Written by Oliver Buckley, Senior Associate Director, Energy
Blockchain is a fantastic case study for communications professionals.
The media has hyped it up, as is often the case for new technologies. Bitcoin, which is the most widespread and best-known example of blockchain in use to date, has had massive press coverage globally.
Tyler Winklevoss, the world’s supposed first bitcoin billionaire, said about the cryptocurrency: “We have elected to put our money and faith in a mathematical framework that is free of politics and human error.” A bold claim.
It has been reported in multiple well-respected publications that Bitcoin has a very hungry data-mining requirement. It has even been reported that Bitcoin uses more power in a year than the country of Ireland.
However, Bitcoin is just one application using the blockchain platform. What is less well understood is that Bitcoin’s power requirement is because of the data mining undertaken by people around the world who can earn money from these activities. Blockchain itself isn’t necessarily the issue. Even so, Samsung recently announced that it was developing chips designed specifically to harvest cryptocurrency coins, the theory being that these chips use less energy than traditional computer chips.
Another issue with Bitcoin is that so many people perceive it as an investment asset as opposed to something that can have actual applications in the real world. This could sully the image of investments being made in blockchain concepts, pilot trials and start-ups, some of which hold a great deal of promise. Moving the mindset away from this will be a challenge but will be necessary if blockchain is going to be accepted by the public.
Leaving aside the cryptocurrencies, the developing role of blockchain in sectors across the economy is clear to see. Applications are being tested far and wide: in healthcare, financial services and energy to name a few. Blockchain, alongside Artificial Intelligence and cybersecurity, were the hot topics at Davos in January.
What I hope to see in the public domain in due course is a narrative that seriously tackles the perceived weaknesses of blockchain. This is where start-ups, large corporates, government and thought leaders can step forward and ‘own’ the space.
Blockchain won’t solve every issue in every sector. Nor does it need to. If a simple Excel will do, you don’t need blockchain.
Furthermore, no technology is perfect and there will always be human error so solutions will inevitably be found to resolve common issues. It’s easy to get fixated on the downsides of a new concept, but faults can get fixed. Communications will therefore be required to set the positives in context against the negatives.
Ultimately, we don’t know how influential blockchain could be. Could anyone have imagined the speed and scale of change caused by the introduction of the internet? Or smartphones? Now people could hardly imagine living without them. It could be the same with blockchain.
The energy sector is one sector where blockchain is building momentum. A White Paper developed in 2017 by the World Energy Council and PWC concluded that ‘outside of the financial sector, the energy sector is seen as one of the industries where blockchain could have the biggest transformative and disruptive impact’. Interviews with senior executives in the energy industry showed that:
• 93% believe that blockchain will be able to disrupt the functioning of the industry and contribute toward accelerating the speed of the energy transition.
• 87% think that blockchain technology will start making the most disruptive impact within the next five years.
Take the following example: blockchain creates a much more direct relationship between energy producers and consumers. Individual households that generate power (via solar panels or battery storage for example) can buy and sell electricity with their neighbours, utilising smart contracts that transact automatically. The blockchain records when and where each kWh was produced and assigns this to a consumer, so the certificate of origin is guaranteed.
Such systems are being piloted now – the best known of which is the Brooklyn Microgrid project in New York – with the theory being that such a grid is able to function separate to the main national grid. Terms such as ‘decentralisation’ and ‘disintermediation’ have caught on in describing the benefits of such a system. If the pilots are successful, the systems are rolled out, and people buy in to the concept, then we’ll see a significant change in how the energy market works.
The blockchain journey has just begun. Whether you’re for or against it, there is momentum. The role of the communications professional isn’t to explain how it works, but that it works.
Madano is a fully integrated communications consultancy that specialises in advising clients in sectors where communications are critical to success. Our Energy Practice works for clients across the energy industry, including blockchain, grid technologies and renewables.