- Sep 29, 2019 3:27 am GMT
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I have already posted a link to the Atlantic Council's report on blockchain use in the energy industry. Here's a short write up summarizing the report's conclusions. Briefly, blockchain is good for certain tasks, such as asset registration and management of DERs at the grid's edge, within energy markets. But it also presents multiple technological and legal challenges. For example, the massive energy consumption of Bitcoin, a cryptocurrency powered by blockchain, and scalability problems to handle millions of transactions per second are already well-documented. The authors write that it also presents legal and practical challenges. "Blockchain's decentralization is misaligned with the statutory authority of state regulators and the utilities they franchise. And its inherent transparency is at odds with the confidentiality and sensitivity of financial and power system data — particularly dangerous in an era of international cyberattacks," they write.
To a certain extent, they have it right. Decentralization requires removal of statutory authorities and that might be a difficult goal to achieve, especially given the way current systems work. But their comment on blockchain's "inherent transparency" is incorrect.
Most blockchains are pseudonymous, meaning they reveal only certain data details. So this means that an entity is identified by an address on the blockchain and its transactions may be visible to pretty much everyone. Others, like cryptocurrency zCash's blockchain, use zero-knowledge proofs to completely anonymize details. Monero is another example of a privacy coin.
There is nothing "inherent" about transparency in blockchains and this is demonstrated in the blockchains being developed in the energy sector. EWF's blockchain is very much a centralized marketplace where details about transactions are revealed to all participants. In its strategy document for blockchain, Germany has made special mention of privacy as an important consideration for blockchains. The country plans to pilot test connecting an "energy system" to a public blockchain and it is likely that the connection will be calibrated to reveal only certain details.