Smart Grid System Based on Blockchain Technology for Enhancing Trust and Preventing Counterfeiting Issues

Traditional systems in real life lack transparency and ease of use due to their reliance on centralization and large infrastructure. Furthermore, many sectors that rely on information technology face major challenges related to data integrity, trust, and counterfeiting, limiting scalability and acceptance in the community. With the decentralization and digitization of energy transactions in smart grids, security, integrity, and fraud prevention concerns have increased. The main problem addressed in this study is the lack of a secure, tamper-resistant, and decentralized mechanism to facilitate direct consumer-to-prosumer energy transactions. Thus, this is a major challenge in the smart grid. In the blockchain, current consensus algorithms may limit the scalability of smart grids, especially when depending on popular algorithms such as Proof of Work, due to their high energy consumption, which is incompatible with the characteristics of the smart grid. Meanwhile, Proof of Stake algorithms rely on energy or cryptocurrency stake ownership, which may make the smart grid environment in blockchain technology vulnerable to control by the many owning nodes, which is incompatible with the purpose and objective of this study. This study addresses these issues by proposing and implementing a hybrid framework that combines the features of private and public blockchains across three integrated layers: user interface, application, and blockchain. A key contribution of the system is the design of a novel consensus algorithm, Proof of Energy, which selects validators based on node roles and randomized assignment, rather than computational power or stake ownership. This makes it more suitable for smart grid environments. The entire framework was developed without relying on existing decentralized platforms such as Ethereum. The system was evaluated through comprehensive experiments on performance and security. Performance results show a throughput of up to 60.86 transactions per second and an average latency of 3.40 s under a load of 10,000 transactions. Security validation confirmed resistance against digital signature forgery, invalid smart contracts, race conditions, and double-spending attacks. Despite the promising performance, several limitations remain. The current system was developed and tested on a single machine as a simulation-based study using transaction logs without integration of real smart meters or actual energy tokenization in real-time scenarios. In future work, we will focus on integrating real-time smart meters and implementing full energy tokenization to achieve a complete and autonomous smart grid platform. Overall, the proposed system significantly enhances data integrity, trust, and resistance to counterfeiting in smart grids.