How Blockchain Betters Energy

Written By Alexandra Perry

Posted October 10, 2017

At this point, it’s safe to say the world has Bitcoin fever.

Yesterday morning, October 9th, Bitcoin was sitting at $4,605, with its peer Ethereum resting around $300.

Those numbers didn’t come out of the blue, regardless of what economists say. They have been years in the making, with many ups and downs in the process.

But digital currency’s volatility hasn’t deterred investors.

The massive gains early investors made on Bitcoin have created an entire digital currency market over 800 coins strong. Investors are frantically scrambling to get their hands on digital assets — just in case some of those tokens generate Bitcoin-level gains.

And many of them do. Just this year, dozens of digital tokens have raked in quadruple-digit gains:

  • Ripple is up 4,400%
  • Litecoin is up 1,077%
  • NEO is up 9,000%

This is some pretty exciting stuff, and investors are quite excited.

But that doesn’t mean they should abandon all caution. Many investors don’t take the time to understand the underlying technology that makes digital currencies so unique.

They just want to partake in a boom. They overlook the fact that Bitcoin is actually a technology, operating on a revolutionary distributed database known as blockchain.

For many people, the mere mention of “blockchain” immediately leads to glazed eyes. As soon as you introduce a complex and confusing technology, people tend to edge toward the door.

But investors would be foolish to turn a blind eye to blockchain technology. If anything, it is the reason digital currencies like Ethereum and Bitcoin are game changers.

Blockchain could change the way dozens of sectors operate, boosting efficiency and transparency and lowering costs.

That includes the energy sector, where blockchain technology is already being implemented by dozens of companies.

But First, What is Blockchain?

For all its complicated terminology, blockchain is actually pretty simple.

Put simply, a blockchain is a distributed database for storing information.

The blockchain database is not stored in a single location; rather, it is hosted by millions of computers that could be all over the globe. This means with blockchain there is no single point of failure, making the database incredibly strong.

It also means the records stored on the blockchain are open and verifiable. You can’t alter it without someone knowing. Every modification made to the blockchain is visible to the public.

chain_for_blockchainexampleThe distributed nature of the network also helps keep the information stored on the blockchain safe from hackers. There is no centralized location for hackers to target, making the whole database more secure.

For those of you who are having a hard time visualizing the above concepts, just imagine a chain of iron links. Each link that is added to the overall chain is just as strong as the previous links.

With blockchain, there is no weakest link.

Now, blockchain is most famously known for providing the backbone of Bitcoin. In fact, many of the traits that make Bitcoin attractive to economists and investors (security and transparency) are only present because of blockchain.

But what many people don’t know is that blockchain can do far more than power a digital currency revolution. That is why blockchain-based businesses are expected to be worth over $10 billion by 2022.

Blockchain can be implemented by companies all over the globe to improve everything from internal function to products.

This is particularly true in the energy industry, where blockchain is already making waves…

How Blockchain Is Changing Energy Management

In the energy world, blockchain is being applied in a variety of ways. One way that is particularly interesting is that blockchain is allowing consumers to resell their unused solar energy.

That’s right. Because of blockchain, you can turn a profit on your solar panels. 

In New York State, it is already happening. The project is called the Brooklyn Microgrid, and the residents who participate rely on an exchange of energy from their community.

With Brooklyn Microgrid, blockchain technology was used to create a “peer-to-peer” energy market. The system itself is sustainable, secure, and offers a long-term power security if the community is hit with a crisis where extra energy becomes essential (like a hurricane).

Microgrids have the ability to operate independently of large utility companies in the case of an emergency, protecting users.

And it isn’t just being used by communities. Blockchain technology is also being used by utilities.

German energy storage and battery company Sonnen has paired up with grid operator TenneT TSO to evaluate the use of blockchain technology to help integrate renewables into the grid.

This partnership could pay off for Sonnen, helping them link Sonnen’s residential batteries with the grid.

And who is supplying the blockchain technology that Sonnen is going to use? That would be IBM, which has developed a blockchain for businesses.

Now, I am going to be honest: The two examples above are just the tip of the energy blockchain iceberg. It would take hours to fully explain all of the applications that blockchain could have in the energy sector.

Investors don’t need to know the highly technical details. They just need to know that blockchain technology has the potential to generate profits in the long run if you are looking in the right places.

As I mentioned above, blockchain-based companies are expected to be worth $10 billion by 2022.

That means many of the companies pioneering the space and building the fundamental blockchain tools other corporations need are poised for a profitable run.

A few of these companies have already emerged — IBM being one of the most notable.

Others will likely claim their space as the sector develops. And you can bet I will be watching closely.

Until next time,

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Alexandra Perry

follow basic@AlexandraPerryC on Twitter

Alexandra Perry is a contributing analyst for Wealth Daily and Energy and Capital. She has multiple years of experience working with startup companies, primarily focusing on artificial intelligence, cybersecurity, alternative energy, and biotech. Her take on investing is simple: a new age of investor can make monumental returns by investing in emerging industries and foundational startup ventures.

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