Introduction to Blockchain - Amazon S3...1. Price Signals (optional) 2. Produces Electricity 3....

Jun 1, 2018CONTENT COPYRIGHT © 2018, ENERGY BLOCKCHAIN

CONSORTIUM, Tony Giroti, [email protected]

Introduction to Blockchainwith focus on Energy

June 1st 2018

Tony Giroti

[email protected]

Content Copyright © 2018, ENERGY BLOCKCHAIN CONSORTIUM, Tony Giroti, [email protected]

Your Presenter

Tony Giroti• 25+ years in IT

• Bachelor and Masters in Electrical & Computer Engineering

• Developed Distributed Computing Platforms

• Developed High Availability Transaction Processing Applications

• Designed Fault-Tolerant, Massively-Scalable Supercomputers

• Entrepreneur, Founded a few Startups

• Spent last 12 yrs in Energy, Smartgrid and now Energy Blockchain

• Emeritus Council, Board member in US DOE GWAC, NIST SGIP

• 5 USPTO Patents

• Chairman, Energy Blockchain Consortium

Jun 1, 2018 CONTENT COPYRIGHT © 2018, ENERGY BLOCKCHAIN CONSORTIUM, Tony Giroti, [email protected] 2

Disclaimer

Any product, individual or company mentioned in this webinar should not be construed as an endorsement by the Energy Blockchain Consortium. We have avoided the use of any names by choice so any mention is purely coincidental and for illustrative or informational purposes only. All participants are expected to conduct in the webinar per the professional, business like and common sense norms.


Energy Blockchain Webinar Series

• Series created by Energy Blockchain Consortium

• FREE to anyone registering (energy-blockchain.org/webinars)

• 12 Webinars: Held First Friday of every month @12 to 1pm EST• 2018: Jun 1, Jul 6, Aug 3, Sep 7, Oct 5, Nov 2, Dec 7

• 2019: Jan 4, Feb 1, Mar 1, Apr 5, May 3

• Webinars are also available for offline viewing

• About Energy Blockchain Consortium:• A non-profit consortium of Companies interested in using Blockchain technology to

solve the most compelling problems in the Energy industry. Join as members.

energy-blockchain.org or send me an email [email protected]


Topics

• How Blockchain started, Bitcoins and What is Blockchain?

• How does Blockchain work?

• A conceptual Blockchain Application (Example)

• What is the hype all about?

• The Energy Blockchain• Is there any danger using Blockchain?

• What is its practical use in Energy industry (Example)?

• Energy Blockchain Potential

• Next Steps


Blockchain: How it all started? • The Great Recession (2000-2010) and the Financial Crisis (2007-2008)

• Global Economic downturn• Pseudo name Satoshi Nakamoto created Bitcoin paper• Aug 18th ‘08 Bitcoin.org domain, Jan 3rd ’09 Bitcoin started, May 22nd 2010 10K BTC Pizza!

• Blockchain & Bitcoin are not the same• Blockchain =‘technology’, Bitcoin = ‘app’

• Bitcoin is a cryptocurrency – a digital asset• Digital Currency. Fixed supply 21M coins (rarity of Gold) • Blockchain & Cryptography to control its creation & management• A ‘Fiat’ currency $, € etc.

• Today: Blockchain for Tracking and Buying & Selling of any Goods or Assets• Payments are not always necessary • Also known as Digital Ledger Technology (DLT)• Technology itself provides trust so intermediaries are not needed


What is Blockchain?


A CompanyBank, Utility, Insurance, ISO, Retailer

Application

Database

Business Logic

The World Today

Company A

Blockchain Node A

Ledger A

SmartContractX

Company B

Blockchain Node B

Ledger B

SmartContractX

Company C

Blockchain Node C

Ledger C

SmartContractX

Company D

Blockchain Node D

Ledger D

SmartContractX

Centralized Control (w or w/o distribution)

• Data: Company has 1 or more databases• Business Logic: Company runs biz process• Control: Company controls Data & App• Trust: The Company is the Trusted Party

• Decisions: Made by The company • History: The Company knows it• Changes: Made by The Company• Transactions: In Company’s Database

De-Centralized Control (Nodes are connected via P2P Network)• Data in multiple ‘databases’ i.e. in ‘distributed’ Ledgers so multiple nodes have Same Data• Business Logic: Same SmartContract runs in multiple companies • Control: 1 Company DOES NOT Control Data & App. Who does? Individuals (Us), Node operators, others• Trust: Blockchain technology is the Trusted Party & NOT company (So no people trust required “Trustless”

• Decisions: All Participants must agree on the Validity (CONSENSUS)• History: All Participants know where the data came from (PROVENANCE)• Changes: Data and SmartContract Logic CANNOT be changed (IMMUTABILITY)• Transactions: Any Shared ledgers has ownership of assets or completion of transaction (FINALITY)

The World with Blockchain (Next Gen. of Distributed Computing Platform)

How Blockchain works?


Example: Andy sold 3 widgets to Bob. Rate is $1 per unit .

Company A

Blockchain Node A

Ledger A

SmartContract: Amt = Units x 1

Tx

Company B

Blockchain Node B

Ledger B


BobAndy

3 widgets1

$3$3 2

Node A Creates a digitally signed TRANSACTION (a) 3 Widgets from Andy to Bob(b) $3 from Bob to Andy

Tx

3Node B: VERIFICATION of Transaction(a) Does it comply with Blockchain rule(b) Is its Digital Signature ok(c) Are there any conflicts with prev transactions

5

Provisional Unconfirmed Transactions “Memory

Pool”Tx

6

4Tx

Company C

Blockchain Node

Ledger C


Tx

Node C: VERIFICATION of Transaction(a) Does it comply with Blockchain rule(b) Is its Digital Signature ok(c) Are there any conflicts

8

Hash: 32 bytes unique ID of BLOCK

Time Stamp

Link to Prev Hash

A set of Transactions

Tx Ty

10Periodically VALIDATORS create Blocks

(a) If Node C was a “VALIDATOR” it creates a BLOCK in Ledger C

(b) VALIDATOR is rewarded (from transaction charge)

11Like Transactions, BLOCKS also

Propagated from Node to Nodeand linked as a Chain. Hence BLOCKCHAIN

Provisional Unconfirmed Transactions “Memory

Pool”Tx

9

Ty

Inner Workings: Consensus, Trust

How do validators validate a transaction and block ? What is the agreement? Who’s in control?

Distributed “trustless” Consensus is the Primary Innovation of Blockchain


1 Proof of Work• Anyone with compute power can do

• All actors solve math problem

• The winner is the leader with brute power – The “Miner”

• Leader creates a block. Others verify

• Leader is financially rewarded

• Cheating is difficult. 32TwH per year

• Flaw: Miner > 51% resource can hijack

2 Proof of Stake• Created to solve energy issue

• Brings mining back into the chain

• Actors w/ stake replace energy use

• Leader who creates block is chosen deterministically by their stake

• Min % stake may be required to participate

3 Proof of Authority

• Only pre-approved accounts are Validators – “Authority Nodes”

• Earn the right, uphold high standard, reputation

PoW PoS PoA

4 Multi-signature

5 Practical Byzantine Fault Tolerance (BFT)

Inner Workings: Smart Contract


• Computer SW to enforce pre neg-ed contract in distributed environment• Nick Szabo coined circa 1994• Transaction mgmt. protocol

• Key Points • No 3rd parties needed• Each transaction is trackable and irreversible (immutable)• Provides security – superior to traditional contract law• Reduces transaction costs associated with contracting

• Advance but Foundational Topics to understand• Custom Logic possible with degrees of Turing-completeness• Byzantine Fault Tolerance (BFT): Built-in feature of Blockchains• Smart Contract = (a) replicate asset registries, (b) with cryptographic has chains, (b)

Contract execution, (d) BFT replication, (e) Transaction management

A Blockchain Application


Company A

Blockchain Node A

Ledger A

SmartContractX

Company B

Blockchain Node B

Ledger B

SmartContractX

Company C

Blockchain Node C

Ledger C

SmartContractX

Company D

Blockchain Node D

Ledger D

SmartContractX

The World with Blockchain (Nodes are connected via P2P network)

BLOCK hash

Time Stamp

Previous Block Hash

Transactions

Tx Ty

Block 123BLOCK Hash

Time Stamp

Previous Block Hash

Transactions

Ta

Block 124BLOCK Hash

Time Stamp

Previous Block Hash

Transactions

TcTc Tc

Block 125BLOCK Hash

Time Stamp

Previous Block Hash

Transactions

Td Te

Block 126

A Blockchain App

An app that allows me to sell widgets at $1 per unit and discount of 10% over 10 units

Smart ContractX:

• Rate $1 per unit with 10% disc. for over 10 units

Transactions Tx, Ty, Ta, Tb, Tc….. :

- Andy sold 3 widgets to Bob: Bob → Andy $3

- Cathy sold 10 widget to Dan: Dan → Cathy $9

- Emily sold 1 widgets to Frank: Emily → Frank $1

- Gina sold ……

Blocks

- 123, 124, 125, 126

• Decision is encoded in code & Validators

• Individuals can be in control of their data

• A simple minority cannot hijack the value for the masses

• Cost Overheads can be significantly reduced

• Rise of the “Scaled Intermediaries”

What is the hype all about?


Blockchain can Disintermediate

Blockchain is based on

Democratization

Blockchain empowers Decision Maker

• No Monopolies

• Multi-fold increase in Securitycapability

Blockchain is DecentralizedGame

ChangingBenefits

Energy Blockchain

Use of Blockchain in Energy


Energy Blockchain

• The use of Blockchain in Energy industry is ‘Energy Blockchain’. • Coined Circa Feb 2018 by the Energy Blockchain Consortium

• Tracking Energy assets or use for trading & payments• Electricity, water, gas, oil, gas, energy data, from Gen. to Consumption• Track any Asset, any Data, Process any Transaction, Perform instant Settlements• P2P trading, Wholesale Electricity Trading on ISO with market participants

• Use in both Regulated markets & De-Regulated markets

• Permissioned Blockchain: • Perfect for Utilities, Oil & Gas co., Regulators, Policy Makers• Huge Advantage: Cheaper transactions, Lower latencies, Higher Control• No need for ICO, cryptocurrency or rely on exchanges & anonymous users• No danger from ‘Immutability’ of Smart Contract Issues• Use PoS or PoA for Consensus and Validation (not PoW)


Energy Blockchain Use

• Peer to Peer Energy Trading

• Wholesale Market Settlement

• Energy Data Management

• Energy Forecasting

• Energy M&V

• Net Energy Metering

• DER Service Coordination


• Grid Security

• Customer Data & Service

• Retail Billing

• EV Charging

• Energy Storage

• Microgrid Network operator

• REC & Carbon Trading

• Price Responsive Demand Response

P2P Trading - Transactive Energy


OC

Micro Grid

IT Grid / Blockchain

B

P

U

23

4

5

6

Transaction

1. Price Signals (optional)

2. Produces Electricity

3.Places Order with pre-negotiated price with P or (b) Buys via Exchange, Consumes Electricity

4. Removes KWH from Producer into Grid

5.Balancing Function, Manage Load, Frequency, Power Factor

6. SmartContract, Billing and Settlement

7.Proof of Authority (Confirmation), Customer Service

8. Proof of Stake (Other)

7

Note: • P & C may be connected to a feeder line originating

from the same substation or the two maybe on different feeder lines on two substations

Electricity Grid

Energy Market

I1

8

I ISO / RTO

P Producer

C Consumer

U

O

B

Utility

Operations

Blockchain

Blockchain

Energy Blockchain Potential?


Massive Transformation

• Bi-Directional

• DERs

• Prosumers

• Renewables

• Smartgrid

• Off Grid

• Storage

• Disintermediate

• EV

+ = Accelerated Disruption

Other Blockchain terms?

• Digital Wallet: Like a Global Bank Account. E.g. Bitcoin Wallet.

• Hash Function: Is a SW algorithm to map data of any size to fixed size

• Popular Digital Currencies: • Bitcoin BTC, Ethereum ETH, Ripple XRP, Bitcoin Cash BCH, Cardano ADA, Litecoin LTC

• Some ‘popular’ Blockchains: • Ethereum ($75B): In 2017, 3 our of 4 projects developed on Ethereum

• Ripple ($30B): Banking - Real time Settlement & Currency Exchange

• IOTA ($15B): Specializes in IoT. Consensus is “Tangle”

• Qtum ($5B): Combines Bitcoin and Ethereum with PoS

• Coinbase ($2B): Digital Currency Wallet and Exchange

• Hyperledger (Apache foundation)

• ICO: Initial Coin offering


What Next?

• Questions & Ideas : Contact Tony Giroti, [email protected]• Go to energy-blockchain.org/webinars to register or watch next webinars• Come Join the Energy Blockchain Consortium and be part of this journey• Don’t do it alone or with unknown players• Work with Peers and Partners and manage this Disruption smartly• Get involved in real Blockchain projects and implementations

The Energy Blockchain Consortiumenergy-blockchain.org


Thank You


Contact Information

Tony Giroti

[email protected]

617.480.6550

Introduction to Blockchain - Amazon S3...1. Price Signals (optional) 2. Produces Electricity 3....

Documents

Transcript of Introduction to Blockchain - Amazon S3...1. Price Signals (optional) 2. Produces Electricity 3....