Our FutureLab Presents the Blockchain
"At a certain point, technologies come down the hype curve and start maturing. It’s becoming more mainstream. We like it because it’s fundamentally part of the new narrative of our business. We are decarbonizing, decentralizing and digitalizing the energy world. A technology like the blockchain is critical to apply to the operating business. This is partly the future of the internet of energy. Blockchain will be one of the building blocks to help us to succeed by offering new solutions to our customers" - E.ON's Chief Digital Officer Matthew Timms.
Have you heard of the Byzantine generals problem? The generals have to agree on a strategy to attack a city. But they are not all in the same place, so how? They need a messenger! This messenger must be a middleman and cross the citadel. But what if the message has been compromised? How can they make sure that they all have the same information? The more generals want to join, the more complicated the plan becomes. Does everyone trust each other? The only way to solve the problem is to make sure that everyone is working with the same status of info - and then can agree.
Doesn't it sound a lot like a cryptographic system we know?
The blockchain is a distributed ledger, which is like a distributed message of the past. Everyone that has this info, can make sure that this info is a common truth. It is a peer-to-peer network that validates transactions without the use of third parties, like banks, in the case of bitcoins or similar crypto currencies. But the blockchain isn’t just about monetary transactions. It can also be used to validate contracts. Indeed, the blockchain stands for the digitalization of trust - and makes sure that there are no hidden agendas. Everyone can trust each other, based on the distributed ledger, in which many different computers can be used to verify information.
Who needs this thing?
Blockchain means that transactions are immutable, distributed and archived. You can’t change anything from the past that has been put into a block. Over 50% of the network nodes have to validate a generated block in order for it to be queued into the blockchain. When the majority says yes, then all the nodes have a copy of the new node in the blockchain. There are different types of blockchains. public, private, permission and permissionless. There are times when the functionality needs to be limited. If it’s public, then everyone can be part of decision making. There are hundreds of blockchain implementations.
Maybe Some Examples?
Ripple an example that is driven by financial institutions with a lot of banks behind it - so that they can replace traditional & slower financial transactions. A number of banks started this consortium to get experience with the blockchain, so that they don’t get left behind. All this because the blockchain can actually work without them.
Other examples include: Bitcoin (the most well known), Tendermint, Ethereum, Hyperledger, and the Energy Web Foundation (EWF). At E.ON, we are part of the EWF, a non-profit that was conceived at the Rocky Mountain Institute. It was started as a great place to explore blockchain technology within the energy industry, now it is an open-source, scalable blockchain platform specifically designed for the energy sector’s regulatory, operational, and market needs.
And some of our internal projects, like EISBLOCK, which optimizes feed-in management compensations, and Enerchain, which looks at B2B trading energy wholesale products, are active use-cases for blockchain.
Why should we use it?
Use it when you need to increase the efficiency of projects. Don’t use it as a hammer that makes every project look like a nail. It’s de-central, it’s transparent, with unique IDs that are not your name. If you don’t want people to know what or who is behind a transaction - no one would know. It’s immutable - you cannot change it in hindsight. It can be autonomous. You can automatically make transactions based on computer logic. Also, you can help Byzantine generals make better decisions.
Does blockchain suit your use case? Find out more here