What is Blockchain Technology?
Blockchains allow digital information to be distributed but not copied. A blockchain is a series of timestamped records of data. The blockchain structure is formed by multiple blocks, with each block containing a group of encoded “transactions” (individual operations). Cryptographic hash functions are used to securely connect each block to the previous block in the chain. Blockchains have no centralized control, as the transactions are recorded across many computers.
The basic ideas behind blockchain technology began to emerge in the 1990s when the practice of time-stamping digital documents to make them difficult to tamper with was first introduced. The system continued to be developed by various computer scientists, but was not widely used until the launch of Bitcoin in 2009.
Benefits of Blockchain Technology
One of the main benefits of blockchain technology is the security of the data. The structure of the block chain contributes to the security of the system. There is no “centralized authority” or control in a blockchain, and the information is not stored in one specific location. All information that is held in a blockchain exists as a shared database. The data is hosted on many millions of computers at the same time. Having no centralized data means that there is no specific target for hackers, contributing to the high security level of data in the block chain. Cryptography is used in all the links in the blockchain.
Another benefit of the technology is that the system is very transparent. The data stored in a blockchain is accessible to anyone and is very public. As a result, it is very difficult to have false or faked records. Once a piece of information enters the blockchain, it cannot be tampered with, and the path that information takes through the chain can be tracked.
Another benefit of blockchain technology is that it eliminates the need for middle parties during transactions and exchanges. For example, when sending money using blockchain, the only two parties involved are the sender and the receiver. Usually, in the act of making a purchase, there is a middle party involved, who processes the transaction, and takes a cut of the profits. Blockchain technology eliminates the need for this middle party, which saves the sender and receiver money.
Blockchain and the Energy Sector
The decentralized nature, security, and transparency of blockchain technology make it potentially very useful to all types of companies within the energy sector. Particularly when it comes to buying and selling, blockchain technology could increase efficiency and lower costs by reducing the number of steps that are currently involved in these transactions.
An example of this that can be considered is the renewable energy sector, specifically wind and solar energy. The rapid expansion of this industry, and the fact that most renewable energy sources are weather dependent, creates an organizational challenge when it comes to distributing, measuring, and monitoring these energy sources. Communication and exchanges between energy producers and energy consumers have become more frequent and complicated as the industry continues to grow. The implementation of decentralized blockchain technology to this industry could ease some of these logistical challenges.
In the oil and gas industry, there are numerous transactions that occur between companies, landowners, and consumers. The implementation of blockchain technology into the oil and gas industry will lower costs that are associated with the logistics of purchasing and selling. This could help companies to save money and deliver products to consumers for more affordable prices.
There is still a lot of development, research, and trial and error that would have to take place before blockchain can be implemented into the energy sector and used by companies and governments. However, it has the potential to positively impact the energy sector and it will be interesting to see how development progresses over the next few years.
by: Clare Graham