By Jerry Cuomo, IBM Fellow
The Internet has radically changed how we interact with each other and conduct business.
What hasn't changed, however, is the basic mechanics of how people and organizations execute transactions with each other.
Until now.
Blockchain has the potential to become the technological foundation for all electronic transactions conducted over the Internet. Although blockchain was originally designed to provide trust and security for trading with newly emerging cryptocurrencies, the technology enables a trustworthy digital record of asset ownership.
Here's how blockchain works: It's a distributed ledger shared via a peer-to-peer network. Each participant has a copy of the ledger’s data, and additions or changes to the chain are propagated throughout the network, but only after the parties in the transaction agree to the changes. This approach enables participants to eliminate much of the review and verification that adds to the cost and time it takes to complete transactions.
At the same time, blockchain provides transparency. All of the participants have insight into the transactions that have taken place. Sharing ledgers in sync worldwide ensures that assets can be tracked almost instantly with a high degree of trust.
To help developers quickly begin exploring the use of blockchain in the enterprise, IBM this week made several announcements to rapidly advance the use of distributed ledger technology across multiple industries. New blockchain services on IBM's cloud platform, as well as plans to offer blockchain engagement centers (called Garages) in London, New York, Singapore and Tokyo, underscore our recent contribution of nearly 44,000 lines of IBM developed bockchain code to the Linux Foundation’s open source Hyperledger Project.
As a founding member of the Hyperledger Project, our contribution was developed through the collaboration of more than 35 of our IBM Researchers and software developers dedicated to the Linux Foundation project, and more than 100 technical architects focused on making blockchain ready for business.
We believe that only a cross-industry, open standards approach can move blockchain more rapidly into mainstream use by helping developers easily build secure distributed ledgers that can be used to exchange most anything of value.
The open source model ensures interoperability. By sharing the foundational layer, the participants can focus their efforts on creating and refining industry-specific applications, platforms and hardware systems to support their needs. These industry-specific or functionally specific extensions of the technology will be created and governed following the same principles.
In terms of security against fraud, it's easy to see the integrity and creditworthiness of any tradable asset. The benefits are that for anyone involved in trading or pricing assets, the system reduces cost and complexity, creates shared trusted processes, improves visibility and enables trusted record keeping.
Blockchain technology can make a difference whenever valuable assets are transferred from one party to another even though the technology began as with the trading of cryptocurrencies.
Now blockchain can be used to record virtually anything of value, or any tradable asset. Such assets could include a will, a deed, or almost any type of secure transfer of information or smart contract. Even so, blockchain lacks some critical capabilities for wide by businesses.
It has been technically challenging to use until now. Technology companies and banks are currently investigating various versions of distributed ledgers. Banks, investment banks, financial marketplaces and insurance companies are the pioneers in exploring the possibilities.
Blockchain technology, used properly, can provide the same kind of openness and efficiency we have come to expect in the Internet, to the new era of transactions.
Jerry Cuomo is an IBM Fellow and Vice President of Blockchain Technologies, IBM Systems.
To learn more about the new era of business, visit ibm.com/outthink
