This diagram shows how commitment tokens would work to distribute funds from the construction loan to the project owner, subcontractors and manufacturers.
The lending institution behind the construction loan would issue "commitment tokens" to the builder, which the builder could then distribute to subcontractors when a bid is awarded. Once the subcontractor completes the work, which could be scheduled and accounted for daily, the builder could approve the token and the subcontractor would be instantly paid.
Likewise, any supplier, such as an HVAC manufacturer, could be paid by the subcontractor using the tokens, which would be activated upon delivery. Bowden said this approach would help builders using the tokens be more attractive to subcontractors — in a market that is currently short on subcontractors, which can delay work and drive up construction costs — since they would be paid instantly.
It would also reduce liability across the board since payment for goods and services would be instantaneous and would be tied directly to the construction loan.
For all the potential it holds, Bowden said his mission isn't to proselytize about blockchain. "I want to create real value and real impact in improving the construction industry's efficiency," he said. "I don't look at the blockchain as the end, I took at it as the means to the end."
Hear more about blockchain and other technology disrupting the industry at Bisnow's CRE & UrbanTech Summit Oct. 18 at the Omni San Francisco.
You’ve never heard of Yuji Ijiri. But back in 1989 he created something incredible.
When people look back hundreds of years from now, only the printing press and the Internet will have it beat for sheer mind-boggling impact on society. Both the net and the printing press enabled the democratization of information and single-handedly uplifted the collective knowledge of people all over the world.
So what am I talking about? What did Ijiri create that’s so amazing?
Blog Post by Daniel Jeffries
Triple-entry accounting can be thought of as a way of agreeing on objective economic reality, a single source of the truth.
Triple entry accounting is an enhancement to the traditional double-entry system in which all accounting entries involving outside parties are cryptographically sealed by a third entry.
Thus placed side by side, the bookkeeping entries of both parties to a given transaction are congruent. The third entry in the system, entered into the blockchain, is both a receipt and a transaction.
It’s proof that something happened between two parties, which goes beyond the receipts that each party holds in double entry.
There are many other activities that can occur on a construction project beyond simple accounting transactions.
And many of these parameters are just as important to record and document as the financial transactions themselves. These can include scheduling performance at the individual task level, inspection failures, product failures, safety infractions, etc.
In our case, all of the construction project parameters are recorded to a common ledger as an immutable record.