How Blockchain Ledger Technology Is Coming of Age
Most people know alternative currencies such as bitcoin make use of a distributed transaction ledger technology called blockchain. But what isn’t well-known is how numerous businesses are investing heavily in blockchains for noncurrency applications.
Blockchain Technology Poised to Grow
Last month, the Linux Foundation announced a major new initiative called Hyperledger, which will create one of the largest open-source projects ever attempted. The goal is to build blockchains with a series of standard protocols and processes that could be used by a wide variety of industries both in and outside of the financial services sector, including manufacturing. The first set of computing partners includes IBM, Intel, VMware and Cisco, among dozens of other companies.
I spoke to IBM’s John Wolpert, the company’s global blockchain offering director, about this effort. He is responsible for engineering products and open-source initiatives and has been involved in other IBM initiatives in the past, including running the groundbreaking alphaWorks organization and the Extreme Blue incubator lab. Wolpert is keynoting a blockchain conference in February in San Francisco.
It wasn’t all that long ago that many banks and other traditional financial institutions “were hesitant to be associated with blockchains because of bitcoin,” said Wolpert. But all that has changed in the past several months. “Now people are talking about how they can use blockchains without endorsing any shadow currencies, and everyone is excited. It has gone beyond being a fad.”
The Linux Foundation’s announcement stated that Hyperledger will “free developers to focus on building robust, industry-specific applications, platforms and hardware systems to support business transactions.” That means that “applications can be built on top of this industry-standard fabric,” explained Wolpert.
Eventually, code for Hyperledger can be downloaded from Github, just like other open-source software. “There are going to be lots of people who will compete on providing solutions,” he said. “We will try to get the best minds across the industry to work together on this code.”
How IBM Is Getting Involved
IBM will eventually have hundreds of developers working on various blockchain projects. Wolpert likened what IBM is doing here to what the company did with Java. “It wasn’t our technology, but we got behind it and put an army against it. At its height, it was in the thousands that were working on Java-related projects.”
When Hyperledger is available, “developers will be able to deploy on the IBM Cloud, among other places. We intend to be the best place and fastest place to get blockchain technologies running.”
Wolpert made the point that the work on blockchains is “firing live ammunition” and not just sending a bunch of emails between interested parties. “This is more than peer file sharing because we are moving assets on a massive scale in ways that we never thought of before and doing so automatically and without any human intervention. It isn’t just the data, but using the transaction log of the data in new and interesting ways.”
Going Beyond Banking
While the financial implications are more obvious due to the popularity of bitcoin and other cryptocurrencies, there are many other nonbanking uses of blockchain technology. Wolpert talked about scenarios in which manufacturers will be able to identify defective parts, such as what is involved in an automobile recall, and be able to locate a specific part that is used in particular car makes and models without having to physically examine numerous cars.
“This could reduce a recall of a million cars to a few dozen that are actually affected because OEMs don’t have to share proprietary information and can just participate in the ledger,” said Wolpert. “We could have a car part blockchain that is online and that the safety board could query and discover the part’s actual locations. Once you have that, this blockchain can become the foundation for a supply chain network for other purposes.”
It is an exciting time to see how blockchains can break out of their initial role with cryptocurrencies and become the foundation for deeper supply chain business networks.