|European Union Electricity Market Glossary|
“Blockchain is both a code, i.e. a communication protocol, and a public register, in which all transactions between network participants are recorded one after the other, with a high degree of transparency and in a way that cannot be altered” (Blockchain and the social economy, Blockchain and distributed ledger technology as an ideal infrastructure for the social economy, Opinion of the he European Economic and Social Committee, 9 July 2019, INT/880, point 3.2).
The said Opinion of the he European Economic and Social Committee of 9 July 2019 further refers to the following features of a blockchain:
- it represents the order of records, which comprises a set of "blocks" (parts of code) that are linked together cryptographically, making each part of the block that forms the chain traceable and unchangeable;
- these "chain-linked blocks" are simultaneously recorded on each of the devices through which the blockchain participants connect (each participant is a link in the chain, helping to validate and store the data that is being exchanged);
- in this way, the transactions take place horizontally and are validated by a number of participants, making it impossible for a single operator to alter or destroy the records.
The term ‘blockchain’ is sometimes used interchangeably with a ‘DLT’ (distributed ledger technology), but, as observed in the Final Report of October 2018 of the U.K. HM Treasury, Financial Conduct Authority, Bank of England, October 2018 (Cryptoassets Taskforce), blockchain refers rather to a specific way of structuring data on a DLT platform.
DLT is in this context understood as “a type of technology that enables the sharing and updating of records in a distributed and decentralised way. Participants can securely propose, validate, and record updates to a synchronised ledger (a form of database), that is distributed across the participants”.
In turn, a cryptoasset is a “cryptographically secured digital representation of value or contractual rights that uses some type of DLT and can be transferred, stored or traded electronically”.
Cryptoassets are also sometimes referred to as ‘tokens’.
In the ESMA’s Advice of 9 January 2019 (Initial Coin Offerings and Crypto-Assets, ESMA50-157-139) ESMA defined an initial coin offering (ICO) as “an operation through which companies, entrepreneurs, developers or other promoters raise capital for their projects in exchange for crypto-assets (often referred to as ‘digital tokens’ or ‘coins’), that they create”.
In the context of energy market a utility tokens can play a particular role, as they can be redeemed for access to a specific product or service that is provided using a DLT platform.
In the public warning of 13 November 2017 (ESMA alerts firms involved in Initial Coin Offerings (ICOs) to the need to meet relevant regulatory requirements, ESMA50-157-82) ESMA underlined:
“Firms involved in ICOs must give careful consideration as to whether their activities constitute regulated activities. If their activities constitute a regulated activity, firms have to comply with the relevant legislation and any failure to comply with the applicable rules would constitute a breach.
12 July 2019
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9 January 2019
13 November 2017
|Last Updated on Saturday, 13 July 2019 11:42|