PYLON NETWORK & FAIRCOOP: Building a scalable blockchain consensus for the energy system

– The disproportionate and uncontrolled energy consumption of Bitcoin and Ethereum, is calling for alternative blockchains for the energy sector.

– An introduction in the 1.0.1 of the advantages of cooperation (also) in blockchain!

Last October, we had the opportunity to present Pylon Network in #Hackmeeting17, at La Ingobernable social hub, in Madrid. Faircoop was also there and they presented their project, the developments & the experiences they have gathered throughout their journey. Right after that, Klenergy had the chance to present Pylon Network and show how an international network of energy communities is possible.

Pylon Network and Faircoop have joined forces under their common objective of strengthening local communities through a decentralized/local network of governance, at a global scale.

This collaboration creates an enormous value for the project since the collaboration with Faircoop in the development of Pylon Coin will be based on the Proof-of-Cooperation consensus – the world’s first cooperative Blockchain, developed by Faircoop team.

The eco-friendly and participatory nature of Faircoin resonates with Pylon Network’s philosophy and vision about the future of our energy systems. Together with Faircoop, we will customize the Proof-of-Cooperation consensus to fit the specific needs of the electricity market and we will focus on the operational characteristics of energy cooperatives, as players in the market.

With the successful closure of Pylon Token sale (ICO), it is possible to fund the commercial demonstration of the platform with 100 members of Pylon Network’s partners, GoiEner – an innovative energy cooperative from the Basque country. During this demonstration with GoiEner Pylon Network will focus on two factors:

– the scalability of the platform/code; and

– the energy consumption per transaction.

From both perspectives, Proof-of-Cooperation algorithm offers a head start among all other proposed solutions (like Bitcoin’s Proof of Work or the most popular choice of Proof of Stake – i.e. Ethereum-based smart contracts). Proof of Stake and Proof of Work consensus are inflexible and were not made for the energy sector (accommodating huge number of energy transactions per minute). At the same time, their scalability is a challenge even without adding the burden of the energy waste through their operation.

The following figure shows one of the main arguments of why both these consensus protocols cannot be viable solutions for the energy sector and will face difficulties in the future – regarding their scalability and their cost of operation.

Figure 1: Bitcoin and Ethereum energy demand per transaction, compared to VISA. Source: Bloomberg New Energy Finance, 2017

As explained in Faircoop’s website:

“Traditional cryptocurrency mining takes an enormous amount of energy – which makes it not only expensive, but also takes a toll on the environment.
Faircoin operates on a completely different system – it calls itself the “cooperative version of Bitcoin”.

“Proof-of-Cooperation does not have this mining functionality. Instead, there are certified validation nodes (CVNs) which cooperate to secure the network.

How does the proof-of-cooperation algorithm work? The consensus rules determine which CVN has to create the next block. Each CVN approves that CVN by digitally signing a piece of data which contains its unique ID. After the respective CVN received all the necessary signatures, it takes pending transactions and forms a new block, which is then stored in the immutable and distributed blockchain database.

There are no rewards for block creation, besides a very small fee that is awarded for any block creators to compensate for the energy and bandwidth costs of running a CVN.”

This is one of the many reasons of why our vision is aligned with that of Faircoop. This collaboration means in practice, that it will be possible to buy Pylon-Coins using FairCoins for exchanging electricity within Pylon Network.

At the same time, via this collaboration we will be working together towards our common target of empowering communities, and looking at ways of interconnecting the energy governance of communities with other economic activities and services.

We are very happy for working closely with inspirational and dedicated technology developers and community builders, like Faircoop. Our team becomes stronger and now, we are focusing on the next, important steps of our collaboration, starting with the development of the cooperation algorithm for the needs of Pylon Network.

We are looking forward to amplifying our impact with our common work and to engineering our society together!