Blockchain – the first utility starts utilizing a “real Blockchain”

On 5.10.2016, I was invited as a panelist to the KIC Inno Energy office inauguration event at the Berlin EUREF Campus together with around 80 others (from the energy scene and multiple startups). What really caught the attention that evening was the press release shared by the utility Stadtwerke Energie Verbund GmbH (Kamen) together with “blog.stromhaltig” and other partners. 

The municipal utilities are, with immediate effect and taking into account local circumstances, using the regional green grid electricity labeling “GrünStromJetons” based on an open Ethereum Blockchain.

Ethereum, speaking in a wide sense, is a Blockchain that is operated by a foundation and can be likened with the internet protocol TCP/IP or can be compared to a modified version of the Linux operating system. It allows the usage and operation of the Blockchain as well as active collaboration on different levels. Ethereum calls itself the “world computer” as the goal is, among others, to run the necessary computational processes for operation on millions of computers all over the world. That was the draw. Meaning, everyone who gets involved with their computing power will be rewarded by the system either in cryptocurrency or in the form of other benefits from the community.
The press release thereby enunciated the advent of the first commercial usage of a “real” Blockchain. From my point of view, with this project, the extremely urgent need to bring together electricity trading and physics is being dealt with. Since there is no simple copper plate for fusion, the decentral producers and the consumers need to be explicitly and physically linked with one another. The current balancing groups are barely or not at all suited for this to happen. The Jetons with their visualization of “green” and “grey” electricity, is a definitely a start.

What is then a “real” Blockchain?
For me, the Blockchain technology can only develop its full potential when it is completely transparent and open with all its entries, operations and consigned contracts (smart contracts). And also only when the data processing is decentral and not on a server hidden somewhere. This way one can always look into the “machine room” of the “GrünStromJetons” and locate green und grey. Until today, this was not only unthinkable in the energy economy, but was also seen as a “real” Blockchain.

Can a Blockchain energy cooperative be awaited?
When you believe in the developer of blog.stromhaltig Thorsten Zoerner, then you can soon expect to see such a cooperative community. All those involved are registered legal energy suppliers and can at the same time potential consumers - based on a real Blockchain and in a electricity DAO (Decentralized Autonomous Organization) world. more (in German) Then let’s go?!

Open, encrypted, accessible & decentral = the trust machine     
The renowned newspaper “The Economist” named the Blockchain technology “the trust machine”. And it can be exactly that when it remains open and decentral and, is at some point, operated on millions of computers perhaps. Only then are the blocks traceable and can be modified with the previously consigned contracts. The computing work provides yields for many private users, either as part of the usage (e.g. an energy cooperative) or they are paid therefore in a cryptocurrency (the popular one being bitcoin).

Why are non-open Blockchains unrevolutionary?
As I busied myself with this theme over the last few months, I often asked myself why so many speak of a revolution and at the same time most of the news on company Blockchains are only seen as efficiently implemented practices. Rumour has it that the classic electricity suppliers deploy the system internally, to handle the distrust in production, to restrict transport and distribution within themselves and also possibly internally handle balancing groups. Well, why not?
But then I asked myself, on closer inspection, what is so special about the hyped-up Blockchain theme “Brooklyn micro grid”. Even other colleagues asked themselves the same question. In Berlin we wanted to link a few balcony PV installations with a business park nearby. Something completely possible even without a Blockchain. In the Brooklyn case, an internal Blockchain was used for the exchange of electricity between neighbours. Yes, it can also be done differently with a server in an office. Transparency? Unfortunately, no. So the entire thing as far as I am concerned is a successful marketing presentation that does not completely utilize the possibilities put forth by a “real” Blockchain. It is not transparent. Hence the developers cannot really speak of a “trust machine” or profit from it. We have to wait and see what the Brooklynites make out of this.
A nice interview with the Jeton-developer Thorsten Zoerner on Brooklyn, among other things can be found here (in German).

Why are open Blockchains especially great for young companies?
Well, in the normal world trust is attained over a long period of time or via many ads. You can never be certain on who should have your smart meter data and with which young companies from the electricity sector you should work with. With a “real” Blockchain, everything changes. All transactions are open while at the same time you have the option to remain anonymous (if need be, with completely encrypted initiated transactions). The blocks that are worked on in a decentral manner cannot be modified without everyone else seeing them. The system has such tight constraints that even vandalism does not really have a chance to bring anyone any profit. For that, too many computational processes need to be overrun and other operators in the Blockchain world also need to play along.  Hereby I would like to encourage all other energy startups to openly employ a real Blockchain. The hidden version is not really revolutionary and does not bring any benefits to young companies other than the usage of the hype word Blockchain.

What has happened to the 132 million investments into DAO?
I want to look back to my previous two blogs on Blockchain and also to our Blockchain day in May 2016 as especially the DAO, with the quasi immediate successful hacker attack, has brought about many insights. You can read more about this in my blogs 132 Mio Dollar ab jetzt überall und nirgendwo - Blockchain macht's möglich and 50 Millionen Dollar überall und nirgends den Hackern entrissen – die DAO übersteht die erste harte Bewährungsprobe.

How has the DAO carried on?
There are two Ethereum Blockchains around the DAO and two crypto currencies as well. The hackers are still trapped with their money in the Ethereum Classic as there is no third party who has converted the money or has only taken it.  The entirety is outlined in the following two German blogs: Nachspiel zum DAO Hack and Etherum und Etherum-Klassik koexistieren.
Is the whole thing an example of a crashing failure of the Blockchain idea or even with the DAO-associated investment ideas as the diverse classical media suggest?
I mean no. For me it is simply fascinating: time will tell what can be learned from this “early collapse”, or in other words the massive problems that have sprung up early, and from the philosophy of “smart contracts”. That I believe is immeasurable and will only boost this young and potentially often utilizable technology. Then neither Bitcoin nor the Blockchain technology are anywhere near the end. To further develop it, there are and will be more Ethereums, more DAOs in all kinds of forms and even more cryptocurrencies.

When you are interested in getting more timely news and expert discussions on the use of Blockchain in the new energy world, then register yourself now for the 17. Forum Neue Energiewelt taking place from 10 to 11 November 2016 in Berlin.