What is Blockchain and How Does It Affect the Construction Industry?

At its core, blockchain is a single database replicated across every node (computer) in a network. The database contains blocks of information that are identical across the entire network. If someone adds a new block, the entire network records the change. Once it’s in place, no one can change the transaction, and it is stored forever.

Additionally, blockchain has the following properties:

  • No single entity controls it.
  • It has no single point of failure. For instance, if one node on the network goes down or is hacked, none of the information goes down with it.
  • Since information is shared among all the members of the blockchain, it is transparent.
  • It’s virtually incorruptible. To corrupt or alter any data, someone would have to hack over 50% of the nodes at the same instant.
  • It has the ability to store code within the blockchain, which leads to the use of smart contracts.

Blockchain in the Construction Industry

The construction industry can take advantage of all the typical financial uses of blockchain–interacting with banks, suppliers, and customers–in a secure and transparent way. If you’ve heard about double entry accounting, you can imagine blockchain as triple entry accounting. Internally you have the traditional transaction, but the other side of the transaction–the bank, for example–also has a copy of the same transaction from their view. No reconciliation!

However, the value of blockchain technology (also called Distributed Ledger Technology or DLT) goes well beyond finance. Blockchains can be used for tracking supplies, designs, and transactions between the owner, contractor, and subcontractors. This reduces errors and misunderstandings as all parties “know” the same information at the same time.

Smart Contracts

Smart contracts are self-executing contracts. They use the blockchain to store rules and instructions (code) that can react to information that is input into the blockchain. These smart contracts can react to real-time project impacts, change orders, and other adjustments. They can even move money from one party to another without human intervention.

Building Information Management

Building Information Management models could be stored on a blockchain and shared with all affected parties. For example, the burden of municipal inspections may be eased by providing a read-only node to the governmental agencies that must approve work.

Blockchain in Construction Supply Chains

This transparency makes it easier to identify errors in a construction supply chain. If a company learns that an installed component is faulty, they can look at the blockchain to learn which supplier is responsible and which projects used the faulty part. The company can immediately notify their team or building owner of the problem and make corrections before an issue occurs. The company can also contact the supplier without the delay normally experienced due to time spent tracing the source of the parts.


In the early stages of its full potential, blockchain technology is exciting. Remember when the internet–the worldwide web–was first gaining its sea legs? We all knew it was something, but we didn’t know we would have smart phones, autonomous vehicles, real-time device tracking, or blockchain. Blockchain is poised to be the biggest innovation in the 21st century.

Blockchain is also paving the way for a more streamlined, efficient future in the construction industry. Learn how it can help your business by speaking with one of our blockchain experts.

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