Energy Sector and Decentralization: Can Blockchain Democratize the Industry?
The blockchain industry is recognized as a disruptive technology that redefines industries and how they function. Many see blockchain as a decentralizing force that reduces guard institutions. The decentralization of the banking industry is well underway and it works to transform some of the most challenging aspects of banking, such as transfers, fluctuating value, saturation, and hackability.
With decentralization, the industry may improve only when there are enough participants involved in the process. If one single provider among all goes through the decentralization process, this just leads to inefficiency. Further, intermediaries should decentralize as well. Aside from the need for participants when it comes to decentralization, there must be an interest in participating as well.
If too few people are interested, the system must either be automated in some way or left as a centralized system. Although there are some markets that may not be ideal for decentralization, one that is considered to be a prime candidate is the energy market.
For the most part, large energy companies provide energy due to their infrastructure necessary for power generation. When only coal and natural gas were the only types of energy sources available, decentralization may not have been prime. Now though, the emergence of larger energy markets makes the industry a good option.
Decentralizing the energy industry would allow for both consumers and energy producers to avoid intermediaries that tend to drive up costs and create issues. With a peer-to-peer system, producers may see increased profits and consumers may save on their energy bills. Essentially, decentralization leads to greater economy and it may be better for the environment as well.
Further, the higher profits may also provide producers with incentives to be a part of a decentralized network. The average consumer should care for two reasons.
First, consumers will have more agency, which enables them to also take actions that lead to more sustainability. They can choose energy options that are best for them and the environment.
Second, when it comes to sourcing green energy, artificial intelligence that interprets the data can also take control of buying strategies, it can source cheap and renewable energy, and it can also help the environment.
Ultimately, decentralization of the energy sector may be a prime option because it not only protects the planet, but also consumers and the energy system as a whole.