August 17, 2022
The construction industry may be in for a significant change with the advent of blockchain technology. In the first of a three-part series, we will explore the potential benefit for your construction business.
At its simplest, a blockchain is a digital ledger of transactions. These transactions can be anything from financial transactions to data exchanges. What makes a blockchain special is the distribution across a network of computers, called “nodes,” and each node has a copy of the entire ledger. The duplication(s) guarantees no central point of failure, making the data resistant to tampering.
The potential financial gain from using blockchain in the construction industry is enormous. By creating a secure, tamper-proof record of contracts, transactions, and project milestones, blockchain could help to reduce fraud and corruption.
Another advantage of blockchain is streamlining payments and invoicing, saving construction companies time and money. Furthermore, project management would realize an enormous benefit, allowing all parties to track progress and ensuring everyone gets paid on time.
Another potential use case exists in supply chain management. Using blockchain to track the provenance of construction materials, from the quarry or factory to the jobsite, ensures that only certified, quality materials arrive.
Before blockchain becomes the construction industry standard, a few challenges need conquering. Firstly, there is a lack of understanding of the technology amongst construction professionals. Industry-sponsored education and awareness-raising would help to get stakeholders on board.
The lack of standards presents another challenge. Currently, no agreed-upon standards exist for deployment in the construction industry, and a universal standardization will need creation and approval for blockchain adoption on a wide scale.
Unsurprisingly, a few technology companies already use blockchain in the construction industry. For example, Blocklancer, a freelancing platform, employs blockchain to create a secure, tamper-proof record of projects and payments.
Aconex, a construction management software company, deploys blockchain to streamline payments and invoicing.
And Skanska, a construction and development company, leverages blockchain technology for digital home buying – without ever having to sign a piece of paper!
Although blockchain technology is still in its infancy, the potential benefits of blockchain for the construction industry are enormous. Blockchain may revolutionize the construction industry; hh2 will dive deeper in a three-part series.