Even though blockchain appears seemingly complicated, its concept is a fairly straightforward one. Simply put, blockchain is a kind of database that houses information on computer systems. To put it differently, blockchain records information in a certain way, which makes it impossible – or at least extremely difficult – for anyone to cheat, hack, or alter the database system in any way.

Every block in this chain stores a specific number of transactions. In addition to that, the database is updated with every new transaction. Anyone who wishes to access the information in the blockchain can do so.

The Impact of Blockchain On the Oil Industry

1) Digitization of Transactions:

Blockchain can enable crude oil transactions to turn digitized, thereby improving overall efficiency and security. In fact, in 2017, French investment and corporate bank, Natixis, was amongst the first to introduce blockchain solutions for transactions involving commodities, such as crude oil and gas.

Through blockchain, buyers, sellers, and the banks can share information since all these parties will be accessing the very same ledger. This means that blockchain can help optimize and streamline the entire process, right from the confirmation of order until the delivery of an LoC (Letter of Credit).

2) Hydrocarbon tracking:

Through blockchain technology, we might be able to effectively track and monitor any regulated substances at regular intervals throughout supply chain processes.

Such tracking and monitoring can help promote accountability throughout the global oil industry.

3) Enhanced trust:

Blockchain can also be used to keep a record of the certificates or permits required for operating any safety-critical equipment. Organizations’ blockchain networks can effectively store and record contractor or employee certifications, such as those associated with welding, first aid, or training. The storing of such information will allow for the easy and swift verification of SOPs and certificates, which, consequently, will lead to greater stakeholder confidence.

In addition, blockchain could also play a role in addressing aspects, such as work performance-related safety and expensive hiring.

4) Improved management of land records:

Since land sales account for a great deal of money, it is essential for oil businesses to keep a comprehensive record of these transactions. The traditional methods for such record-maintenance are quite time-intensive, exhausting, and prone to errors. Not to mention, they are vulnerable to various illicit activities, such as forgery or theft.

In this regard, blockchain can prove to be an effective substitute, allowing oil organizations to keep and maintain these records in an efficient and secure manner. In places like Ghana and Georgia, where land disputes are frequent and disruptive, the scope of blockchain for record-maintenance is being assessed and explored.

5) Increased regulatory compliance:

The global oil industry is highly regulated, and is subject to numerous protocols, ranging from taxation to environmental.

Since blockchain technology will allow for the easy, real-time access of stored information, it will enable authorities to improve visibility and transparency throughout the industry.

6) Oil backed by cryptocurrencies:

Blockchain can assist with the mining of oil by using cryptocurrencies to attract the general public. In addition, crypto will allow users to exploit the digital currencies’ intrinsic value without having to worry about turning to banks.

Such an approach could present an excellent opportunity for the tokenization of the oil sector, and create greater choices for investors. This increase in choices will prove beneficial for both the oil and the crypto industries.

Final Word:

To sum up, blockchain and cryptocurrencies have the potential to improve and assist the oil industry in a myriad of ways. To learn more about the relation between crypto and oil, please feel free to visit ekrona.