Blockchain

How Blockchain can revolutionize the construction industry

Over the past few years, countless articles, YouTube videos, and news segments have been dedicated to blockchain technology. However, the vast majority of this coverage has been limited to how the blockchain relates to cryptocurrency. In reality, this incredible record-keeping system has benefits for a wide variety of industries, including construction. What’s more, it may be a boon to the built environment rather than a detriment. 

Understanding Blockchain Technology 

Put simply, the blockchain is a digital accounting system designed to make it virtually impossible to alter or change recorded information. It functions like an electronic ledger, recording transactions not just in one place but across all computer systems on the chain. So, someone’s attempt to alter the information on one block, the tampering would become instantly apparent to everyone else. 

Blockchain technology is an extremely powerful security system for all kinds of information. Of course, all businesses deal with information in one way or another, including the construction industry. 

Many people involved in construction remain dubious about blockchain’s ability to break into what is arguably one of the least digitized industries in the world. Others feel that this fact only proves how “long overdue” the sector is when it comes to technological advancement. 

This is further complicated by the fact that the construction industry remains one of the most wasteful in the world, with estimates from the UK stating the sector stating that around 35% of all landfill mass comes stems from building projects. 

Essentially, we have a highly wasteful and inefficient industry that is reluctant to embrace new technologies, even when those technologies could dramatically reduce environmental waste and, therefore, costs. But there’s one more factor to consider. That is the urbanization boom taking place all around the globe. According to estimates, the world will need roughly two billion new homes over the next eight decades. 

Blockchain Can Change the Game for Construction 

Using current processes, building these properties will result in a staggering amount of wasted materials, manhours, and money. However, this can all be minimized – and potentially eliminated – with the help of blockchain. After all, blockchain technology has applications for any industry in which there are transactions or interactions. With a single block capable of carrying around 1 MB of data, each out could potentially record thousands of transactions while making it infinitely easier for multiple parties to share that information. 

As it does with every other industry that implements it, blockchain tech will boost efficiency, increase transparency, and streamline the collaboration process that often takes up so much of the sector’s time. It’s not unlike a small business owner who hires an accountant for the first time. Suddenly, they realize there’s so much time for more important things now that they aren’t constantly worrying about their bookkeeping. 

This is particularly notable when it comes to the construction sector because it is so centered around paperwork. From bids and contracts to legal claims and permits, an incredible amount of time is focused on administrative and communicative tasks. But blockchain technology can almost instantly begin automating much of this work via a bespoke project management platform. 

Blockchain also opens the door for the use of smart contracts, eliminating the need for notaries, lawyers, and other middle-men to cost money and slow down transactions. These contracts can even track employee hours and overtime while automatically generating payments at the correct times. 

Last but not least, you have the supply chain. This is a massive problem for the industry and has only worsened post-pandemic. From architects and engineers to material suppliers and delivery personnel, it’s remarkably difficult to coordinate all the moving parts involved in each project phase. This can boost the potential for inefficiencies and mistakes, which, in turn, can contribute to higher costs. Yet as early as 2018, experts were already publishing reports on how blockchain technology could address and even eliminate these challenges. 

Building a Greener Construction Industry 

When considering the implications of blockchain technology, one of the first negatives that arise is the environmental impact of the accounting process. In fact, it’s estimated that the Bitcoin blockchain alone accounts for some 57 million tons of carbon dioxide every year. This is because the machines that record the transactions are extremely energy intensive and can even require additional power to keep from overheating. 

However, there has been remarkable growth in green energy investment in the past few years. As grids around the world switch from carbon-polluting energy sources to windmills, hydroelectric, and solar, blockchain’s impact on the environment will naturally decrease. It may take some time, but the implication can’t simply be ignored. 

Then there’s the cost-benefit analysis associated with what blockchain can do. For instance, consider smart management systems for clean water and sanitation. Consider the technology’s ability to improve responsible production and consumption. Consider its ability to reduce inequality and increase education, which can significantly affect global sustainability. Indeed, these are just some of the ways blockchain is likely to change our world for the better. 

Blockchain and SDGs
As blockchain increases transparency and reduces transactional complexity across industries like construction, the environmental benefits will quickly begin to overshadow the risks. Indeed, this would remain true if blockchain remained powered only by fossil fuel energy. The benefits would simply be too significant to ignore. 

Furthermore, integrating blockchain technology into so-called “smart buildings” will drastically improve the sustainability of construction projects after they’re complete. It could even lead to a “Circular Economy” that values waste reduction and prioritizes recycling construction materials before they end up in landfills.  

The Potential is Undeniable 

Blockchain has been called the most disruptive technology in recent history. However, so many people still think of it solely in terms of cryptocurrency. The truth is, we’ve only scratched the surface of the countless ways this exciting new tech can benefit our world and its people. Now, it’s only a matter of encouraging the global construction industry to see the benefits and capitalize on them rather than continue along its wasteful and expensive path. 

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