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The impact of disruptive digital technologies like artificial intelligence and blockchain goes well beyond finance and payments, touching all aspects of the real economy. This is an underappreciated fact, and it’s what makes these technologies so exciting.
Now, a new application developed by IBM Research that fuses artificial intelligence into blockchain opens up further possibilities for us to transform industries. We’re taking blockchain to another level in our work with Everledger, a global startup that uses digital ledger technology to reduce fraud in the multi-billion dollar diamond industry.
As I explained in a recent keynote talk, diamonds depend on certificates of authenticity and origin that are still largely paper-based. As a result, this information is more vulnerable to tampering. It also poses a major challenge to regulators trying to prevent the flow of “conflict diamonds” into the market, which are used to fund armed insurgencies.
With Everledger, we set out to strengthen the integrity of this process by leveraging IBM Watson to incorporate artificial intelligence into the blockchain. Everledger built a platform in just two years with more than one million diamonds on the blockchain. IBM Research created a new approach to help ensure that all of them are authentic and compliant with thousands of regulations, including those imposed by the United Nations to prevent the sale of conflict diamonds.
In an industry first, we’re directly analyzing data within the blockchain where it resides. In this way, we can eliminate the need for the data to be extracted for analysis, which makes it more susceptible to fraud. Watson cognitive analytics are performed directly on the blockchain, cross-checking a myriad of regulations and records as well as supply chain and IoT data, including time and date stamps and geospatial information.
No longer will humans have to spend countless hours checking reams of paper regulations and certificates to ensure a diamond’s authenticity, compliance and worth. Everledger believes the system can eventually be applied to a whole range of high value goods; everything from priceless works of art, to rare wines, to automobiles.
The amount of digital experimentation taking place within companies like Everledger and other trailblazers is truly impressive. And it is deeply encouraging to all of us who believe in the incredible potential of pairing IBM Watson with blockchain.
At the same time, we know that a few successful projects will not inevitably lead to the kind of scaling needed for the solution to become widespread. For that to happen, we will need to “cross the chasm,” a phrase coined by the author Geoffrey Moore in his classic book by that name. We must span the gap between the early visionaries and enthusiasts and the next, critical wave of adopters known as “pragmatists,” who require much greater assurances of the value of disruptive technologies to their specific needs.
That’s a big, fascinating challenge given the multitude of potential use cases for AI and blockchain together. Getting over the chasm demands sustained innovation, focus, and the right go-to-market strategy. If we succeed, as I’m confident we will, we can make a tremendous impact on the world.