In this article, we will define smart contracts and discuss their role in the energy sector, as well as the benefits and limitations of using them. We will also examine how Attributes utilizes smart contracts to generate origin certificates and ensure trust in their processes.
Definition
Smart contracts are basic programs stored on a blockchain that automatically execute when predetermined conditions are met. They are written in code and follow simple “if/when…then…” statements, performing a specific action when triggered.
Why use smart contracts in energy sector?
Smart contracts can serve a variety of purposes in the energy sector, such as releasing funds, sending notifications, or registering energy assets. They are often used to automate the execution of agreements, allowing all parties to immediately know the outcome without the need for an intermediary or time delay.
For example, a smart contract could be set up to release payment to a renewable energy producer once the agreed-upon amount of energy has been delivered to the grid. If the energy delivery is not met, the smart contract will not execute and the payment will not be released. Smart contracts are also commonly used in the creation, transfer, sale, and trade of digital assets known as tokens in the energy sector.
Benefits of smart contracts
Smart contracts offer several benefits for the energy sector, including:
- They cannot be altered once deployed, ensuring they cannot be censored or shut down.
- They minimize the need for trusted third parties to manage and validate the contracts, saving time.
- The self-execution of smart contracts reduces the risk of errors caused by human intervention.
- As blockchain is a distributed ledger, all network participants have a copy of the transactions, reducing the potential for security breaches and fraud.
However, smart contracts also have some limitations. Because they are immutable, any bugs included in the code cannot be fixed once the contract is deployed on the blockchain.
How Attributes is leveraging smart contracts
Attributes™ uses smart contracts to generate the origin certificates. To make sure the right amount of certificates has been issued, or that only one final user can claim the attributes of the production embedded in the certificate, smart contracts allow Attributes™ to ensure more trust in the process. Moreover, Attributes™’s smart contract codes have been audited by Bureau Veritas and Secura.
