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Blockchain in the Energy Industry

the necessity to understand applicable/governing law. This problem only does not

arise in situations where the parties to the agreement reside within the EU, as the

legislation applicable to contractual obligations remains the same: The “Regulation

of the European Parliament and of the Council on the law applicable to contractual

obligations (Rome I58)” (Giancaspro, 2017). But what happens if the contracting

parties are not in the EU?

The matter should then be dealt with under either private international law or the

applicable law mentioned in the contract (Governatori et al., 2018). A possible solu­

tion to this may be providing a range of alternative options to choose the applicable

law in a smart contract by clicking on the preferred country or region. In the case of

imposing blockchain applications in the energy industry, selecting a proper govern­

ing law for each transaction may lead to complex legal and regulatory situations,

which the tech giants and the government should consider with a more profound and

holistic approach.

7.4.2  Identity within a Blockchain

Most of the energy-related blockchain applications so far are held in public block­

chains. All transactions in public blockchains are easily accessible. Nevertheless,

transactions in public blockchains do not indicate that the identity of the parties is

always understandable. For example, the parties in a bitcoin transaction can partici­

pate anonymously. This can be an added advantage for cryptocurrency situations;

nevertheless, it contributes to difficulties for energy industries, both politically and

philosophically (Diestelmeier, 2019). Unidentifiability will lead to a situation where

the stakeholders cannot identify the real problem or hold any authority responsible

for a wrong, which stands against the core philosophy of introducing blockchain into

the energy industry.

In this case, money laundering on Emission Trading System (ETS) markets,

or market theft due to confidentiality, will remain as a persisting challenge in the

energy market even though blockchain applications are introduced. Therefore, the

existing situation of market exploitation and uneven competition by large energy

vendors and suppliers cannot be easily changed through blockchain applications

(Maksimenko, 2019). This will affect the integrity of the relevant traditional econ­

omy unless blockchain applications that can identify the parties in energy transac­

tions are implemented. Therefore, a range of regulatory reforms have been developed

relating to blockchain applications, especially in the financial sector. While there are

expert arguments on the blockchain recognition/identification of electronic profiles

(Caytas, 2017), such access to identity remains unanswered due to technical and

regulatory barriers.

7.4.3  Liability and Responsibility

The perfect blockchain paradigm allows for a mechanism that totally operates with­

out a responsible central authority (Radziwill, 2018). This means that a legal person­

ality is not defined in blockchain applications (Kshetri, 2017). If any damages arise,