Investor and institutional interest increases as blockchain smart contracts become more usable. Until now, smart contracts could function only with data already in the blockchain ecosystem. Recent advancements like those created by Zap.org — cofounded by Mr. Spanos — allow real-world events and data to trigger smart contract execution.
These improvements unlock an endless array of potential decentralized applications for the technology.
"The future has arrived for the energy sector. Decentralized, peer-to-peer trade will slash costs and lessen administrative burden for the entire process, from upstream to downstream to shipping and chain-of-custody logistics,” Mr. Spanos told Sputnik reporter and columnist Suliman Mulhem.
The implementation of blockchain in the oil industry could result in cost-savings of around 5 percent, according to a recent report on Russia’s own potential for blockchain in the energy industry. These savings arrive largely through automation of the often-tangled traditional paper and back office accounting and trading processes. In a multi-trillion-dollar industry, even a single percent saved translates to billions of dollars per year.
The Aramco officials noted that they are “trying various use cases for blockchain in oil transfer,” and predicted that these next-generation smart contracts will soon play a “huge role” in the future of the Saudi energy market.
Russia and Saudi Arabia are neck-and-neck in annual oil production, with both hovering around 10.5 million barrels per day (bpd.)
As the Zap.org team continue their tour of oil-producing nations, including Oman, Iraqi Kurdistan, the UAE, Venezuela and now Saudi Arabia, Zap.org says it is in the process of launching a highly-focused blockchain venture for energy sector solutions, known as EnergyLedger.
“Contractors in the production and refinement process can be paid for exactly what they do, in the moment they do it, cutting overhead with seamless transaction processing. Settlements are instant, and less opportunity for human error lowers the risk of expensive litigation," Mr. Spanos added.
In addition to the significant cost-savings, the technology also offers benefits with regard to compliance and security.
"Down to tracking each individual barrel, the blockchain will bring incredible internal transparency, reducing the weight of regulatory compliance. Hand-in-hand with transparency, blockchain’s distributed nature also ensures unmatched data security in the age of cyber terror,” Mr. Spanos, who also founded Bitcoin Center NYC — the world’s first bitcoin trading floor, across the street from the New York Stock Exchange — added.
Energy firms are already looking to play an active role in blockchain’s development, with Shell purchasing shares in a blockchain start-up earlier this year to put itself in pole position in the development race, as there could be colossal financial and non-financial gains.
“Oil sector leaders like Russia and Saudi Arabia will soon have no choice but to embrace blockchain’s incomparable advantages. Zap.org’s EnergyLedger is blockchain’s killer app for oil-rich economies,” Mr. Spanos concluded.
The views expressed in this article are solely those of the speaker and do not necessarily reflect the official position of Sputnik.