Blockchain and the built environment

BLOCKCHAIN ANDTHEBUILTENVIRONMENT AboutDigitalatArup Wearecommittedtoshapingthedigitalbuiltenvironment.Wewillembracetheopportunitiesthatdigitaloffersanddevelopnewcapabilitiesthatkeepuscommerciallyandcreativelyrelevant.AdigitalArupwillcontinuetoraisethestandardforworld-classbuiltenvironmentexpertiseusingnewtools andtechnologies.Wewillfocusonprovidingbetteroutcomesforourclientsandsocietythroughimproveddesignandinsight,enabledbydata.Weseekcollaborationwithpartnersinourresearchandshareourthinkingtohelpusandothersshapeabetterworld. AboutArupForesight,ResearchandInnovation Foresight,ResearchandInnovationisArup’sinternalthink-tankandconsultancywhichfocusesonthefutureofthebuiltenvironmentandsocietyatlarge.Wehelporganisationsunderstandtrends,explorenewideasandradicallyrethinkthe futureoftheirbusinesses.Researchhasplayedafundamentalroleindefininghowweanticipateandleverageemergingbusinessopportunities.Tothisday,researchcontinuestounderpinourabilitytoaddressclientchallengesacrossthepublicandprivatesectors.Throughappliedresearch,weareabletoexploreandexperimentatanearlystagetominimiselong-termrisk. Contactusatresearch@arup.com PublishedFebruary2019 Version1.2 CoverImage:©Arup 13FitzroyStreetLondon W1T4BQ www.arup.com Contents Executivesummary4 Foreword5 Introduction6 EvolutionofblockchainforArup8 Howblockchainworksanditskeybenefits10 Isblockchainwhatyouneed?12 Whatdoesblockchainmeanforourmarkets?14 Blockchainandbuiltenvironmentmarkets16 Blockchaintechnologytimeline2018–5018 Markets:Cities20 Markets:Energy28 Markets:Property38 Markets:Transport46 Markets:Water54 Conclusions62 Appendices64 References69 Contributorsandacknowledgements72 BlockchainandtheBuiltEnvironmentExecutivesummary Executivesummary Blockchaintechnologyhasnot(yet)createdthesametransformativedisruptioninthebuiltenvironmentthatitcausedinthefinancialindustry.Butitisneverthefirstgenerationoftechnologythatdeliversasupernova;it’sthesecondorthirdgeneration. Blockchainisthestartofwhattheinternet was28yearsago.Wearewitnessingapunctuatedequilibrium—alongperiodduringwhichapplicationsaredevelopedandresearcherslookfornewwaystouse,buildandrecycleapplicationsorcertainaspectsoftheemergingblockchaintechnologies. Asthetechnologydevelopsandmatures,wemightseestepchangesandemergingapplicationsofblockchain.Thedisruptionwillhappenwhenthesestepchangesarerealised,butitishardtopredictwhatthesewillbeandwhentheywillhappen. Fornow,wewillcontinuetoexperimentandworkwithotherearlyadopters. Inthisreport,weexploreapplicationsofblockchaintechnologywithinfivekeymarketsofthebuiltenvironment:cities,energy,property,transport andwater. Wehavecreatedablockchaintechnologytimelinebasedoninsightsfrominternalandindustryexperts,venturecapitalists,academicsandenthusiaststoestimatetheexpectedearlyadoptionofblockchaintechnologiesbeingtestedwithin thefivemarkets. Theresearchrevealsacurrentlackofindustry-widecasestudiesoutsidethefinancialsector,but anumberofcasestudiesarerapidlyemerginginthecities,energyandtransportmarketswithadoptionestimatedfor2020–25. Duringtheevolutionofblockchaintechnology,wemustprepareforscenariosthatcouldreshape thebuiltenvironmentbybuildinganewfoundationformachinesandhumanstointeractandtransactwitheachother.Thisphenomenoncouldbecomepartofanewtechnologicalbackbonetocombinebuildinginformationmodelling,platformtechnologies,theinternetofthings,anddigitaltwins. Foreword VolkerBuscherDataleader Arup Digitaltechnologiesaretransformingeveryaspectofthebuiltenvironment.Blockchainhasthepotentialtobepartofa newertechnologyinfrastructuretohelpusdeliverontheUnitedNations’SustainableDevelopmentGoalsandtransformour—andtheindustry’s—businessmodelintheageofdata. AtArup,weconsideritessentialtounderstandhowdigitaltechnologiescantransformreal-world experiencesanddecision-making.Welearntocombineintelligence,creativityanddisruptivetechnologies inourdrivetocreatebetterinsightsanddesignsforclientsandsociety.Atthecoreofthisnewparadigmis‘data’.Theyhelpustosimplifyandmakesenseoftheworldinwayswecouldonlyimagineafewyearsago.However,thisopportunityisnotriskfree;withmajorbreachesandscandalsaroundtheuse ofdata,wearefacingfundamentalquestionsbeyondimprovingthebuiltenvironment.Ourthinking mustconsiderthedigitalhuman,securityandtheintegrityofoursystems. Withinthebuiltenvironment,wecreatevastamountsofdataeveryday.Everytimewerunourmodels,exchangeemailswithourclients,simulatetherealworldandcreatedesigns,weneedtoreflecton howtechnologycannotonlyimprove,buttransformourindustry.Thisresearchhelpsuscollaborate,comprehendandrespondtochange. Blockchainpromisestobepartofthistechnologicalinfrastructurebyreducingtransactioncosts,improvingtransparencyandchallengingthecontractualmodelofourhighlydistributedindustry.Withtheadministrationofsmartcontracts,blockchaincouldhelptoreducethedelayacrossthelifecycleoftradingandexchangefromdaysdown tominutes,orevenseconds,whilealsoremovingunnecessaryintermediaries. Theinternettransformedhowweviewdataandcreatevalue;blockchainmighttransformhow weexchangevalueandwhomwetrusttoenablethetransfo