# The Potential of Blockchain Technology and Smart Contracts in the Energy Sector: A Review
## 2 Background Information
### Smart Contracts  
A smart contract is a digital protocol intended to make it easier to verify or enforce the negotiation or execution of a contract. Smart contracts enable reliable transactions to be executed without the involvement of third parties. These transactions are traceable and irreversible. According to [PERSON] [12], \"a smart contract is a set of promises specified in digital form, including the protocols within which the parties execute those promises\".  
It is usually encoded in a language based on Blockchain technology, such as Solidity [[https://soliditylang.org/](https://soliditylang.org/)]([https://soliditylang.org/](https://soliditylang.org/)) (accessed on 23 November 2023), Vyper [[https://docs.vyperlang.org/en/stable/](https://docs.vyperlang.org/en/stable/)]([https://docs.vyperlang.org/en/stable/](https://docs.vyperlang.org/en/stable/)) (accessed on 23 November 2023), Cairo [[https://www.cairo-lang.org/](https://www.cairo-lang.org/)]([https://www.cairo-lang.org/](https://www.cairo-lang.org/)) (accessed on 23 November 2023), Rust [[https://www.rust-lang.org/](https://www.rust-lang.org/)]([https://www.rust-lang.org/](https://www.rust-lang.org/)) (accessed on 23 November 2023), etc., and stored and replicated in a distributed ledger system. The basic structure of a smart contract consists of an initiation event and a set of rules or terms of the contract. The initiating event is the action or event that triggers the smart contract, such as the arrival of a specific date or an incoming payment. Conditions are the requirements that must be met for the smart contract to be executed [13]. The set of rules or terms of the contract are the instructions to be followed, such as transferring of assets or the provision of services.  
Several blockchain platforms leverage smart contracts to facilitate decentralized and automated processes. Ethereum, a pioneering platform, introduced smart contracts, enabling trustless and transparent execution of code for various applications, from decentralized finance (DeFi) to non-fungible tokens (NFTs). Binance Smart Chain (BSC), an Ethereum-compatible alternative, emphasizes fast and cost-effective transactions, making it popular for DeFi projects. Polkadot, a multi-chain network, employs smart contracts through its parachain structure, fostering interoperability and scalability. Tezos stands out for its self-amending blockchain and on-chain governance, providing a platform for smart contract deployment. Cardano incorporates smart contracts for secure and scalable decentralized applications. Solana focuses on high-performance blockchain, utilizing smart contracts for decentralized applications with low transaction costs. These platforms showcase the diverse landscape of technologies utilizing smart contracts, each contributing unique features to the broader blockchain ecosystem. Some use cases of smart contracts are automated insurance claims [14], supply chain management [15], real estate transactions [16], voting and election system [17], crowdfunding [18], cloud storage [19], healthcare records [20], copyright protection [21], online purchases [22], loan management [23], and energy trading [24], where smart contracts can be used to automate the energy trading process and ensure that all parties adhere to the terms of the agreement.  
Figure 1: Blockchain with random numbers of blocks.