a potential ally for sustainable construction?
a potential ally for sustainable construction?
Blockchain is something we’re hearing more and more about these days, but it’s still not easy to understand, and quite complex to implement. This technology is most often associated with cryptocurrencies, but it now offers specific opportunities for many industries, including construction. Really?
Building decentralized trust in the construction sector
The blockchain resembles a large digital ledger governed by a set of rules and conditions that make it secure, immutable, unfalsifiable and therefore trusted.
Laurent Francez - Digital Innovation Lead at Saint-Gobain
To understand Blockchain technology, we need to jump back in time to the sub-prime crisis* of 2007. In the aftermath of the US real estate market crash, thousands of American households are bankrupt and can no longer repay their home loans. The inevitable domino effect results in the failure of many financial institutions, and ultimately, the collapse of global stock markets.
The crisis brings the interdependence of banks and their level of risk-taking into sharp focus, and raises a crucial question: how can future transactions be conducted without the need to be dependent on a centralized financial body? Satoshi Nakamoto (which later proved to be not an individual, but a group of activists - ed.) responds by inventing a technology called the blockchain protocol. Nakamoto then uses this principle as the basis for launching the world's first cryptocurrency in 2009... the one we’ve all heard about: Bitcoin. This digital and intangible currency enables money transfers independent of any traditional banking system.
Blockchain: a user’s guide
But how exactly does blockchain work? Traditionally, when we want to make a transaction, we contact a trusted third party (bank, lawyer, etc.) to act as a central point controlling the entire process. With blockchain, the process is completely decentralized. That means that the blockchain is built on a decentralized network computers (nodes). To put it plainly, the transaction takes place online, and is transmitted for validation into the network computers. Once authenticated by the majority of network members, the transaction is recorded on a ‘block’ that is then added to the ‘chain’, hence ‘Blockchain’. So what’s the secret of these blocks? They all have a unique and encrypted identifier... And better still, each block contains the cryptogram of the previous one! So the blocks making up this enormous chain are indivisibly linked together for all time. It’s completely impossible to modify the content or hack the chain, because to do so would require all the computers connected to the network to be hacked simultaneously.
Secure, immutable and unfalsifiable
“From a very schematic perspective, blockchain is similar to a giant virtual accounting ledger that’s totally secure, immutable, unfalsifiable and trusted,” explains Laurent Francez Digital Innovation Lead at Saint-Gobain. “ All these properties are ensured by the combination of a decentralized architecture with some specific governance mechanisms (consensus, smart contracts,…) and key features like cryptographic algorithms.”
This unique combination is the reason why blockchain technology can guarantee such a high level of security, transparency and trust in terms of the data stored within it. “That makes the blockchain a complex technology for which some very specific skills are required. Moreover, the cost to operate a bockchain-based solution can be very important. It is crucial to challenge this investment with the value that we can generate with it”
The legal potential of blockchain
Long associated with financial transactions, blockchain has emerged in new applications and caught the attention of many business sectors to evaluate it. For example, the food industry sees this protocol as opening up totally new potential for product traceability. Real estate is also very interested in this technology for its potential to deliver secure conveyancing transactions. In fact, the authorities in Ghana are already working on a blockchain land registry project to host and authenticate real estate ownership titles.
Blockchain, BIM and automated contracts
There are still many opportunities to improve productivity and quality in construction. One of its potential applications is in Building Information Modeling (BIM), which uses shared and collaborative data. Saint-Gobain recently got together with startup Ipocamp to launch an initiative in this direction which will provide guaranteed protection of its proprietary objects within BIM files. “In the event of a dispute, blockchain-based authentication will make it easy to prove that our BIM objects originate with us and are owned by us,” explains Laurent Francez. “So it's an additional guarantee of security, integrity and traceability for our own data.”
The other potential of blockchain lies in the management of complex projects.
The construction industry inevitably relies on the joint involvement of a large number of stakeholders across a broad range of multiple skills. This multi-collaboration model complexifies communication to the point where it can sometimes be difficult to exchange information. Leveraging the power of blockchain will make it easier to automate processes like contract bidding, the contracting process and construction permits, at the same time as systematically bringing all the relevant data together into a single, dependable and incorruptible ledger.
Blockchain technology could facilitate interaction with all stakeholders, particularly in the context of smart contract fulfillment. Here’s an example... AXA Insurance recently introduced a policy that refunds policyholders when a flight is delayed for more than 2 hours. This automated contract completely negates the need for administrative formalities, because as soon as the blockchain is informed about the delay, the refund is initiated immediately. “The use of similar contracts in the construction industry could automate and accelerate the process of supplier and subcontractor invoicing,” continues Laurent Francez. “They could also provide a more sustainable solution by limiting the use of paper.”
Could materials passporting be a possibility?
There’s another crucial area where the benefits of blockchain are also awaited: low carbon construction. The challenges posed by the circular economy could be considerably mitigated by using blockchain technology to improve traceability from manufacturers! In practical terms, this unfalsifiable protocol now makes it possible to create a materials passport listing all relevant information: date and place of manufacture, physical characteristics, etc. This unique fingerprint means that developers will be able to identify the origins of raw materials, and select those products offering the less environmental impact.
Inspiration for the circular economy?
Water and wastewater industry giant Suez has also embraced the technology and created its own Circular Chain blockchain to handle wastewater treatment residual sludge management. Similarly, environmental specialist Trace has worked with IBM Consulting to develop CYCLop using a private blockchain protocol. This solution is designed to unite all industry stakeholders via a single platform to optimize waste-related risk management. One of its first applications is to provide traceability of excavated soil, spoil and sediment at every link in the recovery and management chain.
A blank page
From data security to information transparency and materials traceability, blockchain technology promises an important range of opportunities.
However, the initiatives in the industry remain marginal. Why?
Implementations remain complex, and deployments require specific digital expertises that are still quite rare. Moreover, the ownership of the data stored into a blockchain can be fuzzy especially when the blockchain-based solution is provided by external providers. Finally, the implementation of a blockchain can cost a lot and alternatives are often considered instead.
The good news is that blockchain technology is evolving a lot and rapidly. It is certain that new generations of blockchains will be developed to solve these issues and regain the value. Just keep a look on it.
*The United States sub-prime crisis of 2007 was the result of the inability of borrowers to repay high-risk home loans. Its ultimate result was a global financial crisis.
Photos credits : ©Shutterstock/Gorodenkoff ; ©Shutterstock/Gorloff-kv ; ©Shutterstock/LuckyStep