[Paper Review] Review of Blockchain Technology and its Expectations: Case of the Energy Sector

Ruzanna Chitchyan, Jordan Murkin|arXiv (Cornell University)|Mar 9, 2018

Blockchain Technology Applications and Security4 references46 citations

TL;DR

The paper surveys blockchain technology and its expected societal and regulatory impacts, reviews its features, and examines global energy-sector developments to assess whether these expectations are materializing, concluding with cautious optimism.

ABSTRACT

This article suggests that the worldwide relevance of blockchain technology is motivated by the changes that it is expected to cause in: (i) the way that business is organised and (ii) regulated, as well as (iii) by the way that it changes the role of individuals within a society. The article presents an overview of the features of blockchain technology. It then takes a closer look into the developments within the energy sector across the world to gain a preliminary indication of whether the stated expectations are coming to reality. As a result of this review, we remain cautiously optimistic that blockchain technology could deliver the expected impact.

Motivation & Objective

• Motivate why blockchain is globally relevant through potential organizational, regulatory, and societal impacts.
• Provide a technology-focused overview of blockchain features and mechanisms.
• Survey energy-sector developments worldwide to gauge alignment with stated expectations.
• Evaluate evidence for real-world realization of blockchain-driven changes in energy markets.

Proposed method

• Describe the makeup of blockchain technology, including cryptographic immutability and Merkle trees.
• Explain distributed consensus mechanisms and their security/decentralization implications.
• Discuss scalability challenges and proposed solutions (permissioning, off-chain, sharding).
• Introduce smart contracts and their role in dis-intermediation and automation.
• Review current blockchain applications in the energy sector and related ecosystems (P2P trading, certificates, IoT integration).
• Assess alignment between expectations and real-world developments in energy markets.

Experimental results

Research questions

• RQ1 What are the core technical features of blockchain that enable trustless, decentralized transactions?
• RQ2 Are current energy-sector developments and pilot implementations consistent with the expected transformative impact of blockchain?
• RQ3 What scale and regulatory considerations affect blockchain adoption in energy markets?
• RQ4 How do platforms, ecosystems, and smart contracts influence dis-intermediation in energy trading?

Key findings

• Blockchain can provide cryptographic immutability and verifiability, and enables distributed consensus without a central mediator.
• There is growing global activity in the energy sector exploring blockchain-enabled P2P trading, certificates, and IoT integration.
• Consortia and private blockchains offer scalability and automation benefits at the cost of reduced decentralization and trust than public ledgers.
• Off-chain processing, sharding, and other scalability approaches are being explored to address the scalability-security-decentralization trilemma.
• Industry players are piloting and building ecosystems (e.g., Energy Web Foundation, Enerchain, LO3 Energy) to enable new energy services and more automated trading.
• Evidence from ongoing projects shows a broad spectrum of blockchain-enabled energy applications, from retail to wholesale trading and grid services.