Blockchain technology influenced all spheres of business, including the conservative construction industry. Blockchain encompasses diverse realms of the construction space, from enhancing transparency in payments to offering superior services, easing maintenance activities, and more.
While these are just trailers of what blockchain technology is capable of, there are multiple use cases where it finds its application. In most of them, the underpinning force is the cornerstone of blockchain projects – smart contracts.
This article describes various blockchain applications in the construction industry, such as Smart Energy, Smart Cities, Smart Government, and smart transport.
Let’s get started.
Various Applications of Blockchain in the Construction Industry
Some critical applications of blockchain technology in the construction sector are discussed below.
Smart Energy
Major Power Producers (MPPs) have primarily managed energy production and trading set prices and led the markets in recent years. Of late, other players, such as individual and residential electricity producers who use renewable energy sources come to the forefront. Currently, the MPPs make the trades but use microgrids that deploy decentralised techniques like blockchain technology.
Internet of Things (IoT) devices in conjunction with smart contracts on a blockchain. They help bring down congestion levels and faults in demand and distribution management. In addition, using sensors to monitor power usage through smart contracts lets consumers judiciously use energy and resort to a sustainable lifestyle.
Smart Cities
Smart cities are essentially an integration of human and social capital by employing technology solutions. Technological advancements and the internet of things have made sharing resources easier, allowing people to access data in real-time and make informed decisions. Blockchain and IoT technology are used to monitor and improve air quality in cities, thereby making cities behave ‘smartly’.
There are umpteen applications of decentralised apps and blockchain in this arena. Some of these include maintenance of health records, monitoring population growth, fairer and more democratic elections through improved participation, better government functioning through reduced bureaucracy, and more.
Smart Transport
Smart transport ensures the optimum use of resources through integration with other applications, such as smart energy. Smart vehicles, which are becoming a part of modern-day transport, consist of private data to which the owners can selectively grant access to users. Some blockchain applications include remote software updates for vehicular maintenance, easy-to-use insurance based on driver behaviour, smart charging for vehicles, unlocking vehicles, transparent financial transactions, and authorised access.
In addition, mobile billing systems let electric vehicle owners charge their vehicles using a blockchain-based payment system even while they are away from home.
Smart Homes
Smart homes are becoming increasingly popular as more appliances and devices in new and existing homes undergo newer versions and conversions. Blockchains help reduces energy consumption and enhances privacy and security in operations. Smart home devices that run on IoT, though they consume increased resources, help detect any suspicious activity in the home while you are away. This offers a sense of digital identity to smart homes. Smart homes let their users remotely monitor and control conditions like temperature, humidity, illumination, current, etc.
In addition, smart residential districts allow their users to control their homes remotely and a playground and educational areas, such as providing smart car parks, smart card payment systems, smart swimming pools, and options for car and bike sharing. Blockchain provides integration with IoT and manages transactions within the smart district.
Building Information Modelling (BIM)
Most construction projects are already using BIM technology. However, BIM, in conjunction with blockchain, could render outstanding outcomes enhancing the effectiveness of smart contracts. For instance, the model is used in BIM as a contract between the entities. Any deviation from the model may lead to change orders or reworks. Embedding BIM into blockchain smart contracts would help when the project is built as per digital plans.
In addition, the combination of BIM and blockchain would bring all parties together, making them accountable and increasing transparency. Currently, BIM technology uses peer-to-peer networks, but blockchain can introduce real-time updates. These features of transparency, accountability and decentralisation could enhance its functionalities, thereby improving the workmanship of the project.
Smart Governments
Most governments, including UAE, the US, Ukraine, and Denmark, are already investigating and experimenting using blockchain-based projects. Some of these initiatives include Blockchain Statute Law, data and source code disclosure, building a government system based on democracy, and more. In addition, the use of smart contracts to automate processes such as tax collection, local/national digital currencies, identity management, benefits administration, regulatory compliance, and others. In addition, a blockchain-based e-voting system is under discussion to reduce the costs and time involved in electoral voting, making it accessible to people in remote areas rather than physically going to the polling booth.
Business Models and Organizational Structures
With the emergence of blockchain-based decentralised autonomous organisations (DAOs), the organisational structure would change, leading to enhanced, democratic business models. DAOs will be the future, fostering a leaderless organisation with no central authority or hierarchy. Everything would be executed through smart contracts, from managing the operations to managing the finances of the organisations.
Trading of goods and services would be done automatically via smart contracts. Financial reporting will gain greater transparency due to accessibility to the blockchain public ledger. Most importantly, creating a decentralised organisation would prevent the concentration of power in the hands of a few and, in turn, result in minimising corruption, which is otherwise rampant in the construction sector.
Closing thoughts
Blockchain technology holds immense potential to revolutionise the construction industry dramatically. Blockchains can go a long way and do wonders by unlocking the power of their smart contracts.