The tipping point for blockchain

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How did the modern world begin? Not with a bang, but instead with something most people have never even heard of: packet-switching.

Packet-switching is the idea that large messages can be transmitted more efficiently by breaking them up into small, identically-sized chunks. This seemingly modest idea paved the way for researchers and the Department of Defense to establish the Advanced Research Projects Agency Network (ARPANET) of connected computers at four different universities. Packet-switching allowed Leonard Kleinrock, a young computer scientist at the University of California Los Angeles, to send the simple message “LO” to a computer at the Stanford Research Institute in 1969. What’s interesting about this story is that the full message was intended to read “LOGIN,” but the system crashed after the first two letters. Though no one involved in ARPANET could have predicted it at the time, but the world would forever be changed by this first rudimentary, and flawed internet communication.

I feel the world is on the brink of another ARPANET moment, perhaps even an inflection point, which will directly affect the way people do business. This moment is blockchain. Companies are now seeing the potential real-world applications of distributed ledger technology as it comes to life and are demonstrating how they can exchange digital assets across geographies. In my conversations with business leaders, there is a tangible excitement about blockchain for business, leading me to believe its widespread adoption is not only possible — but also inevitable.

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The recent blockchain session at IBM PartnerWorld was standing room only, overflowing down the hallway. In three recent surveys by the IBM Institute of Business Value of those surveyed, 14 percent of government institutions, 14 percent of financial markets institutions and 16 percent of healthcare respondents, all plan to have blockchain in production at scale by the end of this year.

So now the major question is how will businesses get there? I believe the answer lies within one word: collaboration. No one person or business controls blockchain technology, and no one person or business can or should develop all of the promising distributed ledger applications that can ultimately create the “Internet of Transactions”.

The community working to create new blockchain applications fiercely believes in open-source technology, learning from one another and building on the discoveries of others.  At IBM, we share those beliefs. The stronger the network of people working on blockchain solutions, the faster businesses can adopt and benefit from the technology. However, we also understand the complexity required to develop products and applications that can scale rapidly. We have been tackling these challenges with our global clients every day for years, figuring out ways to meet the needs of businesses ranging from Wall Street financial institutions to Fortune 500 companies.

In developing the ecosystem of blockchain, IBM has launched the Blockchain Ecosystem, an environment which essentially marries collaboration with big-business expertise.   The ecosystem is a place where venture capitalists, startups, systems integrators, independent software vendors and enterprise developers can experiment with new ideas and gain access to helpful tools using Hyperledger Fabric as its foundation. And with IBM professionals offering their expertise and guidance through conversations on the Hyperledger Chat — these pioneers are never on their own.

We’ve already seen businesses join the Blockchain Ecosystem armed with innovative and leading edge ideas in which to leverage blockchain. Let’s take for example Everledger, a British company that uses IBM Blockchain to authenticate and trace the provenance of high-end luxury goods, such as diamonds and fine wine. Or The Hive, a venture studio that focuses on artificial intelligence and big data that is collaborating with entrepreneurs in the IBM Blockchain Ecosystem to bring new and interesting blockchain-based businesses into the world. Everywhere and every day, talented people are testing blockchain applications for use in a variety of different industries, from supply chain management to capital markets, manufacturing to healthcare, and more.

Like the ARPANET researchers, you cannot possibly conceive all the potential uses for blockchain. Imagine if distributed ledgers were used to verify the providence of food or provide a record of the votes cast in elections? Or what if they could distribute government aid or even make it easier for citizens to pay their taxes? The possibilities are endless and they are all right in front of us.

The upcoming release of Hyperledger Fabric v1 can accelerate this blockchain revolution. Fabric v1 will allow for multichannel transactions, which empower businesses with the option to keep the terms of some transactions confidential from other participants on the network. Multichannel transactions also run one root transaction through numerous different confirmation processes. For example, Fabric v1 can allow one group of peers to confirm the pricing and financial viability of a transaction while another group can confirm and track shipping details. What’s more, another group can handle insurance, and still others can check customs inspections. Blockchain is no longer a simple distributed ledger; it is beginning to develop the kind of complexity and nuance that makes it a useful tool for real-world business transactions.

Big things come from small beginnings like sending a truncated message “LO” from a computer in Los Angeles to another computer more than 300 miles away. It solves a problem, and it is the first step to solving many more, and that is the potential of Blockchain and tools like Hyperledger Fabric.

Join IBM Blockchain Ecosystem in building blockchain for business. There’s no limit to what we can do together.

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