A whole new kind of building blocks
There has been considerable debate about how blockchain technologies could revolutionise the financial services industry, but it could also have a significant impact on UK construction.
What is blockchain?
Blockchain is best known as the technology behind bitcoin. However, the technology is capable of numerous other uses than simply facilitating digital currencies. In simple terms, a blockchain is a continuously growing list of records (known as “blocks”) that are secured together using strong cryptography. Each individual “block” contains a link to a previous block, a timestamp and other transaction-related data.
Blockchains are, by design, extremely secure and highly resistant to any modification of the data they contain. The key thing is that they are managed by peer-to-peer networks, and any attempt to retrospectively alter data in any one block requires changes to be made to all the subsequently generated blocks – something that would require collusion of the majority of the network – and is thus almost impossible to achieve. As such, blockchain technology can be used to create open, distributed ledgers recording transactions between parties in a highly efficient, auditable and permanent way.
Blockchain technology can therefore help enable trust in environments where it might otherwise be lacking. This explains why blockchain technology is sometimes used in highly controversial circumstances (such as payment for drugs or weapons on the “dark” web).
But that use should not put us off the more positive roles such technology could play in other areas, including in the construction sector.
How might blockchain technology be used in the construction sector?
It is not hard to see potential uses for an undisputed record of actions and facts, captured in real time, not capable of revisionist/subjective reinterpretation.
UK construction is a highly regulated and data generating environment, with numerous compliance verification steps to be recorded across multiple data paths. Payment records, regulatory certifications, delay and disruption events, and programme critical path impacts immediately spring to mind. In that context, it is hard to imagine a future for our sector which does not involve embracing blockchain technology and processes once they are adapted to the data needs of our sector.
The potential for tie-in with BIM technologies is also clear. Blockchain could be used to verify who added which components to a model, when, and at what level of authority and sign-off.
Beyond recording value exchange, and certifying proof of existence of different types of data, other commentators have written of the potential for blockchain technology to enable the administration of “smart contracts” and the creation of decentralised autonomous organisations (DAOs) – created by combining smart contracts. A smart contract is simply a computer protocol intended to facilitate, verify and enforce performance of a contract. In short, it is about contract law and related business practices being facilitated through the design of electronic commerce protocols.
The logical extension to this type of contracting is a DAO. For example, imagine a large new commercial office building, brimming with sensors collecting data on its occupancy and use. The building is occupied by many tenants. Could a DAO, representing those occupying the building, autonomously manage much of what is currently thought of as the building’s facilities management – and potentially much more beyond, to include collection of rent, service charges, insurance contributions?
Who is looking into all this in the UK construction context?
As ever, the question is “what and when?” for the take up of blockchain technology in the UK construction sector. There are a number of initiatives in this area, with a couple of the key ones being:
- BuiltEnvironment (.be) has been formed by a group of construction professionals previously brought together as the CIC BIM2050 Group, as a network that promotes digital adoption across the built environment (see www.teaser.dotbuilte.org).
- University College London, which has established a Construction Blockchain Consortium (see www.constructionblockchain.org), whose stated aim is to become “the leading construction industries knowledge transfer consortium” and a “vehicle for tracking and testing these emerging technologies and build proof-of-concept systems.”
Conclusion
Blockchain technology therefore has the potential to contribute seriously to how we restructure design, procurement, occupation and management of the built environment. The verifiable decentralised and permissionless manner in which data is captured ought to support the adoption and operation of a circular economy. As we progress to an “internet of things”, we will find ourselves increasingly needing a “ledger of things” – and it is hard to imagine that role not being played by blockchain technology at some point in that future.
This article was written by David Savage. For more information please contact David Savage via david.savage@crsblaw.com or +44 (0)1483 252 614.
This article was first published in Building.
Our thinking
IBA Annual Conference
The IBA heads to Miami for its 2022 Annual Conference bringing together thousands hundreds of lawyers from around the world.
Martin Wright
Joint Venture Opportunities
Join our panel where we will discuss various topics including Joint Venture structuring and Partner procurement.
Sarah Anticoni
FT Wealth quotes Sarah Anticoni on forum shopping
"Being the first to file for divorce is not a foolproof way of securing an English hearing"
Louise Ward
What can UK investors interested in Life Sciences learn from their more experienced, including US, counterparts?
The recent tie-up between Canary Wharf and Kadans demonstrates the enthusiasm to access the lucrative UK life sciences market.
Helen Coward
Helen Coward writes for Tax Journal on the main purpose test for SDLT group relief
Mainly ignored? The main purpose test for SDLT group relief
Patricia Nathan-Amissah
The Ayes have it - Collateral Warranties can be a ‘Construction Contract’
The Court of Appeal handed down its judgment in the case of Abbey Healthcare (Mill Hill) Limited v Simply Construct (UK) LLP
Jonathan Morley
Charles Russell Speechlys advising Battery Ventures on the sale of SPT Labtech for £650 million.
Battery Ventures has raised over $9 billion to invest in software and services, enterprise infrastructure, and much more around the world.
Sarah Farrelly
Windrush Day 2022 – supporting access to justice
Charles Russell Speechlys is proud to continue supporting survivors of the Windrush scandal in their fight for justice.
Laura Bushaway
The Leasehold Reform (Ground Rent) Act 2022: Landlords and developers beware serious sanctions for non-compliance
The Leasehold Reform (Ground Rent) Act 2022 received Royal Assent on 8 February 2022 and will come into force on 30 June 2022.
David Coates
Charles Russell Speechlys has advised long-standing client Stonegate on a series A investment into Peckwater Brands
Stonegate is one of the largest pub companies in the UK with a rich portfolio that covers over 4,500 sites.
Sarah Farrelly
Pro bono support for major office premises move for charity in Stoke-on-Trent
Emmaus entities provide safe homes, community support and meaningful work to formerly homeless people across the UK.
Rachel Warren
Financier Worldwide quotes Rachel Warren on the UK’s Economic Crime Act
Evaluating the UK’s Economic Crime Act
Samuel Lear
Property Patter: Reasonable Endeavours
What does it mean to use ‘best’, ‘all’ or ‘reasonable’ endeavours?
Glenn Bull
The balance between Fairness and Certainty in UAE Construction Contracts
Articles 106 and 390(20) arguably make the UAE more focused on fairness than some of its counterparts in the GCC.
Rose Carey
Could the UK’s Life Sciences Vision be restricted by its Immigration Policy?
We explore some of the visa options that may be open to businesses in the sector and their relative pros and cons.
Joshua Green
Joshua Green writes for Spear's Magazine on Wagatha Christie’s lessons for HNWs
Wagatha Christie’s lessons for HNWs
Stephanie Bonnello
Stephanie Bonnello writes for the Practical Law Dispute Resolution blog on witness evidence
When are witness summaries permitted instead of witness statements and when should material be struck out from a witness statement?
Emma Humphreys
Emma Humphreys and Paul McCarthy write for Property Week on the new landlord digital ID checks
Emma Humphreys and Paul McCarthy write for Property Week on new landlord digital ID checks
Carolyn Davies
Carolyn Davies and Oliver Park write for Property Week on the key property points in the Building Safety Act
The key property points in the Building Safety Act
Oliver Auld
Unexplained Wealth Orders & Trustees
Learn about Unexplained Wealth Orders, what they are, who can obtain them and the implications that exist for trustees.