Blockchain is taking every industry by storm. The concept of blockchain was popularized with creation of Bitcoin. Simply put, blockchain is a distributed ledger in which information cannot be copied or altered. The power of blockchain lies in facilitating a decentralized peer to peer network. Blocks are permanent chain of transactions which is synchronized worldwide. Following Bitcoin, numerous other cryptocurrencies surfaced in past half a decade. The next gen blockchain project known as Ethereum took the tech to a whole new level. Now the technology presents us with smart contracts which are far more efficient than escrowing services available in different platforms.
What makes blockchain relevant in construction industry?
The long and short answer is Smart Contracts. By virtue the construction industry suffers from disputes and litigations. The large funds at stake and too many players play a role in that. Issues arising from payment terms and confidentiality are the common culprits. There are contracts in legal jurisdictions that helps prevent these issues. But the inefficiency of the stipulations of the contracts cannot be ruled out. Smart Contracts on the other hand include conditions in the transactions, which if not met stops payment. Smart contracts execute on itself and doesn’t need human intervention. Imagine the kind of acceleration the processes can get with such a phenomenon.
How does it benefit construction projects?
Every long time contractors have faced their share of disputes. Almost every one of those is about payments. Considering the amount of parties involved, there is no industry as complicated as construction. The conditions of payment are not as straightforward as one would desire. Blockchain tech can change the entire scene. By allowing you to make smart contracts, it forces all parties to complete their checklist. Everyone will be forced to hold their end of the deal. It can give you more control over payments and ensures everyone stays on the same page.
What are the odds of wide scale blockchain adoption in the industry?
The essence of blockchain can transform any industry. Nevertheless, a wide scale adoption of blockchain features issues of its own. The current standards of any industry are not yet ready for a massive blockchain adoption. For instance, how Building Information Modeling (BIM) can include blockchain is still unclear. Internet of Things (IOT) is still seen as a concept for future in construction industry. Special IT platforms will be needed for incorporating blockchain. Independent construction companies cannot build platforms for blockchain, unlike the likes of Amazon or Cisco.
Existing ICOs based on construction projects
We dug up some information from the blockchain enthusiast communities. A lot of realty companies are creating their own blockchain. They have announced Initial Coin Offering (ICO) to attract investors. ICO is similar to Initial Public Offering (IPO), except it’s confined to the crypto world. These companies are creating coins or tokens, which entitles investors to a piece of property or transaction fees. Blockchain has got its 1% or more penetration into the construction industry already. Huge impact in this industry is due.