Blockchain supporters are retaling to allegations that technology is too expensive, slow and cumbersome for energy trading platforms.
Speaking at an industry event in June, Stephen Woodhouse, chief digital officer of Pöyry in the UK, feared that blockchain could never manage the volume of trade in the energy markets. "I'm not convinced," he said.
These concerns may be true for the blockchain at the base of popular cryptocurrencies like bitcoin, but they are becoming irrelevant as technology develops, according to Jesse Morris, secretary to the developer of the blockchain platform Energy Web Foundation (EWF).
The Blockchain shortcomings mentioned in a GTM article last month were "somewhat outdated," Morris said. "Existing efforts and research have largely overcome some of these challenges.
Blockchain issues with transaction speed, cost and scalability have already been solved or will be soon, he said. the most damaging challenge that the blockchain has ever faced so far: its work-proof safety protocol can require huge amounts of energy.
With bitcoin, this energy consumption is currently estimated at 73 terawatt hours in the year, more than Austria uses in a year.
This is a problem, admits Morris To make matters worse, the bitcoin network is unlikely to switch to a different security protocol anytime soon
But the Ethereum public network , which is now the largest and most used blockchain in terms of transactions and calculations, is preparing for a move from proof-of-work to an alternative low-energy consensus mechanism called proof-of-stake.
There is no fixed date for the move, although Morris said it could happen within the next two to five years as part of the ongoing improvement proposals.
He said that the Ethereum community is already pondering a plan to approve one out of every 20 blocks of blockchain using stake testing, as a way to verify the stability of the process.
Ethereum miners, the people who validate transactions, must accept the proposal before it can move forward. But in the meantime, EWF is developing a platform that validates transactions with proof-of-authority, another low-energy consensus mechanism.
"We have 15 computers running our network right now and each of them has something like 100 watts of power," Morris said.
Once the blockchain exceeds the enigma of energy consumption, it still has to overcome the perceived problems with cost and scalability.
Bitcoin and Ethereum network transactions today are "quite expensive", Morris admitted, what would be a problem for low margin energy trading applications. Morris cited a transaction cost of $ 5 for charging electric vehicles, in addition to the cost of electricity.
However, he said: "There are many, many technologies that can solve this problem of transaction costs."
The cost, he said, refers to a further blockchain problem: scalability. The Ethereum public network can currently handle around 30 transactions per second. This is not good enough to meet energy transactions on an individual kilowatt-hour basis, Morris said.
But there is no reason why one day of energy transactions can not be recorded at one time, on a single blockchain block. And alternative blockchains could offer much better performance.
EWF, for example, is designing its platform to handle throughput 30 times greater than the public one of Ethereum. Another technology, Iota, should be infinitely scalable, so transaction costs disappear.
Colleen Metelitsa, an on-board analyst at GTM Research, said: "There are many methods that people are doing now and there are many other people who do a lot to downsize and solve these problems."
of work, he said, was chosen for bitcoin transactions because it represents the gold standard in blockchain security. But its energy intensity means it could never be suitable for trading kilowatt hours.
For this reason, when energy-related blockchains reach commercial maturity it is quite safe to say that they will be energy efficient, scalable and have low transaction costs.
Many companies that already use Ethereum may have private versions that have been adapted to work using evidence of authority, Metelitsa said. For Morris, the real challenges of blockchain are no longer about energy, cost and scalability. Instead, technology faces new problems.
It's about getting companies to see beyond the hype and start looking at ways the blockchain could add value, Morris said. This is complicated because there is no simple way to identify that value.
Finally, there are basic problems in ensuring that corporate IT departments feel comfortable with the blockchain. "It's not where they come from," Morris said, "and the talent in the blockchain development space is now scarce, so it's really hard to implement these things right now."