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“It’s clear for those watching the evolution of blockchain that we’re at the start of a digital turning point, an evolutionary step in the way value and opportunity are created and distributed”, concludes an article by British publication Raconteur. The article demonstrates the future of blockchain in a series of interesting charts, mainly focused on how it will revolutionize our financial system.
The impact of blockchain represents more than a financial system however, its influence will be felt across society, in a similar way that the Internet is shaping the modern world. In fact, Canadian writers and researchers, Alex and Don Tapscott, authors of the new book Blockchain Revolution, have gone so far as to call blockchain the second generation of the internet.
“The first generation brought us the Internet of information. The second generation, powered by blockchain, is bringing us the Internet of value, a new, distributed platform that can help us reshape the world of business and transform the old order of human affairs for the better. But like the Internet in the late-1980s and early-1990s, this is still early days.”
Blockchain is a huge network, a database similar to the traditional distributed ledger, it is essentially there to record ownership and value. Once something is recorded it cannot be changed and anyone with access can see, add and validate entries. In this sense it is a universally shared, real-time registry, that can replace our traditional, proprietary, centralized record-keeping systems.
Blockchain arises from the mysterious intersections of finance, crypto-currencies, and complex adaptive systems investigations across many fields. Now we are beginning to see possible uses of this new tool that reach far more than financial transaction recording.
As we, in the smart technology and internet of things (IoT) sector, watch our own technological revolution taking place, how should we expect blockchain to evolve alongside and within our own vision of the future?
The future of our energy system is distributed. Made up of billions of endpoints interacting with each other — microgrids, renewable energy, smart buildings, appliances, sensors and energy management software. It is essential to create a secure system that can verify autonomous transactions in real-time across these nodes as market conditions change.
Blockchain technology has the potential to enable distributed grid management via ‘smart contracts’. These smart contracts tell the system which transactions should be made at what time, following clearly defined rules for energy flows and storage to balance supply and demand.
In an even more direct way, blockchain technology can influence grid management and storage, while facilitating the emergence of virtual power plants. These energy generating, consuming, balancing entities, generally buildings, epitomize the evolution of our modern energy systems. Blockchain can play a fundamental role in the remuneration of the participants in these virtual power plants.
“With blockchain technology, a world of possibilities has opened and we now have a true peer-to-peer platform that enables personal economic empowerment. We can own our identities and our personal data; we can do transactions, creating and exchanging value without powerful intermediaries acting as the arbiters of money and information”, says Tapscott.
One thing potentially holding blockchain back is its association with criminal activity, primarily through the bitcoin crypto-currency that by-passes centralized financial control systems. However, if anything, these shady activities have proved that blockchain technology works.
Another hurdle for blockchain to overcome is its disruption to the traditional structure of our energy systems. In their efforts to influence consumer behavior, utilities primarily use pricing. Pricing structure may bring about desired reductions in consumption at peak-times, for example, but creates unfairness. For those with more money, the price signal is muted; for those with less money, the pricing signal accentuates challenges.
Smart contracts established on the blockchain can provide better results than what we see by attempting to control or influence behavior through pricing. Through blockchain enabled smart contracts, individual prosumers can immediately be paid for generation or storage capacity. Rather than a monthly statement, blockchain provides dynamic feedback, allowing users to understand and react to their energy usage.
Also, in a smart grid supported by the blockchain, the cost to monitor distributed renewable inputs is essentially noting. Every distributed energy source communicates independently and directly with the grid. This is recorded in real time in the blockchain, and payments are made directly to the owner of the energy asset, in their crypto-currency of choice, with no cost, mediation or delay.
The energy system of the future is complex. It involves consumers and prosumers, it tries to prioritize the fluctuating renewable energy sources, and it is made up of smart objects in a process of constant communication and optimization.
The energy system of the future demands the ability to trace, track and record interactions reliably, in real-time. Blockchain technologies allow exchanges to occur immediately, transparently and reliably without centralized authorization, and are immune to alteration by fraud.
The energy system of the future is emerging now, and the addition of blockchain technologies cannot come soon enough.