Wayne Snyder, Director Technology Development
Blockchain. By now, most of you reading this blog have at least heard the term thrown around the last few years; perhaps a website featuring a new product offering, a recent business meeting, your kids at home, or an event such as the recent Merit Network conference where I co-presented on Blockchain with IBM’s New Energy & Environment Business Development Executive Liang Downey. Maybe you even know that Bitcoin, the digital cryptocurrency, is born from Blockchain!
However beyond the cryptocurrency hysteria, Blockchain has the potential to deliver many benefits, some including: improved supply chain management, increased customer satisfaction and loyalty, and perhaps an elevated state of trusted authenticity with your products and services. Consumers and businesses aren’t buying just based on their needs, they increasingly want to purchase from companies that represent their values, which can differentiate a company from its competitors while benefiting the bottom line. In this blog, we introduce Blockchain’s key definitions, characteristics and cleantech use case examples with potential to create smarter, healthier, more accessible communities and cities.
Business-as-usual benefits from serving a bounded market basically consisting of buyers, sellers, and a grouping of value-add supply chain stakeholders. Tangible and intangible assets are exchanged according to mutually agreed to conditions, and finally a transaction is recorded. Seems simple enough, yes? However, traditional business transactions are prone to significant inefficiencies:
- Time: may require an uncertain period of examination to crosscheck the conditions under which a transaction has been executed and/or the validation process of auditing the financial books
- Cost: third party intermediaries can add significant overhead and complexity, increasing business operational expenses that are passed on to the customer in the form of higher prices and lowering competitive market position
- Risk: the process of a transaction is prone to error, with many moving parts that often include human-in-the-loop workflow that can inject mistakes or even lead to tampering
Enter Blockchain for Business, an architecture of thinking that explores the potential to improve these inefficiencies and more. The foundation of Blockchain is the Shared Digital Ledger, a record of an asset transaction that is decentralized, replicated and permissioned.
- The record is agreed to by a consensus of stakeholders in the market having a reason to care
- The record adds to a history of linked prior records
- The record is unchangeable
- The record is conclusive
Smart Contracts exist in the business Blockchain and execute software logic that causes the asset state to change. They are essentially rules that govern a successful transaction; if all conditions are met, then then the transaction is allowed and recorded.
Identities, used by businesses to meet regulatory requirements for who they are dealing with and to support finite endorsement of the Blockchain record consensus, allow transactions to be signed, encrypted, and available on an as need-to-know basis ensuring appropriate levels of privacy and confidentiality.
While any reasonably short blog won’t be able to go into a comprehensive overview of Blockchain, I hope at this point a brief introduction to key concepts such as shared ledgers, smart contracts, and identities has sparked your ambition to explore use cases in your industry to consider solving real business problems.
Some examples of cleantech use cases poised to benefit from leveraging Blockchain technology:
- Sourcing the origin of electricity: do you know your power? Do you know where it comes from? Do you care? Global regulatory policies and younger generations are demanding a transition to more renewable energy where consumers can satisfy their electricity needs from sustainable sources such as solar, wind, hydro and geothermal. Blockchain can create an undeniable, trusted and traceable digital “certificate” of authenticity that electricity sourced is renewable, and perhaps also where it came from and what path it took along its transmission. Blockchain can help build an authentic story representing the customer values and earning their trust.
- Carbon Credits: many global markets are now regulating and limiting the generation of greenhouse gases from traditional fossil-fueled industries. Carbon emissions in our air have arguably led to climate change, lower quality air to breathe and fewer natural resources to sustain the world’s rising population. Without the decentralized, encrypted consensus of Blockchain, credits issued by government agencies could be prone to tampering, errors and plausible deniability.
- Electric Vehicle batteries: EVs are a mobile asset with distributed energy resources; a large battery that provides movement of people and goods but also could be flexible enough to provide power back to the smart grid during times of instability or high demand. Blockchain’s shared ledger could provide irrefutable evidence recording the “prosumer” transaction and from which the smart contract conditions govern how much power the utility needs from the EV, when the utility accepts power back to the grid, how many “energy coins” the utility will pay, etc.
- Electricity wholesale business network: electricity generation capacity is bought and sold in many regional and global markets, consisting of a complex web of supply chains and transactions, business rules, and often times labor intensive work to fulfill the transaction and follow up to audit the paper trail, crosschecking errors and inconsistencies found in independently kept ledgers and contract conditions that were not followed consistently. Through Blockchain software logic automation in smart contracting, these transactions could speed up, helping the grid to be more responsive and resilient to dynamic needs.
- Peer-to-Peer electricity trading: in markets where regulatory policy permits, neighbors in a residential community with shared interests could agree to simple smart contract conditions from which they will produce and consume power with each other using rooftop solar, electric vehicle batteries, and/or stand-by natural gas generators.
- Traffic congestion advisories: in a day where connected and automated vehicles (CAVs) enable seamless delivery of information to the vehicle operator, Blockchain could help capture actions taken to avoid highly congested areas, enabling the operator to earn “travel credits” that promote a more efficient citywide transportation network. Travel credits could then be exchanged for enhanced connected vehicle services such as entertainment, news, e-learning, or even discounts at a favorite local grocery store or tickets for public transit passes.
- Smart City Air Quality: city governing agencies with sensors monitoring and collecting air quality data could use Blockchain to provide a highly trusted level of transparency to visitors, residents and businesses that shows the impact of investments being made to improve the quality of life.
NextEnergy seeks partnerships to explore Blockchain technology development and commercialization activities with goals to accelerate cleantech solutions that create smarter, healthier, more accessible communities and cities. Supported by a variety of partners representing industry, government and philanthropic organizations, NextEnergy offers a variety of programs and opportunities to leverage our assets and team of industry experts to grow your business, explore new ideas, and engage with others.
Please feel free to reach out to me should you have any questions, email@example.com