Tony Huang, CEO, Energy Eco Chain.
Photography Vernon Wong
Any conversation about blockchain technology inevitably tilts toward Bitcoin and cryptocurrencies. How are the two different?
Bitcoin is the first application of blockchain technology. It’s kinda like Altavista and Netscape were one of the first few browsers for the underlying technology which was the internet, which was the “next big trend” then.
The first generation (of blockchain) was cryptocurrency, which were all mining-based. That was followed by second generation blockchains which were ASIC resistant and had Smart Contract capabilities that allowed you to input “wages”.
But what was the mining for?
To create a form of decentralization and verification.
How does that work?
Blockchain technology can be described as a digital ledger that records transactions or any information you can think of. You can write anything to it, and it can be synchronized to anyone.
At the core of blockchain is encryption technology. The hash – or key for information – is unique. When the data is blank, it always defaults to that value. If I put in a set of data, the hash will change. Any time I put in that same data, it will have the same hash, so that’s the encryption part.
Now you have the hash, you put it in a container called a block. So, you’ll need verification to record the information. With multiple blocks linked together, the second block always points back to the previous block – so that’s a blockchain.
For more security, this series of blocks is synchronized across multiple peers so if one was hacked or edited, you have other peers to verify it. Thus, it’s a self-healing database that’s decentralized.
However, mining is on its way to being obsolete, because if there’s a price drop your equipment becomes overpriced fancy boxes. The bitcoin network has also become too costly. Now, the transaction fee for a simple cup of coffee can be up to a hundred or two hundred dollars, so it’s no longer suitable as a payment solution!
How do third generation blockchains work without mining then?
These use a public chain and what is known as a “Trusted Note” to do verification, so there’s no need to waste energy mining.
With Energy Eco Chain for example, we work with trusted financial institutions to host trusted notes so there’s no public participation. Everything is synchronized in real-time, and it’s self-healing. You’ll need all the blocks to get the information, so it’s much more difficult to hack.
In a consortium chain, we don’t need to know who has the first record because we’re business partners. We just share our ledgers, which improves our efficiency.
And how do we apply blockchain technology towards something like energy then?
We do this in three main ways:
1. Supply chain finance
2. Digitalized energy product trading
3. Payment and settlement
By using smart contracts and shared ledgers, we can provide instant settlement for energy bills, thus improving efficiency and lowering cost. Our financial platform can help to bring stable electricity to rural areas by encouraging infrastructure-based investments.
Meanwhile, by digitalizing the energy trade, we can enable entities in the ecosystem to buy/ sell their energy products more efficiently. With liberated smart grids, the technology helps to quantify all the energy stored, used, and created for the grid so we can work with the regulators to digitize the energy sector.
Does that mean I could as an individual, sell energy that I don’t use?
Yes! We call that a prosumer. In energy markets, the cost of transmission is as high as the cost of construction of power plants. So if there are pockets of home producers that can spread energy to their immediate vicinities, the cost of bringing power to the country would be much cheaper. This would give more countries access to stable power as they won‘t have to wait for governments to run power lines.
What’s the impact of not shifting to blockchain then?
We’re in 2018 and networks speeds are moving to 5G, but there are countries in the world where more people have access to smartphones than there are with bank accounts. Obviously something is wrong.
I feel that with blockchain, people can be better empowered. It’s really a good chance to improve human life; giving them access to basic necessities.
So for governments that choose to ignore the potential of this technology? Well, it’ll be like a whole generation going by that gets left behind.
"Blockchain is still in its infancy, but its pace of evolution is faster than anything we’ve seen before; even the internet"