Although blockchain is best known in connection with Bitcoin cryptocurrency, it’s an electronic system that can be applied in many ways. Some commentators use the analogy, “Blockchain is to currency as the Internet is to email,” and it seems likely that some of those blockchain applications are likely to disrupt businesses of all kinds, including remodeling.
The compelling feature of blockchain is that it decentralizes management of transactions, allowing people and businesses to interact without the need for an intermediary. It’s also uniquely secure because record-keeping is distributed across a large number of anonymous individuals. Every “block” of records in the “chain” is sealed against edits in a way that refers to the previous block, and only blocks that match can be sealed (non-matching blocks are discarded). That means a hacker would have to break the encryption for not just one block but for every previous block in the chain. Thus, a smart contract recorded by a blockchain would be rock solid.
Other than cryptocurrency, examples of practical blockchain applications are long on promise and short on detail, and even so-called nontechnical descriptions are vague and way more math-based than my brief description.
One example that caught my attention, however, is something called a smart contract, which consists of a digital document containing code that executes automatically when certain specified conditions are met. I haven’t yet found anyone who’s currently using one, but as it happens, I am personally engaged in a transaction where I think a smart contract administrated by a blockchain would be just the ticket.
Don’t Bogart That Fax
Every month, I apply to an insurance company for reimbursement of expenses covered by a long-term care policy. I use a PDF form supplied by the company that I have prefilled as much as possible. (I have an Adobe add-on that allows me to do that.) But because some inputs change every month and several people have to sign the document, I end up printing it out.
Here’s the process. I manually complete the hard-copy form and sign, then scan all pages, including a copy of the relevant invoice. I email the scan to a person at the long-term care facility, who prints out and completes one small section, and signs. They then fax (the other option is snail mail) the entire form to the insurance company. And they also scan the signature page and email it back to me so I have a complete record. In the final step, the insurance company reviews and approves the application, then mails a check and several pages of explanation concerning the check, along with a hard-copy form for next month (which I never use).
We Are Smarter Than That
To eliminate all that printing, scanning, mailing, and faxing, the insurance company could provide a digital smart contract to which the facility and I would also have access. The document would be prefilled with all of the boilerplate information, and every time one of the three parties to the contract completed a part in the workflow, that transaction would be recorded in a blockchain.
The monthly workflow would begin when the facility enters the invoice amount, which would trigger contract code that notifies me (and the blockchain). When I pay the invoice (electronically via the contract), code verifies the amount and notifies the blockchain. Contract code also populates the application for reimbursement, and when I sign digitally, the contract notifies the facility (and the blockchain). When the facility signs … and so on, until the insurance company approves digitally, which triggers an automatic transfer of funds to my bank account. It also sends a record of the completed transaction to me and to the blockchain, which seals the record.
Not your father’s contract, no. Not even your current lawyer’s contract, unless she’s also a coder. But imagine how such a document would lubricate the disbursement of scheduled draws from an escrow account. Or how a client signature on a change order could automatically adjust contract price and completion dates. Or how a complete record of all project transactions could influence an arbitration hearing.
But don’t get rid of that fax machine just yet.