At IBM Research – China, the idea of enterprise blockchain is spreading rapidly among scientists, as we try taking the technology behind bitcoin to the next level with industry applications and transformations.
The blockchain concept is about creating trust amongst multiple parties. In the same way the internet transformed the distribution of information, blockchain can fundamentally reshape business relationships based on trust and affect positive change in the business world. Permissioned blockchains enable transparent collaboration for all verified parties within the network, eliminating the need for third-party verifications. Given China’s increasingly digitized world of transactions, the need for increased transparency and trust is more important than ever.
From the start, financial institutions have been the primary enthusiasts of blockchain. But it’s not just banks and fintechs that are scrambling to adopt the technology. In fact, organizations in a wide range of industries such as retail, media and entertainment, healthcare and more are recognizing the value blockchain brings to them.
Open trading grounds for loyalty points
Take loyalty points for example. Annually, roughly $4 billion USD or 28 billion RMB worth of loyalty points are allocated to banks in China. Points can typically be used for exchanging gifts or rewards, but because these points are not freely exchanged among banks, less than 50 percent will be redeemed. Imagine if points can be used at a convenience store to buy daily essentials like toothpaste, water, soda, or exchange them at Starbucks for perks. This cannot be done today. To address this point of friction in the consumer space, IBM partnered with China UnionPay to bring all banks together onto a permissioned network. Now consumers worldwide can redeem their loyalty points anywhere, anytime.
Open network for emissions allowances
The decentralized yet permissioned blockchain network enables individuals to carry out complex models of exchange almost instantaneously, instilling trust where there previously was none. Today in China, blockchain is ushering in a new era of applications in green fintech based on transparency, trust and accountability. A recent example comes from a partnership between IBM and the Beijing Energy-Blockchain Labs, a collaborative innovation to establish the first blockchain platform for carbon trading in China.
China has established carbon emission trading system to address climate change since 2014. The market for global Carbon Asset Trading will reach towards $3.5 trillion by 2020 and China will become the world’s largest carbon trading market.
Under carbon asset trading, major emitters can purchase additional emission allowances from enterprises with lower emissions. The resulting fund can then be invested to develop sustainable technology. This orchestrated effort involves multiple parties. At best, it takes at least 10 to 14 months to complete the process.
Blockchain can help enterprises reduce processing time to just three to six months. It synchronizes the information of every participating party in the network, adding increased transparency and permission where needed. Once a transaction is entered, it cannot be altered.
The data, however, is 100 percent traceable and available to all participants to track in real-time.
In a world of vulnerabilities, where business transaction remains inefficient and expensive, blockchain becomes a secure and flexible alternative for major institutions. There is an unmet need for a transparent network of exchange in China. Blockchain can not only enable enterprises such as credit card companies and banks to create new business models, but also transform industries with increased trust and efficiency.