Treating Blockchain-Based Smart Contracts as a Special Case of Control Systems

A Useful Perspective for Facilities Owners, Operators, Architects, Engineers, Contractors, and Suppliers

Abstract

There is a saying, “There is nothing new under the sun.” This phrase suggests that things that seem new will later be understood to not be new at all, but only variations of existing things. This review examined the ‘new’ technology of blockchain and considered how facilities design, construction, and operations needs and challenges are evolving and if/how blockchain may address these needs and challenges. In going through this exercise, an observation developed that perhaps blockchain-based smart contracts are not ‘new’ at all but rather, as we posit, a special case of control systems. This post considers the validity and usefulness of taking this view of blockchain-based smart contracts.

Byline

Richard Bucksey BEng (Hons) CEng MIET, Engineering Manager, Fluor

Arvin Delgado, Manager Operations & Maintenance Infrastructure, Fluor

Joe Manganelli, Architect & Human Factors Consultant, Fluor

The Value Proposition of Blockchain

Walmart recently completed a pilot test with an experimental, decentralized food supply chain management system built upon distributed ledger and blockchain technologies. The blockchain-based information management system reduced the time to trace a product to origin from 7 days to 2.2 seconds (Miller, 2018)! Similar efficiency gains are being realized by blockchain solutions for many work processes that entail rigorous and extensive monitoring, tracking, validating, and reporting of information. ((Accenture Consulting, 2017), (Arsene, 2019), (Oracle & Deloitte, 2019)). In summary, a blockchain-based approach to information management is valuable and useful because:

1. it automates documentation, compliance, validation, and reporting work processes that have traditionally required laborious, time-consuming, and error-prone human effort,
2. it is especially useful for organizations or consortia with members/users sharing interconnected networks of data, information, and processes, and
3. it accomplishes this automation in ways that are inherently trustworthy and secure.

Adoption of blockchain-based information management is extending into facilities design, construction, commissioning, and operations ((Construction Blockchain Consortium, 2019), (Helium Blockchain Alliance, 2019), (Forester, 2018)). It is easy to see why. There are parallels between work execution (e.g., procurement, supplychain management, scheduling, commissioning, compliance checking, etc.) on large capital Architecture, Engineering, Construction, Operations, Ownership, Supplier (AECOOS), Engineering, Procurement, Fabrication, and Construction (EPFC), and Operations & Maintenance (O&M) projects. Some of the successes achieved with blockchain-based solutions in AECOOS industries include:

1. integrating building information modeling (BIM) and blockchain as part of bridge design (Arup, 2019),
2. integrating blockchain into an energy microgrid supply system (Arup, 2019),
3. integrating blockchain into an Internet of Things sensor fusion system to better support sensing data management for smart city applications (Hardjono, 2016), and
4. integrating blockchain into a digital twin and handover materials as part of continuous data management from design through O&M (Sawyer, 2018).

Blockchain & Control Systems

There is a saying, “There is nothing new under the sun.” This phrase suggests that things that may at first seem new will later be understood to not be new at all, but rather only variations of existing things. Our effort to understand the ‘new’ technology of blockchain and if/how it may address the needs and challenges of facilities design, construction, and operations led to the observation that perhaps blockchain is not ‘new’ at all but rather, as we posit (from an industrial facilities design/construction/operations perspective), a blockchain-based smart contract is a special case of a control system. This post considers the validity and usefulness of taking this view of blockchain-based smart contracts.

To consider this proposition, it is first necessary to adopt definitions for blockchain and control systems. To adopt a definition for blockchain, it is useful to differentiate between the concept of a blockchain and the related concepts of a distributed ledger and a smart contract. To adopt a definition for control systems, it is useful to frame them in the context of cyber-physical systems in order to understand why control systems are becoming more ubiquitous and relevant to all facilities project types and all aspects of all facilities project types as we increasingly build and operate smart infrastructure based on the Industrial Internet of Things (IIoT). To understand blockchain and control systems, it is also useful to understand the difference between data, information, and knowledge, as well as the difference between innovation and invention.

• Blockchain: A blockchain is a record of transactions (or events) structured in a specific way. Its structure is a concatenation of time-stamped, sequential, and compartmentalized sets of recorded events (i.e., blocks of information linked in series, or a ‘chain of blocks’, hence ‘blockchain’), each with a unique identifier (hash). Importantly, the record is constructed using a one-way function, such that it is impossible to revise any one recorded event without revising all subsequent events and hashes, thereby making any attempted manipulation of the record immediately apparent. With regard to the related concepts of distributed ledger and smart contracts, (1) use of blockchain solutions as part of distributed ledgers makes blockchain solutions much more useful, and (2) blockchain solutions make the use of smart contracts more feasible (both with regard to efficiency of execution and trustworthiness of the integrity of the execution of the contract).
• Distributed Ledger: A distributed ledger is a method (and the artifact) of recording and storing data or information across multiple, physically separate databases such that all databases maintain a shared, consensus record of events and that all databases update in a synchronized way (i.e., a ledger that exists in the same form simultaneously in many different places and that changes in the same way in all its locations at the same time).
• Smart Contract: A contract is a record of a transaction between two entities, whether those entities are people or other things (i.e., a bank and a manufacturer, or a sensor and a data logger). Contracts often have clauses that trigger certain events once other events occur. For instance, a contract may have a liquidated damages clause that says the engineer will pay the owner and contractor in the event that the design is not accomplished within a certain period of time. A smart contract is a contract that automates the collection and validation of data and information and the execution of the terms of the contract once the data/information are validated. For instance, a smart contract could release a purchase order once information is submitted and validated that all required authorizations have occurred, the design is approved, and required contracts are signed.
• Control System: A control system is an arrangement of data inputs, outputs, and logical transformations that process data or information in highly structured ways to achieve a desired overall transformation or sequence of transformations or homeostasis (i.e., state change or state invariance) of a system. Control systems come in different general forms with specific purposes. There are two fundamental dichotomies that underlay the structures of most control systems: open/closed and positive/negative. Open loop systems process information to effect a transformation such that the results of the transformation are never fed back into the system. Firing a projectile is an example of an open loop system. A sequence of actions accelerates the projectile but the energy or information of the projectile is never fed back into the mechanism used to fire it. Closed loop systems process information such that the outcome of the system process is fed back into the system as an input. An air or water temperature control system is an example of a closed loop system. Positive feedback systems process information using one-way transformations that amplify the system’s effects. Spinning a flywheel such that a consistent force is applied but with each rotation that force is added to the forces already applied so that the rate of rotation and the inertia of the system continues to increase indefinitely is an example of a positive feedback system. Vicious cycles are a well-known type of positive feedback system. Negative feedback systems process information such that some outcome behavior of the system is fed back into the system as an input and used to maintain operation of the system within a predetermined range of performance. Self-regulating systems (homeostatic) systems, such as normal heart rate and HVAC temperature control are examples of negative feedback systems.
• Cyber-Physical Systems (CPS): Cyber-physical systems are physical systems that have integrated layers of logical processing and that are connected to other software (cyber), hardware (physical), or cyber-physical systems, and that participate in the wider system of systems. The key concept here is that physical assets are imbued with integrated logic systems (typically in the form of software systems) that operate locally and/or also participate in a wider web of software, hardware, and software-hardware systems. For instance, a pump is a mechanical (hardware/physical) system. When the pump is connected to a control system and a sensor and a switch are added, it is a physical asset that is part of a control system. In this system of systems, notice that the sensing and actuation are integrated with the physical system but it is still a simple, closed system. Conversely, when a local microprocessor with a local logic board are added to the pump that automate certain pump behaviors at the local level while also reporting back to, receiving instructions from, and participating in a wider control system, and its behavior is now coordinated with the behaviors of many other systems of systems, then it has become a cyber-physical system. CPS are noted as distinct from traditional control systems because the scale, complexity, and interconnectedness of the system of systems presents unique design, operations, and management challenges that were not concerns for older, simpler, more limited control systems or merely physical assets. Given this definition of CPS, the crucial point is that CPS are composed of many interconnected control systems in addition to the actual assets and processes that they control.
• Smart Infrastructure: Smart infrastructure is infrastructure composed of many interconnected CPS. To be more specific, Fluor proposes the following definition: “Smart Infrastructure integrates physical and digital infrastructures utilizing networking, monitoring, data collection, and analytics to optimize the performance of assets, users, and the environment.”
• Industrial Internet of Things (IIoT): IIoT is similar in nature to the concept of CPS and the related concept of the Internet of Things (IoT). There are several key points of differentiation to be aware of with regard to the relationships between CPS, IIoT, and IoT: (1) CPS as a construct predates IIoT and IoT by many years and is the basis for each of the latter. One way to think of IIoT and IoT are that they are popular language descriptions of an emerging technical systems type (CPS). (2)CPS may also be extended to include living things whereas the concepts of IIoT and IoT are generally discussed with regard to non-living software and hardware systems only. (This concept of representing living systems as CPS is not as new as one might think. In fact, the disciplines of human factors and ergonomics (HF/E), which represent and analyze how humans interact with complex technical systems, represent humans as having both processing capabilities (i.e., cognitive HF/E) and physical actuation capabilities (i.e., physical HF/E), (similar to how we may logically decompose the capabilities of a robot) so that they can map the structures and behaviors of people in relation to the structures and behaviors of the software and hardware technical systems with which they interact (Definition and Domains of Ergonomics, 2019)). (3)Generally, IIoT and IoT assume not only the CPS construct but also its integration with Industry 4.0 constructs (i.e. cloud computing, big data, predictive analytics, etc.). (4)A key difference between IIoT and IoT are the sophistication, robustness, and fault tolerance of the systems. IoT is more consumer-focused. If a consumer’s smartphone-activated smart-toaster (an instance of IoT) burns the toast, there is minimal risk to human health, wellbeing, performance, or to assets and infrastructure. Conversely, if a pharmaceutical production facility’s ethanol-based cleaning in place (CIP) control system (an instance of IIoT) malfunctions and spills 15,000 gallons of ethanol, there is substantial risk to human health, wellbeing, and performance, as well as potentially catastrophic asset and infrastructure damages. Given the different risk potentials for IoT versus IIoT, IIoT must be developed and maintained to much higher standards, which costs time and money.
• Data: A datum is an individual, discrete measurement of a phenomenon. Data (plural) are a collection of individual, discrete measurements of phenomena. Data are a type of information but information is not a type of data. That is, all data are information (or components of information) but not all information are data.
• Information: Information is a description of structured form and/or behavior that represents a phenomenon.
• Knowledge: Knowledge is perception and understanding of a phenomenon, including how information about the phenomenon relates to the phenomenon itself.
• Invention: Invention entails developing a fundamentally new system, information, or knowledge to address a need.
• Innovation: Innovation entails adapting existing technology, information, or knowledge to serve a new purpose and thereby address a need. Invention may include innovation but not all innovation is invention. Blockchain technologies are primarily innovations because the components that compose blockchain solutions have existed for a long time. Having said this, there may be some strategies, knowledge, and technologies that are being invented to address specific blockchain technical challenges. But by and large, the components of blockchain have existed for a long time, which is one of the reasons it is such exciting technology — — since it is mostly built of existing components, it can be integrated into existing information management systems without the need to invent fundamentally new information management infrastructure.

A Proposal: Blockchain-Based Smart Contracts as a Special Case of a Control System

Given this set of definitions, five observations should be clear.

1. The design, construction, and operation of modern manufacturing facilities are in fact the design, construction, and operation of smart infrastructure, which is the design, construction, and operation of interconnected systems of CPS, which is the design, construction, and operation of many integrated layers and systems of control systems.
2. A blockchain-based solution applied to AECOOS concerns, such as a mechanism that automates monitoring, tracking, validating, and reporting of information for plant design/construction/startup/operations in the form of smart contracts (i.e., contracts that automate the collection and validation of data and information and the execution of the terms of the contracts ) is in fact a control system (i.e., an arrangement of data inputs, outputs, and logical transformations that process data or information in highly structured ways to achieve a desired overall transformation).
3. If a blockchain-based smart contract solution is a specific form of a control system, then what kind of control system is it? A blockchain-based smart contract control system can be open or closed (i.e., there may or may not be a feedback mechanism). A blockchain based smart contract control system can have a positive or negative feedback loop. What appear to differentiate blockchain-based smart contract control systems are: (a) the immutability of the information and logic contained within them, (b) the persistence of the record, and (c)the consensus-based mechanism for maintaining the validity of the smart contract.
4. When viewed as a special instance of a control system, a blockchain-based smart contract solution can be designed, constructed, and managed using current best practices for the design, construction, and management of control systems.
5. When viewed as a special instance of a control system, a blockchain-based smart contract solution can be managed through current best practices for organizational and process management controls.

Concluding Thoughts

Blockchain-based smart contracts are poised to revolutionize facilities design, construction, and operations. Use of this technology will be transformational and will greatly increase the quantity and complexity of information that can be processed while simultaneously reducing the time and cost of processing and increasing the trustworthiness and security of the information processing. Blockchain-based smart contracts are technology that all AECOOS stakeholders must learn to leverage. Fortunately, in delving into this ‘new’ technology, it appears that it is not fundamentally ‘new’ but rather a new arrangement of existing technologies. Once this ‘new’ technology is reframed through the lens of the familiar, it becomes clear how and why it can and should fit into facility design, construction, and operations, as well as how it can be managed. Once blockchain-based smart contracts are viewed through the familiar lens of control systems and can be associated with existing protocols, it becomes easier to figure out how to deploy them and manage them. In summary, blockchain-based smart contracts give us an enhanced form of control systems that can be leveraged to automate design, construction, startup, and operation of facilities-as-instances-of-smart-infrastructure in ways that make doing so feasible and lucrative, and that become part of risk, cost, and schedule mitigation strategies. For these reasons, we are quickly approaching a time when blockchain-based smart contracts will be foundational for facilities control systems.

Acknowledgements

The authors and Fluor would like to thank the many people who provide direction and feedback on the development of these ideas and this manuscript, especially: Sanjiv Dabee, Tom Hendricks, Juan Hernandez, Kristen Lane, Chris Loria, Steven Polansky, Maureen Price, and Dave Watrous.

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