How Blockchain Is Transforming The Energy Industry
Commodity and energy trading houses have proven that they can adapt their business model in an economy that imposes more capital requirements and regulations every day. These companies have invested millions of dollars in the last decade to build efficient systems for their regulatory requirements and key risks. Today, a new technology, blockchain, is shaping the commodity market, making it more efficient with reduced transaction costs.
Blockchain is a disruptive technology that allows storing data without the need for a central authority, implying that financial transactions will no longer be stored in a central database but distributed to several other computers that store data locally. For this reason, this technology is called distributed ledger technology (DLT). Each transaction is recorded and added to the previous one, resulting in a growing chain of information.
Blockchain is a buzzword in the financial industry, and it’s slowly captivating the trading floor, as well as the power and utilities sector, which is tiptoeing to disrupt the centralized business model approach based on legacy systems.
Photo courtesy of Dana Smillie.