Blockchain-based hierarchical smart contracts to prevent user profiling in decentralized energy trading systems

Abstract

Smart grid technology has transformed electricity generation , distribution, and consumption by incorporating advanced communication systems and distributed energy resources , including solar panels and energy storage solutions . This integration enables prosumers to actively participate in energy markets, benefiting from real-time monitoring, dynamic pricing , and load balancing. However, the detailed data collected during these processes raise significant privacy concerns, as it may expose sensitive information about users’ lifestyles. This work presents an innovative energy trading system operating within decentralized energy distribution networks . The system leverages blockchain-based hierarchical smart contracts to enhance privacy protection for users. It automates energy trades, ensures accurate transaction verification, and obscures user identities and energy consumption patterns through its hierarchical structure, preventing unauthorized profiling or data breaches. Additionally, mechanisms to detect and penalize dishonest behavior are incorporated, ensuring the integrity and fairness of the energy market. The feasibility of the proposed system is experimentally evaluated in an IoT environment through a small-scale implementation using actual IoT devices, yielding positive results in terms of scalability and privacy features. Lastly, a comparative analysis is presented to demonstrate the advantages of the proposed system over existing state-of-the-art solutions.