A blockchain is a ledger which is made up of individual ‘blocks’, each representing a transaction.
This ledger exists independently on the servers of multiple ‘nodes’, and the nodes must validate the accuracy of any new block by consensus before the block is chronologically linked to blocks representing prior transactions.
A blockchain’s heavy encryption enables secure data transfer and prevents retroactive editing of the transaction chain, making it a permanent and transparent record of ownership. Additionally, smart contracts (codes which execute a transaction once conditions are met) can be embedded into a blockchain to automate transactions.
Potential Use Cases in Energy
Blockchain has the potential to transform the energy sector by:
(i) providing a smart and decentralised energy generation and distribution infrastructure; (ii) automating transactions using digital contracts, and (iii) documenting ownership to facilitate asset management and certification of renewable energy. These innovations can significantly reduce costs associated with facilitating transactions, keeping records and ensuring regulatory compliance. However, they also raise questions about the meaning and regulation of producers, security of smart devices, and scalability of technology.
Linklaters' relationships with regulators, banks, merchant acquirers and other payment institutions, as well as with payment services and systems providers, mean that we understand the issues that affect the financial technology ecosystem, enabling us to deliver incisive advice.