The United States Senate seems to have warmed up with the blockchain. In a recent hearing on the electrical implications of the blockchain, some aspects of the blockchain were discussed. In the first place, the electrical consumption that "proof-of-work (POW)" systems create has been explored. POW systems are the two most important encrypted. Depending on how the platform is designed, massive exploitation of electricity grids can be created.
With the increase in the price of Bitcoin last year, the amount of electricity needed to run it exploded. At some point in late 2017, it was estimated that Bitcoin's blockchain was using more energy than many small nations. Bitcoin's blockchain uses more energy as the price increases, and this is one of the inherent scalability problems of the system.
The POW systems are not the only way that a blockchain-based system can be organized, and may or may not be the best way to make the cryptocurrency. Another idea discussed in the United States Senate was how the blockchain could make the electricity grid more efficient. A number of companies are already working with this aspect of the blockchain, which can use cryptocurrencies to make the electricity market much more effective.
The American Senate sees the advantages in Blockchain
The power grid in the United States needs to be updated. Many people do not know that while the United States is the largest economy in the world, most of their infrastructure is in poor condition. Walmart has recently patented a blockchain-based system that would work with the next generation IoT home appliances enabled and would create a network efficiency level that would otherwise be impossible.
Read: Bitcoin Energy Consumption: Faced with the Environment Concerns
Arvind Narayanan, who is an associate professor of computer science at Princeton University, said to the Senate on where the blockchain could adapt to the US electricity market,
"A blockchain-based market could be more attractive than a centralized trading platform if market participants are opposed to a single company that controls the platform. allow customers to directly exchange electricity with each other in a "peer-to-peer" manner, for example by purchasing and selling solar energy on the excess roof, however, peer-to-peer business requires again the collaboration of utilities that eventually control the physical flow of electricity. "
Professor Narayanan brings a good point. The way in which resources are delegated can set planned economies, like China, regardless of Western nations where public services are allowed to profit from their operations. Blockchain has the ability to create transparent markets. The rise of Intelligent Artificial (AI) and IoT technology can drastically change the way resources are allocated, but deep-rooted interests will probably resist this increased efficiency.
Unfortunately for utilities that operate using a market-based business model, transparent systems controlled by the IA and removing financial incentives are a fatal blow to their business. A commercial model based on the market could have been the best system in a world where price discovery was not easy. Today, access to information that Blockchain and IoT create is reversing that dynamic.
En Actually it is Different This Time
A recent report by the Boston Consulting Group (BCG) suggests that blockchain is not actually suitable for commodity trading. The underlying idea is that commodity traders create value by exploiting price errors from market to market (arbitrage), and therefore, blockchain removes their profitability.
Amy Belt, who was an author of the BCG report, had this to say to Reuters after the report was made public,
"There are so many pilot schemes but none have yet become a true production system. of the problems is that it is not designed for physical operations.The fundamental problem: how do you track a physical entity in a virtual world? are two colliding worlds. "
The idea that traders goods create value through profit seeking may have been true before AI, Blockchain and IoT technology existed, but today that market model seems increasingly archaic. The above quote puts an unrealistic question on a technology that is very new. Blockchain works well with other new technologies and has only existed for a decade
No need for big profits
Trading institutions can be easily replaced by algorithms that do not need profit and can scrape data on a scale would impossible for any conglomerate of human beings to match. It not only eliminates the need for profit, but also creates a new system that eliminates waste far more than has ever been possible.
The huge amounts of energy Bitcoin uses are the result of how the blockchain architecture was designed for its platform, not a fundamental trait of the blockchain. One of the biggest problems for people is understanding the severity of the changes allowed by Blockchain, IoT and AI. In a world where human minds must delegate resources, a market system can be the best
Now, the new technology is changing the nature of the system's efficiency. It may take time for policymakers to realize the competitive disadvantage of a market-based trading platform compared to a well-designed AI / IoT platform that uses the blockchain to create transparent markets.