The concept of blockchain opens a new era in the technology industry. Life becomes easier with the help of blockchain technology. The use of blockchain technology has created a new era for the energy sector which has a direct connection with the centralised trading system. The use of blockchain technology as part of the energy sector will change the entire capacity of energy while applying in different significant applications (Ahram & Sargolzaei, 2017, June). These applications include electric vehicle charging and sharing and also the peer to peer energy trading. There are major challenging issues associated with this blockchain Technology. This current study highlights the severity of the challenging issue associated with this blockchain technology.

This section includes the basic ideas of blockchain technology and issues related to it. Cryptography is the main component of a blockchain system that creates an energy source. Blockchains are made out of blocks by using the cryptography linkage. The cryptographic hash situated in the previous block is known as a timestamp and known for data-transaction. In other words, it can be said that it is time-stamped series which has the ability of immutable record of data storage. It is considered as a record-keeping Technology, which is a public ledger, decentralised and distributed (Beck, 2017).

Generally, the basic level of blockchain is simple understanding which is made out of a chain of blocks. In simple words, a block is known as the Digital information and the concept of the chain is known as the public database but this Digital information is being saved. Digital pieces of information are the basic infrastructure of blockchain. There are three different parts identified in the blockchain (Biswas, 2016). These blocks of the blockchain general store information about the transaction of different type of data like time date or amount of dollar for the purchases in addition to that, the blocks of blockchain also store information about the information who is conducting the purchase with the record of the name. Any other identifying information like digital signature should be part of this store information. Finally, the third function of the stored information in the blocks can distinguish the information from other blocks. Every block contains a unique code, which is known as a hash. In every purchase will look identical but there is a difference which has been protected by the blocks with their unique codes (Crosby, 2016).

Aims and objectives

The research aims to identify the challenges associated with the blockchain system in the energy sector and its need at the centralized trading system.

To analyse the concept of blockchain system
To explore the different applications of blockchain system
To examine the issues associated with the blockchain system in the energy sector
To provide the suitable need of blockchain system at the centralized trading system
Brief information about your work, including motivations, ideas, results, etc.
Contributions

Structure of the thesis

Figure 1: Structure of Research paper

(Source: Researcher)

2. Literature Review

2.1 Concept of digital computing systems

To understand the concept of the blockchain system, the computing systems needed to be analysed properly. The cloud computing system is the paradigm but the application of blockchain is prominent. Storing data system is used by the energy services but the data is being distributed according to the time of demand. The process of fog computing is being used for decentralizing the powerful cloud system. In fact, through the use of the different type of onion router both the cloud and fog computing system the encrypted messages are being transferred according to the requirement. This computing system has different layers from where the encryption has to pass every layer. Using these computing systems is also beneficial because only the sender of the messages will know the actual destination of the information sent (Beck, 2017).

2.2 Concept of blockchain system

The understanding of blockchain can be described as a distributed database which is existing at the multiple computers within the same time. The basic infrastructure of blockchain consists of blocks or sets of recordings which are added within the computer. The use of blockchain technology in any industry is increasing due to its benefits. The use of blockchain system provides greater transparency than the previous transaction histories. The shearing process of this system within the distributed ledger is the advance presidio available in the technology (Crosby, 2016). Besides that, the use of blockchain has enhanced security than the other type of record-keeping systems. The improvement of traceability in the system has provided authentication for the assets. The speed and efficiency of this transaction system are better than others, which have increased the efficiency of the different industries who are using the blockchain system. The reduced cost of using blockchain Technology has increased its popularity in the different business markets including trading.

2.3 Application and components of a blockchain system

The components and elements of blockchain have changed the concept of modern technology. There are three different three elements are identified in the blockchain system, those are the distributed ledger, the consensus algorithm and the node application (Huh, 2017)

The distributed ledger– The database of the blockchain is considered as the distributed ledger. The single-member available in the ecosystem of the blockchain system is being immediately accepted and reviewed by the ledger. With the presence of this component, the incorruptibility has been ensured. For developing traceability of the available record is possible within the blockchain with the use of distributed ledger.

Consensus algorithm– this is considered as the way but the particular network of blockchain decided two transactions are verified and valid. This way have a requirement of the updated ledger as well. Decentralization is a basic feature of blockchain system which does not have any central authority for the validation of the transaction. The role of validation has differences from one network to another network. This is also used for the security purpose within the transactions. The unique hash within the chain is part of the security generation (Ahram & Sargolzaei, 2017, June).

Node application– A particular computer is needed for becoming part of the block system which has an internet connection. In this process, the node application creates the link with the blockchain network. Most of the node application can be used by anyone which create a bigger block change system.

There are several applications of blockchain technology. The use of the internet and things with blockchain technology has created innovations. The finance services can easily use blockchain technology to create a better financial market infrastructure. Blockchain technology is also famous within the governments of different countries for improving the government services which can become more transparent to the citizens of the country. the use of blockchain technology in the Healthcare industry has created centralise operations and better service delivery system(Biswas, 2016).it has improved the efficiency, transparency and security of this industry to improve the Healthcare system. The ideal digital identification feature of this technology can easily use as part of any identification sector. The Identity system has been awarded the use of blockchain technology. The industry of internet of Technology is evolving and the introduction of blockchain technology has already use as part of this process the ultimate system for the future smart devices. The insurance industry needs to share their data in a transparent, efficient and secure manner, which has been managed by this technology by using the peer to peer networking. The use of blockchain technology in the trading industry has created a source of energy, which can create a centralised system for the customers(Beck, 2017). Besides that, there are other industries, which are already benefited from the use of blockchain Technology like supply chain, real estate, music industry, money industry, etc.

2.4 Challenges of using the blockchain system

There are different challenges which are part of using blockchain technology as part of any business industry.

Criminal connection– the security issue is one of the basic challenges for this blockchain system but the network is decentralized. The primary target of using this blockchain system is to maintain the Bitcoin. But currently with the development of this technology the criminals or cybercriminals are using this cryptocurrency to purchase illegal payment method or equipment.

The initial costs– adopting the blockchain system has identified long term benefits related to cost reduction, productivity and efficiency. But introducing this technology need specialised hardware where the software can be used. The system is quite expensive because of the fast-growing effectiveness of using this technology. The setup cost of this blockchain system is high.

Figure 2: Application of blockchain in Energy Internet

(Source: Self Developed)

Energy consumption- The validate transactions on the blockchain system using the proof of work mechanism. For using this mechanism the basic requirement is complex mathematical problems which can easily verify the transition process and also part of the security provided for the network. For this process, a large amount of energy is required by the computer, which causes high energy consumption.

Integration with the legacy system– The use of blockchain system can be possible with integrating with the previous systems or existing systems. Blockchain solutions can be used by the organisation while using this system at their existing system. It provides the smoothness in the transition process.

Privacy and security- privacy and security are considered as one of the pitfalls of blockchain system(Lemieux, 2016). The original design of the system is made for public visibility. Therefore, in terms of using this technology as part of the corporations or government operations create the issue of protection. Restrict access creation is another difficulty for using this system.

2.5 Blockchain-based energy trading

In energy trading procedures, the use of blockchain technology has gained a huge success. There are two different modes of the book blockchain system, those are used for the field of the energy sector. One mode is structured and the other is unstructured. The P2P network planners are used as part of organising the blockchain-based network.

Trading and markets have already identified the benefit of using the blockchain technology for safety and security of data storage and transfer. Besides that, the energy sector is benefited by using this technology in the billing process. The customer automation building can be possible with this technology which helps the customer to conduct the micropayments. The automation process is also important for energy consumption. Finally, the security of using this technology has provided a better benefit to the energy sector. The technology of cryptography has increased security.

3. Research Methodology

3.1 Research problem and questions

What is the issue?

There are various challenges which are identified in the use of blockchain technology as part of the energy sector. Therefore, a systematic evaluation is highly required to identify these challenges and increase the efficiency of blockchain usage in this sector. This identified blockchain technology has been used in different industries for evaluating the transaction history. The usability of this technology has created a new way for the trading system, which can be possible to evaluate with identifying the challenges and techniques of minimising them(Huh, 2017).

Why it is an issue?

There are various technologies, which are being used as part of the storage device in the digital world. The use of blockchain has kind of change the scenario. Decentralization is possible with using different types of storage process like cloud computing or Fog computing. The use of blockchain technology has created a new variation in energy services. Therefore, understanding the use of this technology in the energy sector is an effective way to increase its use and provide a better digital technology (Kabalci, A survey on smart metering and smart grid communication., 2016).

Why it is an issue now?

A drastic change has been identified with the use of blockchain technology in the different areas of the energy sector. It has been identified that the growth of the energy sector has been improved with the use of blockchain, which promises a transparent record, auditable and automated. The power store and transfer system have to change referred to after this introduction of blockchain. Promising data security has leakages from the starting of digitisation. But with the use of blockchain the ability to increase the security of electronic data has increased(Lemieux, 2016).

Research Questions

What is the concept of a blockchain system?
What are the different applications of blockchain system?
What are the major issues related to blockchain technology in the energy sector?
What are the ways to blockchain in the centralized trading system?

3.2 Selection of research methodology

3.2.1 Introduction

This chapter provides an overview of the research methodology including research philosophy, research design, approach, data collection and data analysis. Based on this chapter the next chapter will provide an overview of the results and discussion.

3.2.2 Research Onion

Figure 2: Research Onion

This research onion provides an overview of the vital sections of the research methodology (Flick, 2015). The innermost layer of the research onion includes data collection and data analysis and the outer most layer includes research philosophy. After that, the second most outer layer includes research approaches and design.

3.2.3 Research philosophy

There are three types of research philosophies including positivism, realism and interpretivism. This current research paper will focus on positivism philosophy. This philosophy allows the researcher to observe the factual knowledge through observation (Fletcher, 2017). This philosophy depends on the quantifiable observation that leads the researcher to conduct a statistical analysis. In this study, the researcher needs to observe things effectively thus positivism philosophy will be suitable for this paper.

3.2.4 Research design

There are four types of research designs including descriptive, explanatory and exploratory and experimental research designs. The experimental design will be taken in this research paper. However, the experimental design can be defined as the statement of affairs. This design will allow the researcher to shed light on current issues(Kumar, 2019). In this research study, the researcher will analyze the privacy challenges related to the smart home system by using this design. The experimental design allows the researcher to conduct experiments using several reading materials.

3.2.5 Research approach

Inductive and deductive are the major two research approaches used by individuals. The deductive approach will be taken in this study. This research approach allows the researcher to develop a hypothesis and based on the existing theory(Flick, 2015). This research approach creates a link between then different circumstances. Generally, this approach applies to those research studies that have a clear aim and set of objectives. This current research study includes research aim and set of objectives thus this approach will be suitable for this study.

3.2.6 Sample and sampling

Sample and sampling is an essential step of any research methodology. In this study, probability sampling technique will be followed. The probability sampling technique is suitable to select a sample from a large population(Fletcher, 2017). In this current study, the probability sampling technique will be taken. In this study randomized controlled trial technique will be taken to make a comparison between the control group and experimental group.

3.2.6 Research Method

This study will include an experimental method to collect data. However, in the experimental research tests research technique to collect statistical data. In the experiments, research variables will be used to collect information authentically. The experimental research is useful to determine the changes in the variable. However, in the literature review section, a secondary analysis will be conducted based on authentic resources. In the experiments, the researcher manipulates one variable and makes control over another variable. Experiments will be applied through the scientific procedure. In an experiment, the researcher will be able to observe the outcome of different experiments. The null hypothesis is another part of the experimental method. However, an experiment creates a conclusion by focusing on the factors of the study group and making inferences from the sample of a large population.

4. Experiments

4.1 Experimental design

Blockchain is capable of fixing issues with data complexity, energy sales and sharing. This technology ensures an open and well-timed exchange of energy for values; it is restoring the trust between consumers and suppliers. These solutions will, in turn, bring about an increase in competition among service providers and drop service costs drastically.

This designed network concerning network can help to detect and solve the supply interferences, Energy commodity transactions done on a leading platform can be made of Unquestionable integrity and transparent mode.

Figure 3: Blockchain based power trading process

(Source: Taylor, 2014)

The experiments aim to predict different phenomenons. However, this current topic focuses on challenges associated with the privacy issue of the smart home system. To collect data from different groups’ experiments will be taken in this study. This experimental research includes a range of definitions in a strict sense. This allows the researcher to analyze the changes in the variables. In this experimental method, one group or variable can be manipulated by the researcher and another group will be taken as the control.

With the help of Blockchain-based power trading process, multi-signature technology is being used and there is anonymous information flow in distributed energy transactions, it proposes a solution for ensuring transaction security to the third parties that are not trusted in distributed smart grid. It also qualitatively described the changes in demand for Enercoin caused by distributed power and load changes

4.2 Data collection

In the experimental method, data will be collected through several readings of different experiments related to energy conservation of blockchain technology. Therefore, observation will be made to collect data based on the variables. In this research study privacy issue is one variable and smart home automation technology is another variable. These two variables will be observed and information will be gathered accordingly. Sampling the group is an important part of the experiments. When the researcher has more than one condition in an experiment than one sample group will be taken as the control group and other groups will be tested under the given experimental conditions. Generally, the experiments will be carried out by manipulating the variables. During the data collection, the independent variable will be manipulated that will affect the other experimental groups. Non-experimental factors should be considered during the data collection.

4.3 Data analysis

Data analysis is a crucial part of every research paper. To reveal the importance of the problem and its severity data analysis will be used(Kumar, 2019). In this current research report, the researcher will identify and analyze the challenges related to the security issue of the smart home system. This will be done by analyzing the collected data. To analyze the data chart, graphs and table will be used. This research report will use Microsoft software to show the statistical percentage of the data. From the data analysis, the learner will get an idea about the issue mentioned in the research paper. In the experimental method data analysis will be done by analyzing both dependent and independent variables. In this current study Block chain and energy storage is the independent variable and privacy issue is the dependent variable. Both variables will be observed during the data analysis. The gathered data will be represented by using statistical percentage, graph, table and charts.

4.4 Ethical consideration

The research should consider ethical requirements while conducting research. According to the Data Protection Act, no one can share any personal data of an individual without his or her consent. Breach of data may lead the researcher to face a legal issue. On the other hand, no manipulation can be taken place while representing the data. The entire data need to represent ethically. Therefore, proper citation will be required in the literature review section.

Bibliography

Ahram, T. S. (2017, June). Blockchain technology innovations. In 2017 IEEE Technology & Engineering Management Conference (TEMSCON), (pp. 137-141).

Beck, R. A. (2017). Blockchain technology in business and information systems research.

Biswas, K. &. (2016). Securing smart cities using blockchain technology. In 2016 IEEE 18th international conference on high-performance computing and communications; IEEE 14th international conference on the smart city; IEEE 2nd international conference on data science and systems (HPCC/SmartCity/DSS), pp. 1392-1393.

Crosby, M. P. (2016). Blockchain technology: Beyond bitcoin. Applied Innovation, 2(6-10), 71.

Fletcher, A. J. (2017). Applying critical realism in qualitative research: methodology meets method. International Journal of Social Research Methodology, 20(2), 181-194.

Flick, U. (2015). Introducing research methodology: A beginner’s guide to doing a research project. . Sage.

Huh, S. C. (2017). Managing IoT devices using blockchain platform. In 2017 19th international conference on advanced communication technology , pp. 464-467.

Kabalci, Y. (2016). A survey on smart metering and smart grid communication. Renewable and Sustainable Energy Reviews, 57, 302-318.

Kumar, R. (2019). Research methodology: A step-by-step guide for beginners. Sage Publications Limited.

Lemieux, V. L. (2016). Trusting records: is Blockchain technology the answer? Records Management Journal, 26(2), 110-139.

Blockchain Technology and its utilization in the energy industry

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1. Introduction

Background