positions of employment, defined as third parties in the energy trading nomenclature.
The blockchain is being implemented more and more in businesses worldwide, in energy sectors, in digitized contracts and many other areas. Considering that it shows great promise as a reliable technology, it comes as no surprise that efforts are made to further improve it. It started small, continues to expand, and will most likely become a fundamental concept underpinning future technology, that will, and already has started to forever change business practices on a global scale.
Armand Doru Domuta
Armand Doru Domuta is the CEO of Restart Energy. He has scaled Restart Energy in the last 10 years into a diversified energy company in Romania and developed over 500 energy projects.