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Month: September 2021

Tokenizing Energy is the Future

Posted on by admin

Author; Chloe Diamond

(https://medium.com/sea-foam-media/tokenization-of-energy-is-the-future-7d09ded60c5b_)

While researching for this article, I couldn’t help but think about how archaic the idea of centralised energy distribution is. Large power plants providing electricity to the masses via a centralised grid seems impractical, slow, and expensive, particularly when considering the huge number of people who rely on it.

I endured many school trips to our natural gas power plants in Oxfordshire, England in which we were encouraged to start thinking about energy production and, thankfully, renewable alternatives. Despite many brainstorming sessions, I couldn’t quite comprehend the sheer scale of what I was witnessing. The plants themselves were hard to ignore in the midst of the countryside, not to mention the gargantuan amount of energy they should produce to maintain every household, which is approximately 4.648 per kWh in the UK and 10,766 kWh in the US annually.

As technology progresses, such old-fashioned approaches need to be rethought. Bringing blockchain to the energy sector has the potential to transform how people engage with these utilities by bringing control and transparency back to the end users and offering solutions for people who have been neglected by traditional systems.

Transparent Energy Costs & Crypto Payments

Until now, energy rates have been determined solely by centralised authorities, whether that’s the energy supplier or government. In California for example, the government has artificially-inflated energy rates to deter users from using particular types of energy, making it costly for those who cannot afford alternatives.

Introducing blockchain technology and cryptocurrency payments to this sector means rates can be adjusted according to supply and demand signals in the market rather than a third-party enforcer. This makes energy costs fairer and more transparent for everyone involved, and by using cryptocurrency to pay for energy the entire process will run more smoothly by eliminating slow transaction times.

Tokenizing the Energy Grid

Cryptocurrencies can also be used to tokenise the grid, facilitating a variety of energy market transactions. One example of this is Zome, which plans to reward consumers in tokens for saving energy. It will also allow building owners to generate revenue for discharging energy to the grid when demand is high.

Zome will achieve this in part through integration with IoT smart home devices and a mobile app. This will provide consumers and businesses with an effective way to track their energy usage and receive notifications when appliances are not being used optimally. Users will then be rewarded with tokens for responding accordingly.

Energy Storage as Value & Energy as a Service

As traditional energy distribution systems struggle to keep up with increasing demand, especially during peak hours, the importance of technologies like Distributed Energy Resources (DER) cannot be understated.

DERs are small-scale units of energy generation that are connected to the grid at the distribution level. They usually include (but are not limited to) rooftop solar panels, wind turbines, electric vehicles (EV) and EV chargers, and natural gas turbines.

The ability to store this energy is vital, not only in situations of power disruption but also as a means for people in rural areas to support their local businesses and communities. In an example from one of our partners, Energy-as-a-Service can be delivered to rural communities through portable battery packs (solar or others) to be powered up on farms for cold-chain storage and supply chain. Supply chains on the blockchain is a clear use case, but with a token solution, rural farmers can be rewarded for their participation and given greater access to these services.

Peer-to-Peer Energy Trading

Under current conditions in the sector, energy companies do not honour users for their loyalty, energy savings, or, in the case of renewables, energy generation.

Energy suppliers are able to manipulate costs however they would like due to the system and terms they’re operating under being unclear. This allows for consumers to be disadvantaged because of factors outside of their control, such as their geography, the type of fuel being generated, and the technology available in that region.

Powerledger, a Perth-based blockchain energy company, offers an alternative to this problem by allowing consumers to trade energy between themselves, providing a platform for small communities to exchange self-generated energy with ease. They have already initiated several successful trials in neighbourhoods across Western Australia, where neighbours have begun trading solar energy in a semi-regulated environment with success.

Conclusion

Although we’re just beginning to think about how blockchain could impact the energy sector, emerging initiatives already reveal how much technology could solve persistent problems within the space while improving conditions for many communities.

As increasingly more people become aware of the effect their energy consumption has on the environment, the shift towards environmentally-sound alternatives will gain more force, as well as the ability to take control over our personal energy footprint.

Managing our own domestic and corporate energy usage allows us to make informed decisions, gain transparency of the energy market, share surplus energy with our peers and liberate those who still struggle with lack of access and regular power outages. However we progress, future solutions should be adaptive and efficient, ensuring ultimate compatibility with a variety of demands and environments.

Cryptocurrency Crackdown

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The SEC ramps up its efforts to combat digital fraud.

By Wick Sollers, Dan Sale, Christina Kung, and Kelli Gulite (https://www.americanbar.org/groups/litigation/committees/criminal/practice/2019/cryptocurrency-crackdown/)

Financial services must tie these three factors together – customer experience, best practices and reliability/responsiveness – to have an effective web presence. They can’t go hard into one particular area and ignore the others. They have to understand what’s available versus their competitors, what consumers think of their sites versus competitors’ and how their sites are…

On November 2, 2018, the Enforcement Division of U.S. Securities and Exchange Commission (SEC) issued its annual report. The report described the division’s enforcement actions and policy initiatives over the past year, highlighting the SEC’s enforcement efforts in several areas, including retail investors, the Foreign Corrupt Practices Act, and securities offerings. However, some of the more interesting statistics within the report outline recent efforts to combat scams in the cryptocurrency market.

According to the report, the SEC brought 20 stand-alone actions and opened dozens of investigations involving digital assets this year. This is particularly significant because the agency did not even mention cryptocurrencies in its 2016 annual report. The 2018 report also notes that the SEC has shifted resources to pursue investigations in the cryptocurrency market. Part of those resources will undoubtedly be steered toward the division’s Cyber Unit, which was formed at the end of 2017 to tackle cyber-related threats and misconduct. The Cyber Unit currently has over 225 ongoing investigations.

Most of the SEC’s efforts to combat digital fraud this year were focused on initial coin offerings (ICOs). ICOs are a recent phenomenon and can be thought of as the digital-market equivalent of an initial public offering (IPO). Instead of fundraising by selling shares, companies accept money or digital currencies such as bitcoin in exchange for “tokens” specific to the company. Tokens can take many forms but are, essentially, credits in the company.

Despite regulators’ increasing interest in the ICO market, some large corporations want to capitalize on this new technology. In 2018, Kodak launched an ICO for KODAKCoin, a currency used to buy photo rights on Kodak’s digital photography platform, KodakOne. Kodak’s stock price tripled after it announced its plans to issue an ICO. And Overstock.com raised $134 million dollars in an ICO that launched in late 2017. At the same time, other corporations are distancing themselves from the cryptocurrency market, likely due to the increased government scrutiny. For example, Google and Facebook recently banned all advertisements for ICOs from their platforms.

While corporations are uncertain about the future of digital currencies, the SEC has clearly demonstrated its intention to rein in the market for ICOs. A few weeks after the report was published, the SEC announced that professional boxer Floyd Mayweather Jr. and music producer DJ Khaled settled claims that they failed to disclose payments received for promoting investments in ICOs. In addition to investigating and prosecuting high-profile cases, the SEC has also engaged in non-conventional methods to signal that it is serious about ICO fraud. In May 2018, for example, the agency launched a mock website selling “HoweyCoins” to draw attention to the problem of ICO fraud and show how easily fraudsters can set-up a scam ICO.

The SEC has not been the only regulator to launch investigations into the digital-currency market. State attorneys general from Alabama, Colorado, Maryland, Massachusetts, Texas, Missouri, North Carolina, and New Jersey all issued cease-and-desist orders to ICOs this year. The Financial Industry Regulatory Authority (FINRA) also brought its first disciplinary action related to cryptocurrency in September. Additionally, the Department of Justice (DOJ) announced that it would develop a comprehensive strategy to combat cryptocurrency fraud next year.

The DOJ also scored a big win in a cryptocurrency case in 2018 in United States v. Zaslavskiy. Maksim Zaslavskiy pled guilty to ICO fraud when he initiated two ICOs that he falsely claimed were backed by investments in real estate and diamonds. While the presiding district judge said the indictment “charges a straightforward scam,” the case created monumental precedent. Before Zaslavskiy pled guilty, the court ruled that ICOs are considered securities and must comply with the registration and fraud provisions of the securities laws. As such, agencies will have the full weight of these laws to prosecute future ICO misconduct.

While it remains to be seen how receptive other courts will be to criminal cases involving cryptocurrency fraud, more investigations into the digital assets market can be expected in 2019. In fact, the Wall Street Journal recently published a comprehensive study [login required] that showed that 16 percent of the ICOs examined (513 companies) used deceptive and fraudulent tactics. Considering the rate of ICO fraud, this crackdown may only escalate the tension between crypto proponents and federal regulators.