Bitcoin, Crypto currency, Blockchain

“The Problem of energy consumption is solvable”: BTC-ECHO in conversation with the research center for energy Economics e. V.


The energy industry is often cited as an industry that could benefit from Blockchain technology is immense. At the same time a criticism of an extremely energy-intensive Mining grows, as they come, for example, in the case of Bitcoin. BTC-ECHO author Phillip Horch was talking with the research center for energy Economics e. V. (FfE), among other things, about how the Blockchain and the energy sector are compatible with each other and what are the challenges of this still young technology.

Bitcoin Mining is always in the criticism, to consume a lot of energy and a high environmental impact. The underlying Blockchain technology, however, offers advantages, in terms of the energy sector an advantage. What contribution, in your opinion, the research, the energy sector and the Blockchain closer together?

The Blockchain technology as the infrastructure – and platform-technology can be the Basis for a variety of applications. The first and most prominent example of this is Bitcoin. In our project, we deal only marginally with the topic of Bitcoin, since its applications in the energy sector is extremely low. The Problem of the massive energy requirements of the Bitcoin Blockchain is certainly with regard to the environmental consequences of a particular challenge. Thanks to alternative consensus mechanisms, the Problem of high energy consumption, depending on the Blockchain-design and application, however, is solvable.
In the context of the energy industry, and specifically in our project, we focus on the opportunities of the technology, new developments and the potential for optimization in the digitized supply of energy. Our Recently published technology, to present the report as the basis.

What challenges do you see as the groundbreaking development of the Blockchain technology for the future?

The Blockchain technology is today already able to ensure data integrity, manipulation, security, reliability, high availability, transparency and the Pseudonymity of digital processes. In the case of application cases in the energy sector, in particular, requirements to the transaction speeds and costs and privacy is of high relevance. In perspective, it is expected that through new developments, users-friendliness , interoperability, and energy consumption of public Blockchains with alternative consensus mechanisms is drastically reduced. Even if the concepts could, in principle, be used in other protocols, transferred, lacks standardization. The consideration of current developments shows that the technology is subject to a push for innovation, but sometimes fragmented and many different Blockchain protocols exist. The focus of many developments is on different goals. These are sometimes multi-layered and are aimed primarily at the large limitations in terms of scalability, interoperability and anonymity.

Keyword: standardization: Keep-regulation at the national level?

Standardization for wide application beneficial. The topic is worn on the national level, also in the standardization bodies, is certainly helpful. The Federal Association of the Blockchain shows that this is already successful. However, you will need to in the future in terms of technology standardization. In particular, in the field of energy economy, it is necessary, verifiable, and uniform Standards. As I said, it is according to our understanding of the Blockchain as a platform technology, the benefits to associate a plurality of subscribers and users in an efficient and easy access.

What you consider to be the most important Use Cases outside of crypto-currencies?

The framework of the research project have been identified over 90 industry-specific use cases of the technology. As promising have made in applications to the energy-Labelling (guarantees of Origin), Asset Management, change of Supplier, as well as in the context of System and network services.
Many of the current implementation projects in the context of the energy economy, tackle the issue of Peer-to-Peer energy trading. This is at first glance a very obvious but also visionary Use Case, however, in the current legal and regulatory framework with “training wheels” to implement. The Vision of many of the aims here is to substitute the classical energy supply business. Its tasks, however, are complex and, without the safeguard, for example, the balance of the circle of loyalty and other legal obligations in the P2P trading on prosumers will not be able to replace a Blockchain solution of the RU, but has to rely on its services. In the project were also identified synergies of different use cases that enable multiple applications over a common Blockchain infrastructure to handle, which, in turn, is the character of the Blockchain as a platform-technology. The application of the energy-Labeling was demonstrated in the FfE in the context of a Proof-of-Concepts on the basis of an Ethereum-based flow marking and tested. In the context of our research, especially the potential for optimization of the existing system in relation to the certification and designation of green electricity have been identified. The Blockchain technology promises more value, especially against the Background of an increasing Integration of volatile renewable energy. For an implementation, different approaches are possible.

You hold so, for example, Cross-Chain solutions for make sense? Or you need a completely new concept?

Cross-Chain solutions can be a sensible solution for specific applications. Ultimately, it is necessary to consider the processes and requirements of a Use Case is very specific, and to select, depending on the embodiment, the right technical solution. With the help of a standardization of such solutions would be considerably easier to implement and, if necessary, absolutely necessary.

There are other research efforts of the FfE?

On the Basis of the skills from our current research project we are planning to go into an implementation project that we are preparing with our partners. We want to show that the technology in some application cases, a real value you can deliver, their synergies can play on a Blockchain platform, the strength of the technology, and on the other hand, practical limitations. This can also include, for example, the Integration in existing IT systems (e.g. SAP) or the iMSys infrastructure. Here we see a great challenge, because (for good reason) on security infrastructure designed for innovative technologies leaves little leeway. This includes technical restrictions, such as the integration of data from the Smart Metering PKI in a Blockchain, practical restrictions, such as the billing-relevance and the temporal resolution of the acquired measurement values and legal restrictions, for example regarding data protection. Us as a scientist interested in addition, of course, what are the system effects resulting from these solutions, and what is the added value for the energy economy.

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