IEEE Systems, Man and Cybernetics Magazine - January 2023 - 45

be internally operated in a company or among a group of
stakeholders, and there is a high level of trust as all participants
are known. It should be noted that the characteristics
of those four main domains highly rely on the
consensus mechanisms.
Consensus mechanisms are used to validate transactions
and uphold the integrity of blockchain. PoW is a
decentralized consensus mechanism
that rewards participants
who solve cryptographic puzzles
to validate transactions and create
new blocks. PoS is commonly
used for publ ic permissioned
blockchain. In PoS, participants
put stakes to become validators
and are rewarded for participation
in operating blockchain or
approving and validating transactions
that are being added.
Since validators are offering up
their own resources or putting
stakes into blockchain, this can
help to increase good behaviors
because validators hoping for/
want a good outcome. PoA and PBFT are consensus
mechanisms that are often used for private permissioned
blockchain for business use cases within companies
or among identified groups. Such mechanisms rely
on trusted identified nodes to validate or to take part in
a voting scheme to prove transactions are trustworthy
or to determine whether several participants are given
the right to vote. Hence, as participants are known and
trusted, this can enable faster blockchain because
there is no need to go through all of the steps of verifying
multiple different participants. Particularly,
Hyperledger Fabric relies on
PBFT and it is a private permissioned
blockchain, and it is either internally
run or organized by a group of stakeholders.
Based on the provided information
in Table 1, Figure 7 shows the
commonly reported consensus mechanisms
in blockchain projects [13].
PoW
Power Market Transformation
with Blockchain Technology
Power markets are mainly in a centralized
structure and, indeed, a central
agency is responsible for the authenticity
and integrity of power market data. As a
result, it is costly to successfully access
the data of a centralized market. Besides,
small market players do not have access
to such a market. Blockchain technology
with a distributed and immutable ledger
of transactions can resolve those issues.
14%
24%
30%
As participants are
known and trusted,
this can enable faster
blockchain because
there is no need to
go through all of the
steps of verifying
multiple different
participants.
Figure 8 shows the major differences between traditional
wholesale and blockchain-based power markets [16].
In traditional wholesale power markets, the main objective
of power grid operators is power systems operation
and management for providing electricity to retail consumers.
Power grid operators in traditional wholesale
power markets are vertically integrated, and their main
role is to control power generation,
transmission, and distribution
systems to serve electricity
consumers. In such power markets,
physical power trades occur
through bilateral transactions.
In addition, traders buy and sell
energy on exchanges and banks
act as payment service providers
and are responsible for handling
the transactions made by all parties
involved.
As shown in Figure 8, blockchain-based
energy processes do
not require energy companies,
traders, or banks (for payments).
In the blockchain-based power
market, a decentralized energy-transaction and supply
system can emerge under which blockchain-based
smart contract applications allow consumers to manage
their own electricity supply contracts and consumption
data [17].
Requirements for Blockchain Technology
There are some mandatory requirements for blockchain
technology in modern power systems. High scalability is
one of the main requirements for blockchain technology in
Not Available
PBFT
16%
16%
PoA
PoS
Figure 7. Consensus mechanisms in blockchain technology.
January 2023 IEEE SYSTEMS, MAN, & CYBERNETICS MAGAZINE 45
IEEE Systems, Man and Cybernetics Magazine - January 2023

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