Blockchain in construction – hype, hope, or harm?

Paper i proceeding, 2019

Business and public interest and investments in digital ledgers, smart contracts and virtual currencies such as bitcoin, has skyrocketed. Blockchain is indeed a hyped technology – and should therefore raise healthy skepticism. During construction production, projects and the involved companies take on a disintegrated economic flow and allocation of economic resources; these include supplies of materials and services, payments, accounting tasks, and other economic decisions, that are often treated second-hand by site management, subcontractors, transport companies, retailers and material suppliers. Within such a situation, blockchain technologies can maybe create value for stakeholders in handling this economic flow and integrating it with other information and material flows. So, in this sense, blockchain represents a hope for construction; however, this paper critically scrutinizes blockchain for construction, in trying to answer the question whether it indeed constitutes hope, or it is harmful. The paper will report from an ongoing study and development project aiming at implementing a blockchain prototype for digitalized construction logistics at a large building site. A literature review, undertaken in several iterations from May 2018 to summer 2019 and following the emergence of the hype for blockchain, reveals visions and a few prototypes of related systems for construction. Theoretically, the paper adopts a sociomaterial approach, appreciating that blockchain is as much about social interaction and development of trust, as it is about digitally facilitating economic transactions. Several critical issues threatening to jeopardize the adoption of blockchain are analyzed in the paper, such as the protection of the economic data during transactions, permission access control which only allows a few people to enter the system while still requiring a minimum of trust between those already inside the system, and possible financial speculation on the utilized cryptocurrencies. The way construction stakeholders can mitigate such issues, thus enabling blockchain to become a realized hope rather than harming the sector, is discussed. Probably the largest risk relates to unrealistic hopes of full transparency in open blockchain systems, potentially making the systems too vulnerable to external intervention and even speculation. Permissioned systems with some level of hierarchy appear to be a feasible compromise solution mitigating the potential harm.