The oil industry is a natural but non-renewable source of energy that plays a vital role in the smooth running of vehicles, factories, plants, and many more things. Renewal energy can be produced from natural resources, but once the oil is finished, there would remain no source of mining oil. The demand for oil is increasing, and costs are increasing, which is very complex to track. But blockchain is revolutionizing the oil industry. While tokenizing oil and gas , some oil companies in the US are forming a consortium for the oil sector that will reveal the potential benefits to these industries. The oil industry works by mining the crude oil from the earth, refining, transporting, distributing, and selling, which is known as the supply chain process in this industry that will also help you to understand the system.
Understanding the blockchain for the oil industry in detail
People started to trust the blockchain when bitcoin came into existence because they knew the potential that the government and other third parties could not track users’ transactions or spending habits. Hackers couldn’t hack the wallet of users. We could use our wallet like owning a bank i.,e. have complete ownership of our funds and transparency of transactions publically.
So in simple words, blockchain is the platform to secure the transitions or things that will be immutable and publicly visible without hacking, which can not only work for payment systems but can revolutionize the different big industries like oil and gas, etc.
The oil industry is now implementing a blockchain system that can be a private blockchain for internal tracking like hiring, recruiting, employee performance in the organization, and many more things that would be visible only to the company members. And the second is the public blockchain, which will track companies’ records transparently without leaking and storage problems. They can also use the crypto payment system by removing the financial institutions like banks to reduce the cost, which would also be a significant change in the oil industry.
How can blockchain transform the oil industry?
There are the following aspects of blockchain that can transform the oil industry given below:-
More trust:- Trust factor is significant in deciding the success of any company because if the internal employees are committing fraud, how can the company survive in the external world? The private blockchain in the organization can be transparent with all the operational data of employees from a to z, which will create more trust between the employees and company owners.
Crypto-backed oil industry:- Most of the payments for the oil industry are processed in the fiat currency that we use daily for small and large transactions. The fees of the banking system or other financial systems make it more costly, but the crypto-backed oil industry makes it more cost-effective by cutting these third parties from the supply chain. In addition, the transaction we do in fiat currency will happen as a cryptocurrency for buying or distributing the oil.
Visibility of Oilfield assets:- The need for oil is everywhere worldwide. A lot of manufacturing companies produce a lot of things, and vehicle companies are also producing vehicles to cater to the needs of the general public. People are buying vehicles for their needs, and by increasing the population, the oil demand is also rising, forcing the oil companies to do more and more work. So it becomes very complex for them to maintain the oilfield asset for smooth work. The challenge of tracking a single asset in the entire company also increases the organization’s cost. Blockchain will make the oilfield asset on the operation side visible to the management team so they can make the right decision to control the cost and other things.
High transnational security:- It doesn’t mean the cryptocurrency transaction will only cut off the high fees, but it is also more impossible to hack than any other centralized institution. For example, if you go through the third-party payment gateway, you will lose all your money deposited when it gets hacked. Still, the blockchain system is on millions of computers worldwide, and the hacker can’t hack each computer on the blockchain system, which makes it more powerful.
Minimization of cost:- Cost minimization is also the most significant advantage of the blockchain system because it will reduce the intermediaries in the oil and industry supply chain, decreasing the cost. It will also reduce the system companies pay for the cybersecurity staff and storage handling companies. In addition, it reduces many software and hardware costs by installing the blockchain system in the oil industry.