IBM’s blockchain for business – beyond cryptocurrencies

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IBM’s lab in Böblingen, Germany hosted the company’s Blockchain Summit this week. It was a chance to show off what’s possible with the freshly-minted v1.0 of Hyperledger Fabric blockchain framework, along with customer stories from some of IBM’s earliest Hyperledger adopters.

The IBM blockchain pitch is ‘blockchain for business’ – and it starts with a declaration of what IBM’s not interested in: Bitcoin or other cryptocurrencies; or public, anonymous blockchains. What the company is focused on, however, underscored by its significant investment in the Linux Foundation’s open source Hyperledger project (and specifically the development of the Fabric blockchain framework and Composer tool for application development) is permissioned, private blockchains; blockchains that leverage existing roles and relationships amongst transaction participants, and that provide capabilities that make them useful way outside the cryptocurrency arena.

Hyperledger’s key features

The IBM / Hyperledger concept of a ‘blockchain for business’ is still one of a shared, decentralised, distributed ledger. However, rather than being public (as with Bitcoin et al), membership is collectively defined within the context of business relationships that exist outside of the blockchain. Hyperledger’s definition maps onto the notion of a business network – now supporting the concept of ‘channels’ that partition access, so that not all nodes on a network necessarily see all transactions, for example (which is essential for transaction confidentiality amongst multiple parties).

A choice of consensus models is also available (exploiting the fact that there should already be a degree of trust amongst parties in such relationships, and additional contractual measures can be brought to bear if necessary); and this negates the need for expensive computational ‘mining’ to provide transaction assurance. The business blockchain also makes extensive use of programmable ‘smart contracts’ (or ‘chaincode’, in Hyperledger parlance) to automate business processes (from which blockchain-based applications can be constructed, and integrations made with existing – more-traditional – business applications).

The IBM blockchain business

As a founding member of the Hyperledger project, IBM is committing considerable resource to further the development of key open source frameworks and tools; but it’s also building a business out of its blockchain interests. This sees it offering IBM Blockchain-as-a-Service on Bluemix (a Starter edition, for developers; and a full production environment, referred to as the Blockchain High Security Business Network or HSBN). IBM is also supporting Hyperledger implementations with a number of hybrid cloud solutions for security and storage; and deploying its professional services to assist in the piloting of proof-of-concept projects, and scaling solutions through to production.

The IBM blockchain experience thus far is that enterprise interest is currently in blockchain “as an adjunct to what’s already have in place” (as IBM’s VP for Global Blockchain Labs, John McLean, put it), designed to solve one use case part. Yes, there are start-ups planning to disrupt whole industries – from peer insurance, through community energy grids, to artist-led music publishing… but we’re a way off seeing any significant impact. Yet. So most businesses still feel safe enough just dipping their toes in to see how a blockchain implementaton might complement or extend their existing business models, and/or provide some cost and efficiency savings.

The bigger picture

Blockchain use cases beyond cryptocurrencies are currently shaking down into three main types:

  • Digital identities and personalisation – where the individual, rather than an intermediary, owns and controls unique identifiers that can be used to grant access to, or personalise, services, goods, and experiences.
  • Controlling access to / processing of data held elsewhere – the data itself doesn’t have to be encoded into the blockchain, but the blockchain can be used to facilitate control methods for access and processing into other workflows (such as individuals selectively granting healthcare insurers access to personal fitness data held in third party clouds, as per an example demonstrated by Swiss Re at the IBM event; or the management / transmission of ownership details across the vehicle licensing lifecycle, amongst an array of interested parties – from manufacturers through dealerships and leasing companies.
  • Asset provenance through transaction assurance in supply chains – so multiple parties across company, industry, and geographic boundaries can track goods at milestone points, and for example – through ingestion of IoT sensor data – log how they’re treated as well as where they are and when. A good example here is Walmart’s project to track food “from farm to fork” in China, to guard against spoiling and counterfeit products.

Once implementations of ‘blockchain for business’ become more widespread and proven, I think it’s very likely we’ll start to see whole new business models powering new market entrants, underpinned by enterprise-scale blockchain technology.

It’s rather like the cloud computing market was a few years ago. In its infancy, cloud computing was sold mainly as a means to cut storage and compute costs by scaling-out elastically in a highly cost-effective manner. What the move to cloud has brought some forward-thinking businesses, though, is the ability to transform their business and operating models, and how they engage with their customers. Cloud economics are fuelling a raft of innovations born of a fail-fast, fail-cheaply, fail-forward agile business-technology development posture.

With this in mind, our plan is to really dig into the blockchain topic over the coming months.

We’ll be exploring more of the evolving distributed ledger / blockchain technology space, along with emerging use cases. We’ll be scanning the horizon for signs of businesses harnessing enterprise blockchain technologies in ways that re-invent and re-imagine business processes wholesale; re-shaping the industries they play in.

We may not be paying for our dinner with Bitcoin any time soon; but that dinner may well come with a blockchain-powered assurance that the beef lasagne comes horsemeat-free.

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