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Is there finally a problem big enough for blockchain to solve?

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As we break free from the blockchain hype cycle of 2017, we find many people scratching their heads trying to understand where and how blockchain plays a role, yet still struggling to grasp blockchain’s main purpose for being; solving the trust disparity within organizations.

If we are to see the adoption of blockchain, the trust problem needs to be big enough for any organization to change its current way of doing business and adopt a collaborative and transparent method of working.

When Richard Creighton, the ex-MD of Honeywell Africa, (with whom I have been fortunate enough to co-create our Sherlock solution) and I set out to build an application using blockchain to solve a current business problem, we were really looking for an industry that had a big enough trust problem to solve. We reverted to the trust problems encountered in the construction industry, hampering the profitability of the construction sector globally.

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A global trust problem

A construction project, irrespective of the size, would typically have multiple organizations working on individual projects, all reporting to different parties, which is then hopefully brought together to an aligned project schedule balanced according to time, cost and quality of the project itself. We find many contractors are driven by self-interest in their own business and rather than that of the holistic project.

One major reason construction is so hampered by corruption, mismanagement, and inefficiencies is due to the fact that alignment across the many participants of the project is disjointed.

The following excerpt puts the size of the trust problem found in construction in perspective.

The World Economic Forum published the following statement on 4 February 2016:

“The value of global construction output is expected to increase by $8 trillion to reach $17.5 trillion per annum by 2030.

It is difficult to determine precisely the value of losses through corruption, but estimates tend to range between 10 and 30%. The experience of the CoST programme suggests that a similar amount could be lost through mismanagement and inefficiency. This means that by 2030, unless measures are introduced that effectively improve this situation, close to $6 trillion could be lost annually through corruption, mismanagement and inefficiency.”

Due to construction being susceptible to high levels of corruption and mismanagement, rigorous standard contracts are available to guide the management of these projects to abide by an agreed system and work ethic.

A standard contract is however not enough if it is not supported by accurate evidence, as the outcome merely results in high-earning lawyers spending their joyous days resolving disputes while charging the respective parties for their efforts, which in turn decreases the profitability of many projects and further divides the contractors who would otherwise be aligned in their endeavors to complete the project efficiently.

Accountability through transparency

The question remains: how do we solve the problem of dissension within the industry? If left unanswered the construction industry could become unsustainable and the wider consequences of such an event would be unfathomable.

I believe the only way to truly eliminate the necessity for trust, is by either removing the human factor, which we know is not entirely possible or by creating accountability through transparency. But how do we enforce transparency while still allowing for commercial privacy which encourages entrepreneurship and capitalism?

Blockchain and distributed ledger technology has given us the ability to increase transparency and reduce the reliance on trust in a network, while IoT has given us the ability to create a trusted device with which to gather accurate data on real-world events.

We have applied these principles to our IoT-enabled Smart Contract Network, running on the IBM Blockchain Platform, which is underpinned by The Linux Foundation’s Hyperledger Fabric, to convert the standard construction contracts to self-executing smart contracts to make certain elements of construction data transparent to all parties involved in a project, while allowing for private commercial data to only be captured in private collections between the parties to which it is relevant.

Sherlock uses smart devices that are capable of peer-to-peer control as needed and have the logic capability in the sensors. Patterns of control can be executed in milliseconds from the device. IoT devices monitor topics (events) and publish changes to the blockchain, executing an applicable smart contract.

A more specific device called the Eagle, provided by our IoT partner Digital Twin, is a portable biometric reader, which links an individual’s fingerprints to verifiable validations in field as proof-of-presence and for whom it verifies an activity or event.

Through the support of IBM and their unique Designed Thinking principles and workshops, we were able to build Sherlock to address an industry problem in a collaborative manner. This has led Sherlock to earn its IBM “Ready for Blockchain” badge as an IBM verified solution.

I believe these are just some of the ways to ensure sustainability in the construction industry over the long term and that the enforcement of accountability and transparency needs to be equal across all the parties involved in a project.

Big problems with innovative solutions

As Henry Ford said, “Coming together is the beginning. Keeping together is progress. Working together is success.”

If blockchain’s main purpose is to eliminate the reliance on trust, then we must continue to search for the industries which would be most impacted by its involvement in order to improve the global economic outlook for everyone involved. Once we solve the large trust issues in the industry, the ancillary issues will start resolving themselves.

What I have learned is that trust, is a relative phrase and one’s perception of trust may differ from another’s. We therefore need to question why trust exists in the first place. Trust issues tend to exist across many industries and by solving this dilemma within one industry will by default benefit others.

If you are in an industry (construction or other) and are facing some of the issues described above or have some suggestions as to how Sherlock can be of value to you, please reach out as we are continuously seeking input to make Sherlock smarter by finding ways to put her to work in solving your trust challenges.

To find out more about becoming an IBM Blockchain Business Partner like DoshEx, visit IBM Blockchain Ecosystem.

From time to time, we invite industry thought leaders, academic experts and partners, to share their opinions and insights on current trends in blockchain to the Blockchain Pulse blog. While the opinions in these blog posts are their own, and do not necessarily reflect the views of IBM, this blog strives to welcome all points of view to the conversation.

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