Blockchain Technology Applications Off-the-Grid Solar Power Neighborhood Marketplace on the Blockchain in Brooklyn, NY. Part 2
Immutability of blockchain technology
Immutability means that once a record become a part of a blockchain, it is impossible to delete or change the record. This is possible because many blockchains connect blocks of the chain with hashes.
A cryptography hash is a string of data that is much shorter than the original data. For example, block #522235 on the Bitcoin blockchain contains information about 1484 transactions including addresses, amounts, timestamps, outputs and more, yet when cryptography algorithm SHA-256, that the Bitcoin blockchain uses, creates a hash for this data, the hash is 0000000000000000003ee12949eb3f34e57070063bcc6aec736101a05d174558. Once the miners seal a block of the Bitcoin blockchain with a hash, the hash becomes a part of the block and together with the data about the transactions gets added to the blockchain. You can see the page for the block #522235 of the Bitcoin blockchain here: https://blockchain.info/block/0000000000000000003ee12949eb3f34e57070063bcc6aec736101a05d174558
Cryptography hashes have several important properties. First, as mentioned above, for large sets of data they are much shorter than the original data. Second, a set of data can only have one cryptography hash using a cryptography algorithm. Third, two very similar sets of data will have very different hashes under the same cryptography algorithm. Fourth, while anyone who has access to the cryptography algorithm can create the hash having the full original data, recreating the data only having the hash for it is impossible.
These properties are the reason why blockchain networks are so secure. Every block contains data and the hash for the data. Every block also contains the hash from the previous block. If someone were to change even at least one digit of the information in a block of the blockchain, the cryptography algorithm would generate a new hash for the data and the blockchain would reject the edited block because the following block of the blockchain contains the old hash for the block with unaltered data. The new block simply would not fit.
Because blockchain networks are decentralized, they typically have many copies of the blockchain on various computers and even if someone were to figure out how to alter a full blockchain, other computers with full copies of the unaltered blockchain would reject the new version.
Why blockchain for microgrids?
Because of the properties described above, blockchain technology is finding more and more interesting applications.
For example, in Brooklyn neighborhood of New York City neighbors are using blockchain technology to sell electric energy to one another.
This example may seem shocking to someone used to reading about global-scale blockchain projects. Why would someone use blockchain to conduct transactions in a neighborhood?
In reality, blockchain is not just a great solution for global industries. It is also a great solution for small, local marketplaces because people in communities are looking for a solution they can trust. Blockchain is perfect for that because of its immutability property. In addition to this, people in communities are looking for solutions that do not come with large maintenance costs and blockchain is perfect from this perspective, too. Most widely popular cryptocurrency networks today are open source, meaning that the original code is free and communities do not have to invest a lot of funds into software and electronic infrastructure.
The current state of microgrids and green energy
Today, people can already legally sell and buy green energy. This happens every time someone signs up with a company such as Green Mountain Energy.
Green Mountain Energy has been created in Vermont in 1997. The goal of the company is to offer sustainable power solutions to its customers and promote deregulation of the electricity marketplace. Deregulated marketplaces are an area in which blockchain technology has a tremendous potential because blockchain technology is about peer-to-peer transactions without a third party oversight.
Green Mountain Energy has expanded to New York City is 2009 and also operates in Illinois, Maryland, Texas, Pennsylvania, New Jersey and Massachusetts.
When you sign up with an eco-friendly energy provider, you are technically not buying green energy directly. You are buying the company’s energy credits, also known as renewable energy certificates. This means that you still may be using electricity produced by traditional means, such as a coal plants or natural gas plants, but with investing into renewable energy certificates you are making sure that in the future more energy will come from renewable sources.
In the United States, a renewable energy certificate or REC is a tradable commodity which serves as a proof of 1 megawatt-hour of electricity coming from a renewable energy source. The certificates represent a mechanism of adding renewable energy to the existing energy grids and systems.