Power Ledger – Energy Revolution Incorporated
A deeper look at Australia’s first ICO and what’s actually on offer
For those of you after a quick fix:
Power Ledger are a company based in Western Australia that have created a Platform (software) based on the blockchain technology that underpins Bitcoin. Their Platform enables P2P trading of energy. This is possible due to the roll out of advanced digital (electricity) meters, also known as smart meters.
Their first trial took place in 2016 at the National Lifestyle Villages in Busselton, WA. It was conducted across the Western Power network and was a world first. It involved 10 households over a period of eight weeks.
Since Power Ledger’s inception in 2016 they have assembled an amazing team of individuals including their current Chair, Dr Jemma Green. Jemma cut her teeth at J.P.Morgan and holds a PhD in disruptive innovation in energy markets. Jemma was also invited to Sir Richard Branson’s Necker Island for the 2017 Blockchain Summit hosted by Bill Tai – who is also an advisor at Power Ledger.
Power Ledger opened the ICO presale on the 27th of August 2017. 100 million tokens sold out in 72 hours to the tune of $17 million AUD. The public ICO will be launching on the 8th of September 2017 at 7am UTC. 155 million tokens will be sold over a period of 4 weeks. Weeks 1, 2 and 3 have discounts of 15%, 10% and 5%. These discounts are applied after the uncapped ICO finishes. The tokens will be available on exchanges no later than 4 weeks after the ICO.
Let’s take a deeper look…
Don’t worry if you haven’t heard of Power Ledger, ICO’s, blockchain, or cryptocurrency, we assume nothing and have created the following as a one stop shop to not only inform but enable you to participate in the energy revolution that is currently taking place.
What is Bitcoin?
At this point Bitcoin, a cryptocurrency or digital currency, is entering the mainstream as not only a replacement for conventional currencies but it has started a revolution in many other industries. In October 2008 a person(s) using the pseudonym, Satoshi Nakamoto published a white paper describing a digital currency called Bitcoin. This paper addressed an issue that has plagued the internet for decades…
The problem with the internet is that if you create something, music for example, and send it to your fans, there is really nothing to stop them from copying it and sending it to another person, most likely for free. This problem became apparent with the rise and fall of Napster. Now let’s say you wanted to send someone money, for arguments sake you scan a 50 dollar note. When you scan that 50 dollar note onto your computer it is the only copy. If you send it to someone else there are now two copies and so on and so on. You could apply a condition to the transaction in which the person who initially transfers the 50 dollars has to delete the old file but who’s going to do that?
‘Satoshi’ addressed this problem by creating the blockchain. The blockchain is a ledger or list of transactions. All the transactions that take place using bitcoin are recorded and stored on nodes. Nodes are like financial institutions. They keep track of all the records and if a fraudulent transaction takes place on one of the nodes that isn’t verified by all the nodes, the transaction is blocked. There are an estimated 9500 reachable nodes working this very second to verify transactions on the bitcoin blockchain. Who are these nodes? The best part is they’re just people like me and you – anyone can become a node and that’s where a cryptocurrency’s power comes from.
So how does Bitcoin have value? You may have seen that 1 bitcoin is currently worth $5,000 USD. This is largely due to mining, and supply and demand. Mining is a term many are familiar with but in the cryptocurrency realm is a term only understood by experts. Mining in a nutshell is solving complex algorithms that in turn encrypt the network. With each ‘block’ of transactions that are verified and encrypted a reward is handed out – so many bitcoins. ‘Miners’ as they are so called, run very powerful computers that verify transactions and encrypt the network. In order to do this a substantial amount of energy is required, hence bitcoin is backed up by energy. Similar to how conventional currency was once backed up by gold. So much energy has been committed to ensuring the network is unhackable that it has taken on a monetary value.
Then there is supply and demand. Bitcoins are finite, by the year 2140 21 million bitcoins will have been created. Partly due to this, the price of bitcoin will continue to rise because it has been designed to accommodate the entire world’s economic activity. This means that bitcoin is in short supply and with more and more people wanting to partake, demand rises, similar to housing prices in the inner city.
Bitcoin and energy, what’s going on there?
Satoshi created bitcoin and the blockchain but the blockchain isn’t only applicable to the finance sector, it can be used in many industries and energy is one very important sector that it is applicable to.
Energy is neither created nor destroyed, it is simply transformed from one state to another. A power plant transforms the energy stored in coal into electricity. The electricity produced is transformed by homes, business, vehicles, into heat, light, motion. Once transformed however, recovering the energy and converting it back into electricity is very difficult, hence electricity consumption is a one way street. It goes in one direction, from order to disorder. Keeping track of this conversion is a very complicated process and everything needs to be accounted for or the power we take for granted will simply stop and we are left without electricity.
Most Western countries take their electricity infrastructure for granted. But it has become a very costly and largely over-engineered system whose main priority is to ensure there is sufficient power even at the furthest reaches of the network. This requires enormous pressure, so-to-speak, to reach the residents on the fringes of our society. However, with the advent of solar and battery technology the status-quo is being disrupted and energy companies could potentially be left with huge assets that were once worth worth hundreds of millions of dollars, if not billions, that no-ones using because solar and batteries are simply cheaper.
The blockchain can be used to solve this problem by encouraging people to stay connected to the grid (poles and wires) and distribute their energy rather than hoarding it for their personal needs. If everyone is connected and producing and consuming electricity the network needs to become dynamic. Nikola Tesla’s outdated electricity network simply won’t suffice and needs to be superseded.
The application of blockchain technology to the energy sector will mean the average consumer from the suburbs who isn’t home during the day and has a large solar system installed on their roof, can transfer energy to the apartment block in the inner city who has much less roof space. They will be able to do this instantly without friction and can receive a much better return on the solar system they have invested in. Without the blockchain this is simply not possible.
Ultimately, the blockchain will be used to distribute energy to where it is needed, cheaply, quickly and largely without the need for oversized centralised power plants. Remember the blockchain is simply a ledger that can’t be manipulated and involves minimal human intervention. Once the nodes are in place it is largely autonomous. It will make transferring energy cheaper and easier and in turn decrease our reliance on fossil fuels and large corporations.
Who are Power Ledger?
Power Ledger are among the select few, along with G.Solutions , who have seen this wave of innovation coming. We first became aware of Power Ledger at the beginning of 2017 after brainstorming how the blockchain could be applied to energy transactions. We were pleased to learn that we weren’t the only ones and that another Australian company like Power Ledger were leading the charge.
Power Ledger have a world class team. Outside of their Chair Jemma Green, covered in the intro, the team is made up of 16 individuals with a range of expertise. To learn more about their team visit https://tge.powerledger.io/
How will Power Ledger democratise energy?
As most people interested in cryptocurrencies will know, bitcoin isn’t the only digital currency. Ethereum is a cryptocurrency in an entirely new field of its own. Ethereum’s cryptocurrency is called Ether and this currency was used to found the Ethereum Foundation – a Swiss nonprofit. However Ether isn’t the only outcome of Ethereum, the developers at Ethereum have essentially created a platform for anyone to use that is backed up by blockchain technology. Understanding the intricacies of Ethereum is difficult but a few important points should be understood in order to comprehend how Power Ledger’s Platform works.
Ethereum runs smart contracts. For example, you may want an employee to work 25hrs/week and you will pay them 20$/hr for their time. You’ll sign the contract and so will the new employee. If you were to pay them less than $500 a week, assuming they met their obligations, they may have legal recourse/you would be in breach of contract. Ethereum works in a similar way, however the process is completely decentralised and automated. A piece of code, called a ‘token’ contains all the details of the contract.
For Power Ledger they have chosen to call their smart contracts or tokens POWR’s. POWR tokens are like licenses for computer software. In order to use Power Ledger’s Platform you must have sufficient POWR tokens. However POWR tokens are not the only token used on the Power Ledger Platform.
Power Ledger also run a private blockchain where energy is traded using a token called Sparkz. Sparkz represent the lowest denomination of a currency in that particular region. In Australia it’s 1 cent . Therefore in Australia 0.01 AUD = 1 Spark. This has been done for a number of reasons. If POWR tokens were used worldwide for transacting energy – energy is typically measured in kilowatt hours (kWh) – third world countries would be forced to pay in $AUD/kWh’s, meaning, due to inflation and exchange rates, such citizens would pay exorbitant prices simply because their currency isn’t as valuable.
How does all of this work? The way the POWR token operates in the Power Ledger Platform is you would purchase POWR tokens on an exchange – an exchange allows people to trade conventional currency for cryptocurrencies and also between cryptocurrencies – you then convert those POWR tokens to Sparkz. The Sparkz are used to pay for energy and reward those who produce energy using solar for example. The Sparkz can flow in two directions.
First, an Application Host like Power Shop (energy retailer) can receive Sparkz from prosumers and reward them with $. This also means Sparkz can be traded for fiat without necessarily first having POWR tokens. This is possible because the Application Host acts like an exchange. They pay the prosumer $ for Sparkz which generates POWR’s, then they can trade the POWR’s for conventional currency. This has been done to not only encourage energy retailers like Power Shop, who have a large consumer base, to use the Platform but to enable the not too tech savvy to participate.
Secondly, prosumers can redeem Sparkz for supplying energy to a neighbour or someone on the greater network that requires electricity. They can then convert the Sparkz they have redeemed for POWR tokens. It is then possible to either hold onto the POWR tokens they have ascertained, which will increase in price as demand increases, or trade them on an exchange for conventional currency.
In short, Sparkz are used in a closed-looped trading system that operates on a private low energy consumption blockchain (Ecochain). Sparkz are the energy trading platform’s currency, while POWR tokens (Ethereum smart contract) grant access to the POWR Ledger Platform. Sparkz can be created by application hosts or prosumers to distribute energy and they can also be traded for fiat or POWR tokens.
Throughout the trading process a certain portion of the funds go to the prosumers, which is several times greater than what they are currently receiving. A portion also goes to the application host and finally Power Ledger charge a small transaction fee. This ensures Power Ledger can maintain the Platform and expand to new regions.
Why are Power Ledger doing this?
In Australia and worldwide, energy trading has become very complicated, regulated and it is typically the consumers that foot the bill for the failing system. Energy prices are going up and up and especially with the rise of solar and battery storage, someone needs to pay for the network that was intended to connect consumers to low cost energy.
What we have seen however is those that can afford it have installed solar and batteries, which decreases demand on the grid and forces those who can least afford it to pay for maintenance and expansion of a failing business model. Power Ledger are addressing this problem on a global scale by using blockchain technology to allow instantaneous transactions of energy peer-2-peer, neighbour to neighbour, business to business via our existing infrastructure.
With battery and solar PV panels decreasing in price more and more this problem will only become amplified. Now is the time to stop this troubling trend and Power Ledger have the solution. By encouraging Distribution Network Service Providers (DNSP) and energy retailers by donating POWR tokens to their organisations and holding them in escrow for a period of 1-3 years, they are ensuring the infrastructure we have paid for is not made obsolete.
Think of all the jobs, materials, professions, industries and people that rely on a functional electricity network. If we were to lose it we would not only close the door on an important component of our society we would be effectively closing the door on each other and those who can least afford to adopt new technologies.
What’s an ICO and how can I buy into Power Ledger?
An Initial Coin Offering (ICO) is very similar to an Initial Public Offering (IPO) on the stock market, except there is one very important distinction… Power Ledger’s ICO enables you to buy POWR tokens at a reduced rate to what it will later be on exchanges, but it does not give you a stake in the company nor enable you to vote on how they chose to spend the capital raised.
Power Ledger’s ICO is uncapped. This means the 155 million tokens on sale will be distributed amongst the investors no matter how much is raised. This means $30 million dollars could be raised, which would make the tokens worth approximately 20 cents eachs. The ICO is uncapped because Power Ledger wanted to prevent large investors (whales) from buying all the tokens if they were priced at 20 cents/token. This means even if $100 million is raised those that invest will still receive POWR tokens.
The ICO is set to run for 4 weeks and this has also been done to encourage as many people as possible to invest in the Platform and ensure the tokens are widely distributed. Weeks 1, 2 and 3 have discounts of 15%, 10% and 5% to encourage people to get in early.
Power Ledger chose to conduct a presale to test demand before the public ICO took place. They priced 100 million tokens at 8.8 cents USD each and they sold out in 72 hours. Think of how much they could raise during the 4 week token generation event (ICO).
To invest simply go to the Power Ledger website at the bottom of this post and follow the prompts. The ICO starts on the 8/9/2017 at 7am UTC. Should you have any questions be sure to join their Telegram group which is packed with their staff 24/7- also listed.
What’s the point in buying POWR tokens now?
Let’s be honest, the crypto world is made up of plenty of cowboys looking to make a quick buck. These types will most likely buy into the ICO and sell the tokens shortly after. While this has a negative impact on the price of POWR tokens, what it also does is weed out such characters and stabilizes the token.
Once all the cowboys are gone we will be left with the dedicated investors that either hope to use the POWR tokens in exchange for Sparkz or see the POWR tokens as a longterm investment. While renewable energy is ubiquitous, we will always have to pay for electricity one way or another. You will be investing in something we will always need – energy, it’s that simple.
If you’re like us you’ll see this as a massive opportunity to get in early and support a technology, that in our humble opinion, is the only way forward in the energy sector. The POWR is now in your hands…
– Written by David A. Fulton
To be part of the public ICO @ tge.powerledger.io/
Join the conversation on Telegram @ t.me/powerledger
Facebook @ facebook.com/powerledger/
Blog @ medium.com/@PowerLedger_io