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Blockchain technology can substantially improve and expedite the business and accounting sides of the industry.
Construction is an industry that has decidedly benefited from recent technological advancements. Developments such as geofencing and building information modeling have improved construction management and increased efficiency. These types of advancements, however, have been primarily focused on improving the more tangible features of construction such as material and workflow management. Blockchain technology, on the other hand, has the potential to substantially improve and expedite the business and accounting sides of the industry. Examining the technology and its possible impacts on the construction industry is both meaningful and timely, as construction has often lagged technologically behind other industries and variations of blockchain are currently being implemented in a variety of industries.
What is blockchain technology?
Blockchain technology was originally developed in response to the 2008 financial crisis as means by which exchanges could be made in the low-trust environment of cryptocurrency. 1 Blockchain operates as a mechanism through which parties can exchange compensation without relying on third-party institutions, such as banks, to process payments. 2 Unlike the traditional method of conducting financial transactions via private third-party databases that keep track of the entities that own and owe monies, blockchain uses a distributed, decentralized ledger technology that is viewable and shared by every person or entity that is a party to a financial transaction. The financial ledger that is created when transactions are processed is not kept on any one centralized database server, but is rather synchronized across multiple computer platforms so that every person or entity that is a party to the transaction can view the information in real time.3 This technology, known as peer-to-peer, allows parties to conduct business without thirdparty involvement. Peer-to-peer technology is a form of computer networking in which there is equal engagement between application participants, who are referred to as nodes. Data are both stored and viewable by the nodes who participated in a transaction.
In addition to eliminating the need for third-party involvement in financial transactions, blockchain technology creates a permanent, immutable record of every transaction. The technology locks blocks of data into place in a chain by using a hash identification methodology. Through this method, the data specific to each transaction result in...