The Potential of Adopting Blockchain Technology and Developing Smart Construction Contracts

Running head: CONSTRUCTION LAW 1
The Potential of Adopting Blockchain Technology and Developing Smart Construction
Contracts
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The potential of adopting blockchain technology and developing smart construction contracts
Certain individuals developed the blockchain technology. The aim of establishing such
technology was to put a system in which individuals are allowed to trust each other, and this
would build their confidence. The system has however led to the establishment of certain other
systems such as trusted timestamping. Additionally, blockchain resulted in an unusual digital
transaction (Pilkington, 2016). The blockchain is defined as a database which stores an indefinite
list of records from many other different computers across the world. Such a record is typically
done in a chronological manner. The block chains have a fingerprint and time stamp from a
previous blockchain.
There is no modification which can be done to the block chains once data has been
captured and hence the data cannot be manipulated by a third party. When a new transaction
occurs, there is an update in all the computers, and this, therefore, enables the distribution of
digital information across the globe. At the beginning of a blockchain, the user typically asks for
a transaction (Yli-Huumo, Ko, Choi, Park & Smolander, 2016). The request by the user will then
be transferred to the other computers usually referred to as nodes. The request submitted by
different users will then be validated using a variety of algorithms by the nodes. Further, the
information stored in the blockchain cannot be changed or rather be corrupted since corrupting
the technology will need the use of insane computing power.
The blockchain technology is a decentralized system, and it occurs between all the parties
thus the middlemen will not be required. Additionally, it reduces conflict of interest and saves
time for carrying out a variety of tasks. When compared with the traditional system, they are
considered to be the best since they are more secure and thus a variety of institutions such as the
government and banks have turned to it. Over the years, it has been discovered that a

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decentralized ledger is useful for the smart contracts. Such smart contracts are often referred to
as digital contracts or self-executing contracts.
In the digital contracts, the contracts are transformed into computer code. Such a code is
stored and replicated on a system (Mainelli & Smith, 2015). It is then monitored using a group of
computers that administer the blockchain. There will also be ledger feedback which could entail
receiving a product or service and transfer of cash.
Blockchain Robustness and Durability
Crosby, Pattanayak, Verma & Kalyanaraman (2016), argues that just like the internet,
blockchain has certain inbuilt robustness. The storing of information in the codes using
blockchain prevents certain actions such as control of the data from one point and also the
occurrence of a failure. Bitcoin, for example, was developed in 2008, and since then it has never
failed. Since the invention of the blockchain, it has proven to be durable just like the internet.
Nodes
The nodes are typically a network of a computer which makes up the blockchain. Variety
of tasks performed by the computers are reliant and have to be validated. The nodes act as an
administrator in the blockchain, and hence they are considered to be mining bitcoins.
The blockchain is Incorruptible and Transparent
The blockchain typically lives in a consensus state whereby it carries out verification by
itself. It is, therefore, therefore, a self-auditing system which checks every particular transaction
which occurs in the computers. Due to the self-auditing nature, there are two fundamental
features which can be drawn, that is it cannot be corrupted through alteration of a unit of
information existing in the blockchain (Tian, 2016). Such a feature is due to the computing

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power which runs the whole network (Crosby et al., 2016). The other feature is transparency,
where data stored, where data stored, is transparent since it is stored in the network as a whole.
The blockchain is designed to be decentralized in nature such that all the activities which
happen in the blockchain is a function of the network as a whole. The decentralization of
blockchain is a technique in which the network works the basis of the user to user. Such an
operation will result in the formation of mass collaboration. The blockchain is expected to be in
use in the near future in almost all the places of work (Tian, 2016). The finance officers, for
instance, have been seen to be one of the widest users of blockchain technology. The World
Bank has estimated that the blockchain has been used to carry out over $430 billion money
transfers.
It has been argued that the blockchain will have the potential to do away with the
middlemen in various transactions. The blockchain has also enabled the invention of the General
User Interface (Zheng, Xie, Dai, Chen & Wang, 2017). Such a general User Interface has led to
the development of certain application referred to as the wallet application which is being used
by individuals in purchasing bitcoins. It is expected that the wallet apps will lead to a
transformation in business transactions in the years to come and this will also include the other
types of identity management.
Enhanced Security and Blockchain
When data is stored in the networks of the blockchain, the risks associated with such data
is eliminated. The centralized points of the blockchain technology do not have the vulnerability,
and hence the computer hackers cannot easily hack the database. Unlike on the internet where
the username and password are required to assets and identity online, the blockchain does not. It
instead uses encryption technology for security measures (Atzori, 2015). The security measures

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use the private and public keys. Usually, the private key enables the owner of a bitcoin to access
the bitcoin and any other digital asset easily. The public key, on the other hand, the address of
the users in a blockchain technology.
According to Tapscott & Tapscott (2016), blockchain technology has been on the use in a
variety of areas. The new form of cryptographic currency referred to as the bitcoin was the first
form of technology which was developed using blockchain. The early adopters of the blockchain
mainly included certain digital companies such as the sin industry and gift market. The bitcoin
has helped reduce costs by providing a more secure and inexpensive means of payment I the
digital industry. The digital companies earn revenue through the pay per view model. Further,
the blockchain technology has been applied in the making of birth certificates, passports,
documents which need validation and even IDs.
The use of smart contracts in the blockchain technology has helped in the provision of a
more secure means of payment. Such a method of payment allows the users to send and receive
money through contracts. However such contracts are typically autocompleted. Another key use
of the blockchain is the provision of a timestamp, and this serves as proof existence.
Additionally, it acts as a cryptographic notary service. However, there are certain nations which
will be reluctant to adopt the blockchain technology, and this is attributed to the fact that it will
threaten their financial system. It is expected that the blockchain technology is likely to stay for
some time and also evolve (Beck, Czepluch, Lollike & Malone, 2016).
The bitcoins and blockchain will replace the money system of payment of various
transactions across the world. Banks will be compelled to adopt the cryptographic currencies. A
domino effect is likely to occur since, after the adoption of the blockchain technology, the stock
market will also be expected to do the same (Tapscott & Tapscott, 2016). The various industries

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should typically expect a lot of disruptions, and this will result in a financial crisis and other
chaos in the world. According to the current trends, the technology is vastly gaining a lot of
steady moment. When the technology was first introduced, a bitcoin was valued at $5. However
that has changed, and currently, its value is equivalent to $1200.
The use of blockchain technology in various business activities will result in certain key
elements as discussed below;
Supply Chain Auditing
According to Mainelli & Smith (2015), in real business, the customers always long to
know if some of the ethical claims by companies on their product and services are true.
However, with the distributed ledgers, the companies can easily certify that all the claim of
ethics on their products are real and thus their product is genuine. The use of timestamping of the
blockchain provide for transparency by indicating the date and location which relates to the
particular products.
Prediction of the Markets
The blockchain technology is expected to be one of the key wisdom of the crowd that
will typically surpass other technologies with the ability to forecast the market (Tapscott &
Tapscott, 2016). For instance, the blockchain technology has the ability to payout based on the
outcomes of the events which are active already.
Land Title Registration
The blockchain technology has the capacity to keep records efficiently just like the
publicly accessible ledgers. However, a key advantage of the technology is that it is not prone to
fraud like the traditional technology (Fujimura et al., 2015). The only limitation is that it is labor