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The Intersection of Blockchain and Energy Trading: Exploring Smart Contracts

The intersection of blockchain and energy trading has been a topic of increasing interest in recent years, as the world seeks to transition to cleaner and more efficient energy sources. One of the key components of this intersection is the use of smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. These contracts have the potential to revolutionize the way energy is traded, making the process more transparent, efficient, and secure.

Blockchain technology, the decentralized digital ledger system that underpins cryptocurrencies like Bitcoin, has been touted as a potential game-changer in various industries, and the energy sector is no exception. The transparency and security offered by blockchain make it an ideal platform for energy trading, where the need for trust and verification is paramount. With the global energy market valued at over $1.8 trillion, the potential impact of blockchain on this industry is immense.

Smart contracts are one of the most promising applications of blockchain technology in the energy sector. These contracts are essentially computer programs that automatically execute the terms of a contract when certain conditions are met. For example, a smart contract could be set up to automatically release payment for electricity once a specific amount of energy has been delivered to a consumer. This eliminates the need for intermediaries, such as banks or other financial institutions, to facilitate transactions, reducing costs and increasing efficiency.

In the context of energy trading, smart contracts can be used to facilitate peer-to-peer (P2P) transactions between energy producers and consumers. This has the potential to disrupt traditional energy markets, as it allows individuals and businesses to trade energy directly with one another, bypassing traditional utilities and grid operators. This can lead to a more decentralized and resilient energy system, with increased competition and lower prices for consumers.

One of the key benefits of using smart contracts in energy trading is the increased transparency they provide. With traditional energy contracts, it can be difficult for consumers to verify the source of their energy, leading to concerns about the environmental impact of their consumption. Smart contracts, on the other hand, can provide real-time information about the source of energy being traded, allowing consumers to make more informed choices about their energy use.

Another advantage of smart contracts in energy trading is their ability to facilitate the integration of renewable energy sources into the grid. As the world seeks to transition to a low-carbon economy, the need for flexible and responsive energy systems is becoming increasingly important. Smart contracts can be used to automatically adjust energy supply and demand in response to fluctuations in renewable energy generation, helping to balance the grid and reduce the need for costly and polluting backup power sources.

The potential of smart contracts in energy trading is already being explored by a number of innovative projects around the world. For example, the Brooklyn Microgrid project in New York allows local residents to trade solar energy with their neighbors using a blockchain-based platform. Similarly, the Australian-based Power Ledger project is using blockchain technology to enable P2P energy trading in a number of pilot projects across the country.

Despite the promise of smart contracts in energy trading, there are still a number of challenges that need to be overcome before they can be widely adopted. These include regulatory hurdles, as well as concerns about the scalability and security of blockchain technology. However, as the technology continues to mature and more pilot projects are launched, it is likely that we will see an increasing number of energy transactions being facilitated by smart contracts in the coming years.

In conclusion, the intersection of blockchain and energy trading, particularly through the use of smart contracts, has the potential to revolutionize the way energy is bought and sold. By increasing transparency, efficiency, and security, smart contracts could help to create a more decentralized and resilient energy system, paving the way for a cleaner and more sustainable future.

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The Intersection of Blockchain and Energy Trading: Exploring Smart ... - EnergyPortal.eu

Photo by Shubham Dhage on Unsplash

The technology known as blockchain, one of the foundations of Web3, a third generation internet that is more decentralized, transparent, and inclusive, has an intriguing backstory. This narrative starts with a scientific article that was released in 2008 under the pseudonym Satoshi Nakamoto.

The paper "Bitcoin: A Peer-to-Peer Electronic Cash System" outlines a digital payment system that does not rely on a central authority or middleman but rather relies on a peer-to-peer network of computers that communicate with one another and use cryptography to verify transactions. The first cryptocurrency in the world is this one, which goes by the name of Bitcoin.

But Bitcoin is more than simply a virtual currency. Additionally, Bitcoin is a protocol, which is a set of guidelines governing how the network functions. The blockchain, a digital ledger that chronologically, openly, and irreversibly records all transactions that take place on the Bitcoin network, is also a key component of the Bitcoin protocol.

Blockchain is a ground-breaking invention because it addresses the double-spending issue, which has long impeded the development of decentralized digital payment systems. By cheating the network or creating duplicate data, double-spending is a phenomena where someone can use the same digital currency more than once.

Through adopting a consensus mechanism, which is a procedure through which network participants (referred to as nodes) concur on the state of the ledger and legitimate transactions, blockchain avoids double-spending. Proof-of-work (PoW), one of the consensus methods employed by Bitcoin, requires nodes to carry out challenging mathematical calculations in order to add new blocks to the blockchain. Successful nodes are referred to as miners, and they are rewarded with more Bitcoins.

By doing this, the Bitcoin blockchain transforms into a single source of reality that can't be hacked or fabricated by bad actors. The Bitcoin blockchain is also a platform that displaces the need for traditional financial institutions like banks or governments by enabling anybody to engage in the global economy.

The Bitcoin blockchain, however, is not flawless. It has some drawbacks, including poor scalability, high transaction costs, high energy usage, and little flexibility. Many programmers and academics began developing various blockchains that provide additional or substitute functionality, such as proof-of-stake (PoS), smart contracts, tokenization, and others, in order to overcome these problems.

Ethereum, which was introduced in 2015 by Vitalik Buterin and his colleagues, is one of the most well-known and significant blockchains. In order to build and run decentralized applications (dApps), users can use Ethereum, a distributed computing platform. Smart contracts are computer programs that automatically carry out business logic and agreements between participants.

Additionally, Ethereum has its own money called Ether (ETH), which is used to pay for network transaction and computation costs. Ethereum also enables the development of alternative tokens, such as NFT (non-fungible token), DeFi (decentralized finance), DAO (decentralized autonomous organization), and others, that can stand in for digital or real assets.

Blockchain technologies like Ethereum and others give developers, businesspeople, creatives, activists, and other people new chances to innovate and work together across a range of industries. They also question the previous paradigm and status quo, which were dominated by centralized authorities and were frequently ineffective, unfair, or opaque.

Blockchain is thus a tale of how technology may make the world a better place by enabling individuals to be more autonomous, creative, and connected. Blockchain tells the tale of Web3, a more democratic, inclusive, and varied version of the internet in the future. You can participate in the ongoing tale of blockchain technology.

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The Story of Blockchain. Photo by Shubham Dhage on Unsplash ... - Medium

The year 2022 was not a very good year for Cosmos and its vision of inter-blockchain communications (IBC). The collapse of the Terra Luna ecosystem (the biggest protocol on Cosmos at the time), tension between co-founders and a fall in the tokens price all cast a shadow on its future prospects. That said, projects such as dYdX and cross-chain oracle protocol Seda continue to call the network home and are adamant about its IBC vision.

Currently, Seda says it enables over 12 million data feeds across 24 networks. In an interview with Cointelegraph at EthCC Paris, Jasper de Gooijer and Peter Mitchell, co-founders of the Seda protocol (formerly known as Flux), discussed the importance of oracles in cross-chain bridges and how they protect the value they enable.

Cointelegraph: How do oracles add value to IBC?

Jasper de Gooijer: The current problem is that smart contracts can only query data outside of blockchains themselves, right? That greatly limits the amount of use cases that smart contracts have, such as in lending markets. So in those markets, if you want knowledge on price on, say, six chains at once, you need six oracle providers, and that's when you need multichain oracles.

CT: What is the biggest accomplishment or technological breakthrough thus far in the Seda ecosystem?

Peter Mitchell: We launched Seda about a year ago. And within eight weeks, we became the second-largest oracle, securing over $2.7 billion in total value locked. And then we realized that we couldnt monitor and scale this into something like 200 chains, right? It would be impossible to have robust monitoring of price feeds.

So the innovation weve built on Seda is that the main chain aggregates the data and then pushes the smart contracts to the subchain. And so, rather than deploying the oracle contract on every new chain, we just deploy this single smart contract.

CT: In light of recent high-profile oracle exploits, what are some ways of keeping the technology secure?

JG: The main point is really just education. People should know that they should not build a bridge with hundreds of millions of total value locked if the [underlying] token only has like $10 million of liquidity on decentralized exchanges. The second thing is building smart price data modules, so you can swap tokens for something like time-weighted average price, which makes it less likely to slip in volatile environments.

PM:Like Jasper was saying, if you have a token that's being borrowed against $100 million, and you only have, lets say, $10 million in liquidity on-chain, then you cant really liquidate $100 million or $50 million positions against that kind of liquidity. So setting up metrics like liquidation thresholds and collateralization ratios beforehand can really set up the protocol for success.

This interview has been edited from its original format for clarity.

Magazine:Tokenizing music royalties as NFTs could help the next Taylor Swift

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Seda co-founders discuss intersection of oracles and multichain - Cointelegraph

Opinions expressed by Entrepreneur contributors are their own.

Now that the metaverse has mostly come and gone, it looks like the key pillars of Web3 are recalibrating back to reality. Even Vision Pro, Apple's virtual reality proposition, is a lot more about answering emails or watching films than living full-time in a neon cyberpunk wonderland.

Crypto, Web3's most important tenet, is also seeing some use cases come back down to Earth. And while this course correction to nearly mundane functionality is overdue, we've seen few tangible ways to make that happen. Many crypto projects set lofty and unattainable goals to transform the financial industry completely. But harsh regulatory conditions, shaky market climates and no shortage of scandals illustrate why that probably isn't going to happen.

That being said, if crypto can't be a worthy adversary to the world of traditional finance (TradFi), it certainly could be complementary. What's preventing that from happening?

If you ask this question to most crypto enthusiasts, you're likely to hear a tirade about regulatory persecution, the evils of the SEC, and a million other external factors preventing crypto from reaching its full potential. In some cases, they're right. But it's easy to thrust the blame onto regulators or "bad actors" in the industry for putting crypto into an unsavory position and it's not entirely accurate.

Related: Bitcoin as Currency Triggers Our Fear of Missing Out. Can It Be Fixed?

Of course, regulation and legislative misunderstandings are major obstacles that are slow to overcome due to the red tape involved with setting fair and comprehensive rules in crypto. And if crypto is to exist as a functional tool and currency in the real world, as significant industry outsiders say it will, you can't really get around regulation to prevent exploitation and full-fledged industry meltdowns.

If regulators do have a general distaste toward crypto, they can't entirely be blamed for it based on the number of scandals the industry has faced in this past year alone. If anything, it's more about companies not being able to get their act together rather than governments completely writing off crypto as a concept. But that's still not the only factor.

Across the crypto and blockchain sectors, projects tend to latch onto one specific application, trend, or use case and never ease their grip on it until it's too late. Even if it might not be the best thing for the project or the industry, it's difficult to deviate from the rest of the crowd in a sector where everyone is still trying to figure out what clicks.

This isn't an anomaly either we've seen it happen with centralized exchanges, NFTs and depending on who you ask, smart contracts.

As much as crypto companies now preach against the doctrine of FOMO (fear of missing out), there is an unmistakable undercurrent of it throughout new industry developments. When a new technology, especially one with a financial aspect inherently attached, does have so much potential, no one wants to get left behind. That's partly why we notice so much theorizing and abstract blockchain-AI integrations, despite most of them not making much practical sense.

There are, of course, many practical applications of AI in the blockchain and crypto. But when projects, or an entire industry, get attached to one thing, it's hard to put down the blinders and shift focus to other options. Instead of exploring concrete ways to boost functionality for the average person, projects shoot for the moon instead. And ultimately, when each company is trying to one-up the other in scope and adoption, you're bound to have function fall by the wayside.

A big roadblock towards crypto ubiquity and functionality stems from communication. Since many major crypto advancements develop in parallel, getting networks and currencies to communicate requires much more effort. Transferring cryptocurrencies often becomes more troublesome than needed and typically requires using relatively unsafe methods.

Smart contracts are a godsend for certain crypto functions. But they've proven time and again to be insecure and unreliable as they keep getting plagued by hacks. For someone looking to transact using crypto regularly, that creates a real risk to their security. Some projects have deviated from smart contracts too. Companies such as Kima, for instance, are developing protocols and settlement layers to facilitate crypto and fiat transfers without relying on them.

Kima's also eschewing smart contracts to help solve the convoluted mess of international crypto transfers, a facet that crypto should inherently be able to do to function as currency. Not that international transfers are so simple using fiat currency or TradFi methods, but I don't have to worry about committing international securities fraud for using PayPal.

Crypto's philosophy from the beginning was to remove intermediaries and bureaucratic stopgaps that prevent unrestricted financial activity. While certain factors are beyond the control of industry builders, there could certainly be a lot more effort put into finding creative solutions to the sector's inherent problems.

So what is stopping me from using crypto to buy groceries? Quite a few things at this point, and they're mainly interwoven. But reinforcing steady and tangible development into interoperability and streamlined everyday use can make crypto's future less daunting to reach.

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I Want To Buy My Groceries With Crypto So What's Stopping Me? - Entrepreneur

The Data Act has achieved consensus among the legislative representatives of the European Union.

The regulations will establish controls on how Big Tech and other businesses operating within Europe utilize corporate and consumer data.

The legislative representatives of the European Union have reached a consensus on new regulations referred to as the Data Act. This development follows apprehensions the crypto and web3 community voiced regarding the potential negative impact of the regulations on smart contracts, raising concerns that the sector could be adversely affected. Nevertheless, the act has proceeded despite these concerns, incorporating the contentious smart contract kill switch provision.

Following the passage of the Data Act by the European Parliament on March 14, negotiations have been underway among EU lawmakers to finalize the bill.

The primary objective of the act is to ensure the equitable utilization of industrial data and eliminate obstacles that hinder the fair sharing of data generated by various data-centric services, including the Internet of Things (IoT).

The regulations will establish controls on how Big Tech and other businesses operating within Europe utilize corporate and consumer data. This alteration forms part of a broader overhaul of internet-connected devices data regulations.

The existence of decentralized transactions, such as those occurring in the crypto sphere, which is governed by unchangeable code, raises concerns for many. The agreement has been confirmed by Thierry Breton, the commissioner responsible for the EUs internal market.

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The conclusive legal document of the agreement has not yet been released to the public. Nonetheless, reports indicate that the initial proposals regarding smart contracts have undergone tighter revisions. These modifications are intended to enhance individuals authority over their data.

As per lawmaker Damian Boeselage, With the adjustments made to the text, we are no longer addressing smart contracts. Additionally, the regulation applies specifically to the execution of contractual clauses in the context of data sharing.

On the other hand, an alternate source asserted that the laws final version still employs the term smart contracts. In response to concerns raised by the blockchain industry, the commission addressed them by stating that the new regulation would not render existing smart contracts null and void.

Additionally, the commission emphasized that the practical implementation of the high-level requirements outlined in the regulation should not pose significant challenges for vendors.

Nevertheless, it remains to be seen whether the ultimate agreement will address concerns regarding the feasibility of implementing the measures on open and permissionless blockchains where there is no central authority to enforce regulatory limitations.

According to an open letter signed by several crypto groups, the Data Act could conflict with the recently implemented MiCA (Markets in Crypto Assets) regulation. The letter highlights that licenses will be granted to cryptocurrency exchanges and wallet providers to operate throughout the European Union under the regulations. The implementation of MiCA is scheduled for 2024.

However, the Data Act still needs to achieve the status of a law. The approval of the wording reached by negotiators for the Data Act to be recognized as the law requires the endorsement of the European Parliament and Council, representing the 27 European Union nations.

Crypto News Flash does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to cryptocurrencies. Crypto News Flash is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned.

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