Blockchain Technology And Decentralized Governance: Is The State Still Necessary? Essay.

Blockchain Technology And Decentralized Governance: Is The State Still Necessary?.

Blockchain Robustness and Durability

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 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.

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.

The blockchain is Incorruptible and Transparent

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 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 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.

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 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.

Enhanced Security and Blockchain

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 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.

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 intensive and costly during its administration. There are certain nations which are already using the technology for land registry projects such as Honduras.

Smart Contracts

The smart contract are typically those contracts which aid in exchange for various items such as money, shares, and property. Such an exchange is done in a transparent manner, and this, therefore, prevents conflicts which may arise due to the presence of the middlemen. Such technology can only be compared with the vending machine (Buterin, 2014). Occasionally, an individual would go to a lawyer and pay them as one for the processing of the particular document. However, with the mart contracts, a person would just put a bitcoin in a vending machine and he or receives the document immediately.

Unlike in the traditional contract where the obligations placed upon all the parties are enforced manually, the smart contract executes the duties automatically, and it does by defining the penalties and rules relating to the agreement. An example of the use of a smart contract occurs when an individual, for instance, pays his or her rent using cryptocurrency. The individual in return will be given a receipt and a digital entry key (Delmolino, Arnett, Kosba, Miller, & Shi, 2016). The system works on the If-Then perspective such that if a particular condition is not fulfilled, then no transaction will take place. The smart contract is applied to various situations which may include those relating to breach contracts, financial services, crowdfunding agreements, legal processes, and credit enforcement

According to Korpela, Hallikas & Dahlberg (2017), the smart contracts enable a client's documents to be encrypted usually on a shared ledger. Such encryption prevents loss of the documents in the computer database.

Provides Backup

Unlike in the banks where a person can lose his or her savings forever, in the smart contracts, there is usually a backup, and this is by a block of a chain. Each of the documents is often duplicated as many times as possible (Dai, Mahi, Earls & Norta, 2017).

In smart contracts, while making the agreements, the middlemen are not usually required, and this, therefore, reduces the chances of manipulation of the documents by another third party. Everything is usually done automatically via a network, and hence no particular bias is possible (Savelyev, 2017).

It is accurate

The smart contracts are automated and therefore avoid the production of errors which may arise from a manually filling forms.

Smart contracts can also be used to save money by an individual, and this typically does not require the presence of an intermediary. An individual becomes the only witness during the transactions (English, Auer & Domingue, 2016).

The documents are kept safe, and this involves the use of cryptography, an encryption of the websites. Hacking cannot take place, and only a smart hacker would be in a position to crack the codes (Dai et al., 2017).

It is Quick

Unlike the traditional form of contract, the smart contract uses a software code which automatically performs a variety of tasks (Savelyev, 2017). Thus a lot of time is often saved.

According to the vice president of blockchain technologies at IBM, smart contracts can generally be used in various industries such as insurance, healthcare, and financial services industries.

Healthcare

The smart contract can be used in the healthcare sector, and this could entail encoding and storing the personal health record of various individuals. The records are stored in a blockchain using a private key which can only be accessed by certain individuals. The research through the HIPAA laws can also be done using the smart contract (Neirotti, De Marco, Cagliano, Mangano,  & Scorrano, 2014). Further, the general healthcare management can use the ledgers for various activities such as management of healthcare supplies, test for results, supervision of drugs and to regulate compliance with regulatory frameworks. Also, the receipts from different surgeries stored in the blockchain could be used as proof of delivery to the insurance providers.

Management

The use of smart contracts enables effective communication within an organization, and this is attributed to its accuracy rate, automated system, and transparency. The above features of a smart contract are used in organizations for various managerial functions in the top level management (Stratigea, Papadopoulou & Panagiotopoulou, 2015). Additionally, the technology reduces different discrepancies which may result during the independent processing, and hence there are low lawsuit costs and reduced settlement delays.

Government

The traditional contract system often leads to the rigging of an election, however with the use of smart contract, there is a more system of election. Usually, the ledger protected votes are decoded, and access to the votes would require excessive computing power. However, no individual all over the world has ever been found to possess such a power (Huh, Cho & Kim, 2017). Additionally, the smart contract has the ability to hike certain low voter turnout. The smart contract can also be used by the volunteers to transfer voting online compelling the millennials to turn out in mass to vote.

Real Estate

Traditionally, if an individual wanted to rent his or her apartment, there would be the need for the use of intermediaries, however with the use of smart contracts, an owner of an apartment would get more money instead(Neirotti et al.,2014). The ledger in the blockchain reduces costs since a person who would want to use an apartment for rental would only pay through a bitcoin, and the contract will be encoded on the ledger. A lot of profit can, therefore, be made by the hard money lenders, brokers, and real estate agents.

Case History

The Barclays Corporate Bank has used the smart contact for a long time to log change of ownership. Such a change of ownership will typically enable the automatic transfer of payments to various financial institutions.

Automobile

According to Huckle, Bhattacharya, White & Beloff (2016), the smart contract helps in the development of automated machines such as the super smart robots. Another example of a technology which has been as a result of the smart contract is the self-parking vehicles which the techniques apply certain oracle to help detect who was at fault during a particular crash involves more than one vehicle. Additionally, the smart contacts could be used in charging of rates by the automobile insurance companies. Such rates depend on the place and the conditions of operations of the vehicles.

Supply Chain

Generally, the smart contracts work on the basis of If-Then such that if cash has been received at a particular location, then the product will be released and this creates a supply chain. In the traditional contracts, the supply chain is faced with a variety of challenges such as many channels for approval which results in an exposure to fraud and losses (Buterin, 2014). In the smart contract, however, such issues do not exist since the blockchain does not allow that by offering an accessible and secure digital version. Such aversion is provided to all the parties of the supply chain, and also all the payments and duties are done automatically.

The potential for Adopting Block Chain Technology and Developing Modern Plain Language Smart Construction Contracts of Your Choice for Construction Projects

The construction industry has been considered to be slow in regards to embracing change, and this has been due to the high regulation of the industry by the government. The government has in the past few years been strict in the construction industry compelling the firms to have the approved certificates (Peters & Panayi, 2016). Some of the requirements are complicated and thus causing certain issues related to verification and trust, and the adoption of blockchain is the only ways to solve the issues. The various uses of blockchain have been applied in the construction industry. Such uses may entail;

According to Bilal, et al., (2016), it involves the development of digital ID which enables individuals to provide relevant information, and an authorized body can easily validate such information. The blockchain technology can be used to record the identities of various persons in a contract, and such an identification helps build trust among people for various contracts over a certain period. The blockchain will be used in the construction industry by developing and having a proof of the membership to the professional bodies governing the industry, and this will allow the individuals to self-certify work (Frantz & Nowostawski, 2016).

The smart contracts work on the basis of If-Then premise. For example, the smart contracts can be used by various clients to purchase goods and have them delivered, and this is because they create trust among the parties. In the construction industry, an individual may decide to buy equipment to be used for construction (Sun, Yan & Zhang, 2016). In such a scenario, payment of a given portion of the equipment will be paid once it has been verified that it has left a particular place. The rest of the other liabilities will then be imposed on the shipping company. The rest of the payment will only be completed after the installation and commissioning of the equipment. The above scenario has been made possible through the use of blockchain technology (Swan, 2015).

Eyal (2017), argues that the use of building maintenance system and blockchain is likely to result in building's being in a position of placing certain orders. For instance, orders on new light fitting and later another individual will be called to install after which both the installer and supplier will be paid. During the construction phase, the same procedure is followed such that all the requirements must be met such as paint color, the temperature range in the rooms and light fitting among others. However, all the decisions and requirements must, however, commence and this forms the If-Then premises which use the smart contracts .The decisions are done among the main contractor, sub-contractor and the clients (Nærland, Müller-Bloch, Beck & Palmund, 2017). The members of the construction project will then be allowed to carry out certain tasks such as monitoring, designing, approval of tender, installation, and certification of various assets. A blockchain maintains the Decentralised Autonomous Organisation transactions of insurance, voting, and money using the program rules.

Despite the various benefits which may be associated with the blockchain technology, it is expected the technique will possibly disrupt the industry in the coming years. Take a look at the procurement process for the buildings where the direct contracts with different customers are only limited to the main contractor and consultants (Davidson, De Filippi & Potts, 2016). The subcontractors are only allowed to perform certain specialized activities by the main contractors. The procurement process entails the following procedures as indicated below;

• The consultants are employed by the client to help create the documents for tender.
• The tenders will then be advertised and called as the main contractor is engaged
• The main contractor will then communicate with the other sub-contractors who will conduct a specialist job at various construction sites.
• A contract of a building will then be entered into, and the consultants will monitor and administer the contract.
• The certifications and warranties will be verified and later confirmed based on the order made.

The use of blockchain technology is expected to result in a more direct contractual relationship with the client. Such technology will not, however, result in the breakdown of various company structures. It will instead lead to more collaboration among various smaller companies. The various individuals working in the construction industry will gain experience in their career (Ekblaw, Azaria, Halamka & Lippman, 2016). Presently, a form of procurement called the construction management has been developed, and it entails the engagement of the client by a construction manager to help in the management of sub trades directly on behalf of them. However, it is expected the application of the blockchain technology will lead to more transparent contracts.

According to Frantz & Nowostawski (2016), the smart contracts and DAO will be integrated with the technology to help automate the administration of subcontracts and buildings. The use of the blockchain technology will eventually result in the creation of certifications of events and a record of various transactions, and this is especially in the life cycle of construction. The reliance on the digital IDs will lead to the formation of more direct contracts, and this will be between those carrying out tasks such as monitoring and design and the different clients (Pettersson & Edström, 2016).

The intermediary costs will be avoided. Additionally, there will be a transformation in the contractual arrangements such that individuals will be employed on a labor basis only and also the materials to be used in construction will be purchased directly from the factory. The creation and application of the smart contracts for a construction project in the loading of various reports will help in reducing certain risks associated with the use of the middlemen in contracts (Badzar, 2016). Further, the use of Blockchain, BIM and other advanced technologies will provide the chance for the creation of a learner procurement method. Such a method typically allows individuals in a particular project team to engage in a systematic manner. The middlemen will, therefore, be eliminated, and this is especially where a particular customer possess transparency of cost, scope and time of the project including more control.

The blockchain technology has been associated with numerous benefits in the construction industry such as the record of details of the individual in a contract and also the reduction in the cost due to the removal of middlemen. To use the technology, the BIM should be embraced and the ‘Built it Twice’ will be the key. The direct contractual relationships will be used together with the technology. Further, there should be the use of the blockchain to back up the whole platform since this will typically allow all the parties in the contract to be engaged fully in the construction project.

The smart contracts should also be applied to all the construction projects, and this is because of some of the benefits it would generate. For instance, it will enable the members of the project to engage freely without involving the intermediaries. The cost used on the middlemen will then be reduced and instead channeled to projects by the client. It will also be prudent to be cautious with the technology in its application in the construction industry. Such a precaution will be based on the fact that, it is likely to result in disruptions in the coming year in the industry and even other industries.

Conclusion

In summary, the use of the blockchain technology and smart contracts in the construction industry will be necessary, and this is because of the benefits associated with it. For instance, the technology can be used to record the identities of various persons in a contract, and such an identification helps build trust among people for various contracts over a certain period. It is also used in the construction industry by developing and having a proof of the membership to the professional bodies governing the industry, and this will allow the individuals to self-certify work. The smart contracts on the other hand also certain benefits to the construction industry.

A key benefit is on the non-use of the middlemen in the contracts, and this helps reduce certain costs incurred for the payment of such intermediaries. It also allows all the stakeholders to meet and agree on certain matters of the construction projects. However, the use of the blockchain technology should be done with a lot of caution, and this is because of the disruptions it is likely to cause in the near future in the construction industry and even the other industries.

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