Hype vs. Reality
In 2015 BaseStone was part of the Barclays Techstars accelerator program. This cohort was almost 50% blockchain* startups. Blockchain hype was not at the crazy levels it reached in 2017 and this cohort, which included EverLedger and Safello were tackling interesting problems rather than pushing pump and dump schemes to the masses as seems to be prevalent today.
At that time we speculated about blockchain in construction and we were sceptical. Not because of the lack of potential of the technology but because we saw the challenges in the industry as much more fundamental. Fast forward 30 months and blockchain is being mentioned as a solution for all ills in every industry and Construction is not exempt.
The issue for blockchain is the common one for new technologies. With a shiny new distributed ledger hammer every problem looks like a nail. Into the hype the BRE have dropped a refreshing dose of reality in their report: “Blockchain – feasibility and opportunity assessment available here. This is a hype free and measured review of the potential for blockchain technology. It examines a number of proposed applications and should be required reading as an antidote to the unconstrained hyperbole the industry has been subjected to recently. While the review is not exhaustive it assesses a number of the issues that impact technology adoption in construction in general and should not be ignored. Let us not forget that the blockchain technologies unlike BIM does not set out to solve any particular construction industry problem, and BIM adoption has not been without its problems. Use your favourite search engine to find articles on “problems adopting BIM”.
I am not here to damn the blockchain with faint praise, far from it. At BaseStone we see the potential that this technology has for addressing some fundamental issues within the industry. The BRE article examines the potential for Smart Contracts as made possible by the ethereum network. Ethereum has a more complete execution engine than Bitcoin that is in effect Turing-complete i.e. is almost a general purpose computer. We believe that the leap to replace JCT, NEC and other forms of contract with Smart Contracts is premature and potentially self defeating. The majority of the proposed benefits can be achieved with a different mechanism. In particular the use of sidechains would provide a distributed, semi-private consensus platform for evidencing project data. Such a platform, which could utilise Smart Contracts with limited scope, would provide the validation for payment stages which already form part of the standard contracts. If the industry was able to take this first step, perhaps we could set the groundwork for faster payments and smarter contracts which could benefit the whole industry.
BaseStone are members of the Construction Blockchain Consortium.
Dr. Simon McCabe
Chief Technology Officer
BaseStone
*A blockchain, originally block chain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data. By design, a blockchain is inherently resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”. More on Blockchain Wikipedia page.