Oil-Based Companies Are Using Blockchain Technology, But Why?
Technological computing and storage capabilities have allowed highly detailed information on oil and gas wells to be collected, managed, and shared. Buy and sell bitcoin at competitive market rates with Bitcoin Era. The platform has paid extraordinary attention to detail while designing its user interface. The exponential increase in oil trade complexity has led companies like IBM and Accenture to explore the benefits of using blockchain technology. The idea is to create a distributed, tamper-free ledger of information that can be shared and validated on various levels.
The benefits of blockchain technology
Blockchain technology has several benefits for the oil and gas sector. Here are just a few of them:
1) Multi-Party Approval – The concept behind blockchain technology is about getting multiple parties involved in business transactions. When used for energy transactions, this could include all manufacturers, shippers, and owners participating in the process. It also creates a paper trail so people can quickly and efficiently resolve disputes and issues.
2) Shared Data – The data stored in blockchain technology is shared but not owned by any party. It means that individual entities cannot modify, remove or duplicate data without the approval of all parties involved in the process. This concept is already being used by companies like EXXON and Shell and has also been adopted globally by banking institutions like HSBC to share transaction data with their customers
3) Auditable records – The database can include shipping details, GPS logs, and the volume of products being shipped. It ensures that each partner can track the progress of their shipment on its journey from its origin to the final destination.
4) Digital Signatures –Minimal costs are associated with using blockchain technology as opposed to traditional processes.
The blockchain ledger can be shared publicly, which allows other interested parties to review and verify transactions without having access to personal information. When using blockchain technologies, each party involved in the process can securely share their data files.
How can blockchain change the oil and gas industry?
Disintermediation in oil trades:
The oil trade volume in the US alone is currently around one million barrels a day. As more companies use blockchain technology to manage transactions, this figure could increase significantly. In addition, disintermediation is a crucial benefit of using blockchain technology as it allows buyers and sellers to share information without relying on go-betweens. This concept could save time, money, and resources while increasing efficiency and transparency along the supply chain.
Elimination of fraud:
Current oil and gas sector processes are often very complex, making them vulnerable to fraud. Fraudsters can exploit weaknesses in existing systems for their financial gain by tampering with information before it reaches its target destination. Blockchain technology makes it harder for fraudsters to do this, requiring more effort and coordination to achieve their goals. Once again, the benefits of using blockchain technology in the oil trade are evident.
Blockchain technology also has an impact on the way intelligent contracts function. In traditional contracts, an agreement must be made with each party involved in the deal. A simple supply chain example could include a shipment of gasoline sent between two different parties along its journey from the origin to the final destination.
The contract between the intermediaries and the shipper states who should receive the shipment and how much, but this information is not always accurate. With blockchain technology, a smart contract could be created that requires participants to make all relevant payments before delivery can begin. It promotes transparency in transactions and ensures that every party involved with a supply chain makes fair and accurate transactions.
New business opportunities:
Blockchain technology can potentially change many aspects of oil trading for the better. The above benefits highlight just a few that could occur in the future. For example, companies can share essential documents like purchase orders and shipping notes without relying on third parties or central databases for information storage.
Supply chain risk reduction:
Blockchain technology can help companies reduce risk through enhanced security, tracking, validation, and transparency. In addition to these elements, it helps companies track products all along their journey from origin to destination by allowing each partner to record every movement along the way. It helps to eliminate potential risks and dispute resolution.
Blockchain technology in oil trading could be crucial in the energy industry’s future. It offers enormous benefits when it comes to improving efficiency, security, and transparency, all things needed to keep up with the demands of today’s customers. The oil industry will continue to grow in the coming years, but only with blockchain technology can it genuinely thrive.
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