My Intuition says Utilities Need Blockchain

Alan McDowell
Jul 20, 2017 · 3 min read

Capital projects

Blockchain will disrupt every industry it comes in contact with.

Utilities are centralized and heavily regulated entities with much complexity.

Let’s delve into the basics of Blockchain technology

Blockchain technology has inherent characteristics that can be useful accross many industries, one of them being the utilities sector which I will talk about .

Now, how does it work:

A blockchain is a distributed, transparent, and highly secure record system which consists of a log of transactions shared across a network. These transactions are stored in the form of a block. Once a block is created, it will be broadcasted to all the other nodes, so that everyone can update their blockchain. Each block is linked to the previous block forming a traceable chain. The creators of these blocks are called miners. When a node receives a block from a miner, it will add it to its local Blockchain and broadcast it to the rest of the network.

Quick Summary

  • Each node on the network contains a complete replica of the blockchain data.
  • Miners authenticate and validate transactions, and then create blocks to be added to the blockchain.

Let’s go through the process:

  1. A starts transaction toward B, G toward H, T to D
  2. These transactions are put together in a block (3 transactions total)
  3. The block is validated by the network of nodes (miners) using cryptographic methods.
  4. The block is added to the blockchain and is visible to all users
  5. B receives transaction A, H receives transaction from G, and D receives transaction from T.

What does Blockchain solve?

  • It solves the problem of trust. People do not need to trust each other. They just have to trust the tech.
  • Traceability and Transparency, enabled by Blockchain’s nature of being a distributed ledger. Anyone can go back and trace a transaction and view it.
  • Accountability. All parties can see and agree on how a transaction progresses.

Applications:

  • Transference of Assets without intermediaries (legal or fianancial).
  • Immutable autonomous programs that can execute actions under specific set of terms (Smart Contracts).

Use cases of blockchain technology in the Utilities Sector

Blockchain can enable a decentralized and autonomous distribution system.

— Blockchains + Smart Meters —

Blockchains can create a more transparent environment where transactions are transparent and secure.

This marriage could help:

  • Help improve debt recovery
  • Improve efficiency
  • Provide customers more confidence as a result of the increased transparency in price changes and fees
  • Reduce risk of fraud or theft

A smart grid network built on blockchain technology would help ensure trustworthy data on water consumption. Customers could publicly track their water consumption without worrying about data tampering.

Smart-contracts would reduce the need for litigation, a lot of analytic work, and financial intermediaries (cost savings).

In the future, water may have peak demand prices. With blockchain, customers would have the ability to reduce their water bill by making more informed purchasing decisions, by avoiding consumption peaks.

End of thought.

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