Cryptocurrencies are incredibly popular right now, and for good reason. But they are only possible through a technology called Blockchain, which is essentially a digital ledger. The nature of the technology allows it to be private and secure, while transactions and related transfers remain transparent. Blockchain itself is infinitely more interesting than the cryptocurrencies it serves. Why? Simply because of its vast and incredible potential, across many industries, including the green energy market.
You’re forgiven for wondering how blockchain is relevant in a completely separate industry such as eco-friendly and efficient energy practices. Once you understand the technology and what it has to offer, however, your tune will change.
Let’s start with the basics, shall we?
What Is Blockchain?
In the cryptocurrency world, a block is essentially a new transaction record; transactions are generally funds exchanging hands. When said transaction is completed, it’s added to the overall database, referred to as a chain. This explains where the technology gets its name.
A blockchain is a collection of digital transactions separated into blocks, hence the digital ledger comparison. Those blocks are transparent and visible to everyone, however, they cannot be edited, altered, or updated once a transaction is completed. Furthermore, the participants have no influence on the blocks information, outside of the transaction itself. This allows it to be secure, with encryption boosting that security to unprecedented levels.
With cryptocurrencies, for example, you can send funds—such as Bitcoins—to a friend or business. That transfer is added to the chain, meaning everyone can see the money exchanged hands and how much. Even though they know the value, they don’t know what exchanged hands or why. Furthermore, they don’t get to see the parties involved.
As for the person receiving the funds, they are sent a private key which provides the details to the funds address on the blockchain. With the key, the funds—or block—can be accessed. Adversely, every account in the blockchain is given a public key, which can be used to send information or funds to.
More importantly, the funds or data handled by the blockchain are incredibly secure and only accessible to those with a private key. In Bitcoin, you can’t just make off with someone’s funds. They have to transfer or send you the currency directly. The downside is if you lose your key, you also lose access to said funds—which highlights how secure the blockchain truly is.
How Can This Be Used Elsewhere?
Believe it or not, the technology can be used in many ways, not just as a public ledger of sorts. Siemens, for instance, recently unveiled the possibility of a crowdsourced “microgrid” system, where the electricity is traded amongst homeowners through a blockchain. It’s a real thing happening too, as an existing microgrid is currently operating and trading electricity in Brooklyn, New York.
Renewables make distributed energy production, especially amongst smaller areas, more viable. Imagine half a neighborhood outfitted with solar panels and related systems generating and distributing generate to the rest of the neighborhood. It’s a crazy prospect, but it’s entirely possible, especially with renewable energy owners selling their excess power back to the suppliers, or playing a role in federal tax credits and discounts. Why couldn’t they sell it to other homeowners instead?
The opposite is true too. When a homeowner with renewable energy sources—like installed solar panels—finds they need more power, they can purchase what’s necessary through others nearby on the blockchain.
How will it work though? Easy, at least in theory. Through Siemens system coins—similar to a cryptocurrency—-are used to pay for electricity. When you sell energy to a neighbor or someone that can make use of your energy source, they pay in coins. In this case, the coins are called SolarCoin, but they could be anything really.
The SolarCoin can then be used to purchase energy yourself or fund personal projects and opportunities related to the coin. Some coins, after a decent amount of time, can even be converted to traditional fiat currency—like into U.S. dollars.
Even more promising is the idea that your energy source could be in a remote location, even in a different state. Let’s say your home is in New England, but you have a solar energy setup in Florida. You could sell your energy to nearby properties, all via the blockchain. This would be incredibly beneficial for those who own multiple properties, such as a vacation home.
This kind of thing is already active in Australia. It will be interesting to see how it’s adapted for other markets, and how long it takes to rollout.