There has been a lot in the news about cryptocurrencies lately and people are just starting to learn more about what blockchain is too. As of now most of the publicity that blockchain has been getting as far as energy consumption is concerned has been negative publicity. That’s because the blockchain that keeps a cryptocurrency going consumes up huge amounts of electricity to power the computers that record its constantly updating status. All that negative publicity could be changing if blockchain could be applied to the energy sector.
How Blockchain Works in a Nutshell
It would take an article 100 pages long to get you to fully understand how blockchain works. We certainly won’t bore you with that. It is however important to know that blockchain is a process that eliminates the middleman. As far as blockchain and cryptocurrencies go they work because they don’t need a bank or government agency facilitating the transfer of them since there is no need for a middleman.
A blockchain can be loosely described as an accumulated and growing list of records that are attached to a digital asset. These digital transactions are also encrypted (hence the term cryptocurrency). In order for a digital asset to have value every single transaction from its inception must be on record. As was mentioned, the big problem with blockchain and cryptocurrencies is that the computers that record the blockchain for a cryptocurrency take a huge amount of electric power to run.
So once gain how does this negative energy impact of a blockchain spur on energy change? Be patient because we are getting to that.
Blockchain’s Role in Energy Change
How can blockchain go from a negative to a positive as far as energy consumption is concerned? There were two key words in the above section that are the key to this. Those two words are ‘digital asset’. As of right now only cryptocurrencies are currently classified as digital assets. In theory though, most anything can become a digital asset if it has a token value attached to it and its transfers and trading are recorded from its inception.
This means that even energy can have a transferrable value attached to it. Currently energy is a pretty one sided affair that only sees energy producers selling it to energy consumers for a set price and then it ends there. But what if energy was bought and sold in token form. How differently would people look at it then? Suddenly that one-way street that energy used to be traded on could theoretically become a two-way street that makes people think more about their energy’s value.
What So Called ‘Energy Tokens’ Could Do For Energy Conservation
Right now energy only has value to those that produce it and end users that try to pay as little as possible for it. This could be taken to a whole new level if energy was placed in token form and had a value attached to it.
Think of it this way. Right now energy is just a number on a piece of paper whose value is determined loosely by supply and demand and government regulating agencies. In other words it has no real attached value. If energy was somehow converted into tangible energy tokens it then becomes a digital asset with real value. It’s a lot harder to throw a digital asset that has value in the trash than it is a piece of paper with no real perceived value.
What Is The Possible End Result Of Treating Energy As Sort Of A Cryptocurrency?
We know that this all sounds a little confusing but you have enough information to at least consider the possibility that energy could truly become a sort of a cryptocurrency of its own with a real value attached to it. This could quite possibly cause people to look at energy’s value in a whole new way and subsequently treat it differently in terms of how they use it (or waste it needlessly).
People will start to see a more direct relationship between energy and value. This could have a huge ripple effect as far as energy consumption is concerned. Just like people try to save money because it has value so too will people try to save more energy when it has value attached to it. In theory this could make people want to do such things as have more energy efficient homes and businesses. The energy savings and impact on the environment could be substantial with this alone.
Energy tokens could even be used as a catalyst for switching over to more renewable sources of energy. Energy investors could potentially line up in droves for wind, solar and hydroelectric power if it had a set value attached to it.
Of course this thinking is all in its infancy. But there truly is a possibility that blockchain could go from being a huge drain on the world’s energy supply to the very thing that makes the world a much more energy conscious and energy efficient place.