How does water trading work?

Most easily, you can define water trading as the exchange of water access rights between sellers and buyers. One entity gets the license to collect a specific amount of water from a groundwater lake, a river, or reservoir. That entity can also sell some of its quotas at a market-defined price. However, if we talk about the practical world, then operating this kind of market starts with many complexities. The tracking process of transactions is also slow and hard, and due to this complexity, there are chances of corruption and opportunism.

What is blockchain technology?

The blockchain is essentially a growing chain of digital records. Each record (or block) contains all previously recorded transaction data, timestamps, and cryptographic hashes in the chain. These records have been relocated, which means they will be copied and stored in many locations simultaneously. This makes public records easy to search and difficult to forge. The most obvious function pr

ovided by blockchain technology is transparency. But technology can also make records more consistent, streamlined, and automated, saving time and resources.

Blockchain technology for the water industry

Calling for blockchain technology to solve distribution problems, mitigate the risks involved and actively monitor water management systems is relatively new in the literature (see Dogo et al., 2019). For record-keeping reasons, unlike the currently applied technology, blockchain can help water organizations supervise supervision and settlement (Poberezhna, 2018). Of course, all data, including records based on use and value, can be placed in permanent records. Blockchain and intelligence protocols can reasonably help organizations and government agencies obtain continuous information about the entire industry, usage design, service billing directors for buyers and potential customers. Record management at the blockchain stage can fundamentally reduce the cost of record keeping.

Also, blockchain can be used to leak information. Using a computer system to create a rolling information file, each computer contains a duplicate copy of the registry. Unlike a centralized power supply, it allows the controller to check and manage the distribution status of the distribution, water permits, exchange status, and approve access to the gradual transfer To assets instead of following the usual management disclosure procedures. Ensure a decentralized ledger for private biological systems while ensuring all economic participants’ security and information flow related to water management.

Secondly, blockchain can be used for reporting, compliance, and audit review. Distributed ledgers can be used in the water industry to monitor the means required by government and regulatory agency guidelines. Registration activities and their constant returns on the blockchain will enable the console’s audit trail and simplify consistency. This change will greatly reduce the time and effort spent by monetary institutions on administrative details (and in this way reduce costs), just like improving quality, accuracy, and confidence throughout the process.

Blockchain provides constant data nature, speed, and clarity for water management because partners can be part of an ongoing process rather than beneficiaries of analysis and later inspections. New plans for certain distributed ledger stages can provide an amazing, lightweight framework with core qualities, such as easy diversity on different systems, reliable information isolation to achieve security across the industry, and cross-licensed hubs Adaptive redundancy (Lin et al., 2017)).

We assume that this approach can be considered an intelligent water management system. Smart water management, or smart water management, is an improvement to the use of ICT that provides automatic real-time data on water resources and environmental conditions, as well as weather and climate forecasts (see Dogo et al., 2019). National authorities in many different countries have also implemented smart water management systems to support flood warning systems and drought warning systems.

Water rights trading: Through real-time monitoring and review of water cycle activities, higher safety and efficiency are provided in the regulatory compliance process so that regulators can gain insight into the market and its results.

Smart contract payment and settlement: Reduce transaction settlement time by canceling third-party brokers that support transaction verification or confirmation, thereby speeding up a settlement so that trading forum participants can settle their accounts in almost any specified period—real-time and reduced (or no) transfer fees.

Peer-to-peer transactions: Energy-intensive water treatment and pumping operations can be integrated into a blockchain-based peer-to-peer energy cycle.

Fundraising: Initial coin offerings (ICOs) have been used to raise funds for projects by purchasing blockchain-based cryptocurrencies, which can be used for water-based projects.


Due to the distributed nature of the code, it is very difficult to change it. All changes to all nodes must be implemented at the same time. Errors in the code may not make the smart contract work properly or leave a security hole that hackers can exploit. In due course, all of these are expected to be resolved, but they cannot be fully resolved at the time of writing.

If it is not properly coded or managed, smart contract updates may cause all smart contract information to be lost from the blockchain.