Lux Research, an independent research and advisory firm, has released a new report that says that blockchain technology is now expanding beyond finance, with applications in the power sector, supply chain and agriculture.
The report, titled “Beyond Finance: Blockchain's Impact on the Power Sector" has been authored by analysts at Lux Research – Isaac Brown, and Katrina Westerhof. Based on interviews with industry stakeholders and extensive secondary research, the authors said that the power sector has emerged as an early leader for blockchain development outside of finance, with the potential to cut costs and streamline processes in several types of power industry transactions.
The electrical power industry is showing how the technology can be creatively used outside finance, it said. The report lists three distinct use cases, which includes managing wholesale transactions, peer-to-peer networks, and renewable credits.
"Power is a logical use case for a few reasons: units of power and energy are a strong fit for so-called smart contracts based on blockchain, and meters can feed data directly into blockchain logic," said Westerhof. "Power also relies on cumbersome trading and clearing systems to support complex markets, and blockchain can help create a leaner distributed system that can cut out intermediaries and associated fees”.
Lux Research evaluated blockchain's use cases in the power sector, and the challenges in implementing them successfully. It said that peer-to-peer energy trading networks across the globe are building on blockchain for its settlement capabilities, while new blockchain-based systems for registering and trading renewable energy credits are beginning to emerge. In addition, blockchain may also find applications in wholesale electricity transactions, where it streamlines complex processes.
According to the report, Ethereum and Hyperledger are the two largest blockchain platforms other than bitcoin, with both providing native "smart contract" functionality.
However, the authors noted that there are few real blockchain experts, adding that finding talent to build a proprietary and secure blockchain can be challenging. Also, blockchain's regulatory and legal implications remain unknown in finance, as well as other tightly regulated sectors like health care and power.
Lux Research will be holding a complimentary webinar, "Blockchain beyond Finance: Power, Supply Chain, IoT, & Much More," on February 14, 2017 at 11:00 EST.
