Introduction
The construction sector ranks among the largest and most important economic sectors worldwide.
This sector, like all large supply chains, has critical issues regarding data fragmentation, lack of transparency and process management.
In this scenario, blockchain technology represents a real opportunity for change that can revolutionise the sector by solving its main problems.
Made famous in 2008 with the advent of Bitcoin and cryptocurrencies, today blockchain can express its potential in many other supply chains such as the construction industry.
In this article, we will explore the technology, its birth, its evolution, its main features and the potential it can offer the construction industry through its many fields of application.
Origins of the Blockchain: Solution to the ‘double spending’ problem
In October 2008, Satoshi Nakamoto, the pseudonym of the inventor of the blockchain, published a white paper called ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ describing the possibility of developing a digital currency independent of any central institution, hence the term ‘decentralised network’.
Thus was born, in January 2009, Bitcoin and its digital asset, bitcoin.
Bitcoin was the first implementation of blockchain technology and the first solution to the problem of ‘double spending’, i.e. the easy reproduction of digital currencies whereby they could be spent twice, thus damaging the fairness of the whole system.
Bitcoin’s decentralised architecture, for which there is no central authority, is based on the creation of blocks that are linked together to form the so-called ‘blockchain‘.
Within each block there are the different transactions, i.e. the different operations that take place in the blockchain.
Each transaction is characterised by a timestamp, the time stamp relating to the instant in which this transaction is recorded.
Blocks are linked to each other with their ‘hash values’, alphanumeric codes whose purpose is to encrypt the content of a document.
The block hash is inserted into the next block and so on until a secure and immutable ‘blockchain‘ is created.
The recording of transactions in the blockchain is distributed to all nodes (devices participating in the network) in the network, making it impossible for anyone to manipulate the network ledger for their own benefit.
By using Proof of Work (PoW), the consensus algorithm that allows the validation of transactions and ensures the security of the network, the amount of computing power to modify or cancel a transaction is enormous as this particular consensus mechanism relies precisely on the energy spent on computational computation.
This algorithm, given the enormous amount of energy required, although of low efficiency is of maximum security as it discourages malicious actors from acting against the network.
The Evolution of Blockchain and Consensus Mechanisms
After the birth of Bitcoin, which focuses on the storage, transfer and ownership of a native digital asset and is mostly geared towards the financial industry, alternative blockchains have emerged over the years that are distinct from the ‘pioneer’ in terms of the value proposition they aim to offer users.
In 2013, Ethereum (created by Vitalik Buterin) paved the way for ‘alternative’ blockchains focused on programmability and enterprise use.
Ethereum in particular was created to enable the creation of so-called ‘smart contracts’, smart contracts that automatically perform specific actions once certain conditions are met.
The corporate use of Ethereum (and all subsequently developed programmable ‘blockchain‘ platforms) in the industrial life of countries has created a very change-prone community that wants to keep up with progress, innovation and its various competitors.
Transaction costs and energy consumption are to be seen as the key parameters in business.
This gave rise to various alternative consensus mechanisms to the traditional PoW used by Bitcoin, such as Proof of Stake (PoS).
In PoS, validating users guarantee the validity of transactions by pledging (in stake, as collateral) a share of their cryptocurrency, which cannot be used or spent.
This new approach significantly reduces the energy consumption associated with transaction validation, making blockchains that adopt it more energy efficient.
This move towards programmable platforms for corporate use and more efficient consensus mechanisms offers great opportunities for the integration of the technology in various sectors such as construction, where the issue of sustainability is now the common thread running through every project.
The different uses of blockchain technology in the construction industry
Thanks to blockchain‘s main characteristics of trust, security, transparency and data traceability, the construction industry would benefit by addressing the well-known issues of data fragmentation, lack of transparency and difficult process management.
The great potential of technology in this large industry is to serve as a single source of truth in relation to the multiplicity of data contained in a project.
The crucial data and information of each project can be recorded in the blockchain, which will ensure transparency and allocation of responsibilities of all actors involved.
There are numerous case studies on the scientific and academic scene that highlight the great potential of the technology in the construction sector, as reported by the authors Vagelis Plevris, Nikos D. Lagaros and Ahmet Zeytinci in their article ‘Blockchain in Civil Engineering, Architecture and Construction Industry: State of the Art, Evolution, Challenges and Opportunities’ here are some examples:
- Reliable data storage and authorisation management. Use of blockchain in a Building Information Modelling (BIM) working environment;
- Data integrity and certainty of information stored in information systems. Use of blockchain in a Computer Aided Design (CAD), BIM and Geographical Information Systems (GIS) working environment;
- Digital twin-blockchain integration to support responsible information sharing in construction projects. Digital twin updates BIM in real time through the Internet of Things (IoT) and blockchain authenticates transaction data.
- BIM-blockchain integration to improve the efficiency of construction authorisation processes in post-disaster events with the application of smart contracts;
- Automation of in-process (construction) payments through the use of smart contracts by eliminating intermediaries and the administrative costs associated with them;
- Application of blockchain and smart contracts for Structural Health Monitoring (SHM) of construction works.
The numerous case studies of the technology in the construction industry, along with many others under development, point the way to a future of greater efficiency and innovation in the delivery and management of construction projects and the construction industry as a whole.
Conclusions
Blockchain technology offers enormous potential for overcoming the current challenges in the construction industry by bringing greater efficiency, innovation and transparency to it.
It is expected that the various construction companies in the global landscape will increasingly explore the potential of this technology by strategically and cooperatively adopting the different solutions offered, bringing added value to the supply chain in order to optimise time and costs in the realisation and management of construction projects.
At the same time, many countries are working to increasingly adapt in the legislative sphere, bringing blockchain technology to rapid growth given its potential and the vast area of sectors it is already impacting and will impact in the future.
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