Energy giant BP has begun experimenting with blockchain in its trading division - a sector specialist has told Sputnik the move represents another step into the mainstream for the technology, and moreover, its capacity for disruption is almost limitless.
BP is experimenting with blockchain, in the hope of making oil and gas trading more efficient. The energy giant's foray into the sphere is just the latest example of a major business adopting the technology, dragging the database provision into the mainstream in the process.
In an interview with the Financial Times, David Eyton, Head of Technology at the firm, said the group was investing in pilot programs to explore the "practical and ethical" implications of using blockchain in the energy sector.
"There are uses for blockchain that could give us a competitive advantage. Blockchain can be much more efficient in terms of speed and verification of transactions. In a big company, with lots of different corporate entities, you have to manage financial settlements and reconciliation between different parts of the business. A lot of that lends itself to blockchain," Eyton said.
BP Tech Chief: Blockchain Could Give Company 'Competitive Advantage'
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Blockchain — a digital ledger system that records online transactions — is oft regarded as an "anti-establishment" innovation associated with digital currencies, such as bitcoin, which rely on the technology. Adam Jason, Head of Business Development at blockchain specialist Consilium, believes BP's interest in the sphere reflects increasing awareness among major corporations about the potential of blockchain.
"BP recognize blockchain can be used to streamline processes significantly — cutting back office expenses and stripping many bureaucratic processes and around payments and removing middlemen from their supply chain. Ultimately, blockchain reduces risk and complexity, increases protection and produces big savings — things every business strives for," Mr. Jason told Sputnik.
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As part of BP's blockchain ambitions, the company has already embarked on a project with Italian oil major Eni, and Wien Energie of Austria, on a pilot program in association with Anglo-Canadian tech firm BTL, in which blockchain trades have been run on an experimental basis, in parallel with live trading systems. However, the report stated oil and gas trading was but one of many potential applications for blockchain envisaged by BP — externally and within the organisation — using traditional currencies rather than cryptocurrencies.
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Despite the technology being in its relative infancy, the lofty promises of blockchain have evidently proven seductive to many businesses — BP is far from the first major corporate entity to delve into the field. Other firms that have adopted blockchain include Danish shipping titan AP Moller-Maersk (which uses it in marine insurance contracts), and banks such as HSBC and Deutsche (in cross-border trade finance).
Moreover, Mr. Jason notes most major payment processors, such as VISA and Mastercard, are filing blockchain patents, Google and Facebook are looking to integrate digital currencies to their platforms, and "every big bank" has a dedicated department for researching blockchain and digital currencies.
However, he is quick to add that there are examples of companies getting involved in Blockchain out of "a desire to be seen to be doing something," without much depth of understanding of the technology.
"Some people seem to be jumping into the space headfirst without really comprehending it. Still, increasing corporate interest in Blockchain is a great thing — we've finally reached the stage when blockchain tech has received some level of mainstream acceptance. We've passed that threshold, now there's no going back. This is the future — internet 2.0, and anyone can own a piece of it," Mr. Jason explained.
In any event, a comprehensive understanding of blockchain may not be an indispensable prerequisite of adopting the technology — its basic concepts and offering is easy to understand. Moreover, much of the "bad press" blockchain has attracted to date, Mr. Jason noted, is primarily the result of speculative digital currency trading, and ensuing volatility.
Blockchain and digital currencies may be intrinsically linked, but they are quite separate concepts and entities nonetheless. Whether a bitcoin is worth a dollar or a cent, "the tech still remains" — and the high and rising value of bitcoin and other digital currencies is symptomatic of "excitement and enthusiasm" about the very technology that underlies it.
"Blockchain is disruptive in so many unforeseen ways — you find a new use case almost every day. Although this is not always guaranteed by any means, the technology has the capacity to replace traditional financial institutions, like retail banks. Physical bank branches are closing all the time — online is the future. There are endless possibilities to what can be achieved, but ultimately it's all about new financial freedom for individuals and groups," Mr. Jason concluded.
