IBM Presents its Take on Blockchain for Business
Evanston IL—CCN correspondent Eric Eissler covered a lecture at Northwestern University by Marie Wieck, IBM General Manager, Blockchain. Wieck covered the industry, the history of blockchain and talked about IBM’s Hyperledger project and how to tackle the challenges of digitization such as food-chain supply safety and digital identity.
IBM enters Blockchain
IBM started working on a blockchain project about 3 or 4 years ago by forming a unit solely dedicated to the technology with more than 1,500 employees. Wieck noted that “We can’t get enough people with skills in Blockchain” to fill all positions. She indicated that the industry is hot and needs talent. “Despite all the benefits,” she continued, “blockchain is very hyped and still very misunderstood.”
However, despite being hyped and misunderstood, Wieck went on to say that “on a lighter note, my view is you know you have arrived in a technology when there are Dilbert cartoons about [blockchain]. You have now passed the point of the hype cycle and [blockchain] is now in the common lexicon.” A rather interesting note is that most people focus on blockchain’s initial entry point and use case, Bitcoin. They associate anything blockchain with Bitcoin and that is not right. There is so much more to blockchain than Bitcoin and cryptocurrencies.
In Development: IBM’s Hyperledger
IBM entered into the blockchain world with the question: Is blockchain the next generation of transactions systems?
“What we have concluded from that,” Wieck explained, “is that, no, it’s really an answer to digitization and the process of digitization.” She continued that, “It’s important to understand the history of what blockchain is and what it isn’t.” She indicated that Blockchain has its origins in digital transformation and disruption. Wieck emphasized that “Blockchain is the answer to the 2008 financial and mortgage crisis. It gets at how you would create the same kind of model that you have in anonymous real-world trading but in a digital world.”
In other words, how can you have “cash” transactions on the internet? How can you reconstruct the market experience?
The real-world experience is that you go to a market and find a book, you know its value and you know the value of your money. You talk to the seller and come to terms, agree on the fair price, establish a value proposition, and then make the exchange. You did not need to divulge your identity, nor did the seller to make the transaction happen. The question is: How do you do that in the digital world? Today, you cannot do that anonymously because there is a mechanism that identifies you, your credit card, your wallet, etc. This is very true if there are cross-border transactions as there are more actors and agencies that will need to take part in your transaction. This is where blockchain comes in and eliminates the middleman.
Hyperledger Addresses 3 Challenges
IBM has looked at 3 major problems with using Ethereum as a base for its blockchain:
Proof-of-work (PoW): via mining is a high energy consuming process where 40% of the spend on blockchain was on mining in 2017. “there are other ways of solving the double spend problem without mining. We didn’t like that aspect of consuming a lot of resources without getting a lot for it, Wieck said.”
Permissions: “A lot of IBM’s clients want to know who they are doing business with and there are ways to provide privacy and confidentiality without being anonymous. The notion of having permissions and trust-anchoring of who you are working with, we believe, actually enhances the value of blockchains.”
Licensing Model: “IBM wants to use open source, it must be there for a new technology platform like this,” stated Wieck. This is very important due to the collaborative nature of Blockchains.
A year and a half ago IBM approached Linux to work on creating the Hyperledger project. There are now more than 200 participants engaged and it is the largest and fastest growing of all the projects in the Linux Foundation and is seeing a lot of traction in other places.
Food Chain Supply Safety
Walmart has partnered with IBM to build a map of the food supply chain to be able to track produce to promote safety in case of food-borne illness outbreaks. When outbreaks happen, it takes weeks to trace it back to the source. By using blockchain in completely connected supply system, it took only two seconds to trace the origin of the outbreak. For it to happen this fast, competitors will need to cooperate and share logistics information. Despite this need for industry-wide collaboration, IBM has been able to decrease the amount of time it takes to trace back the origin of outbreaks down to days rather than weeks without the blockchain technology in place.
Digital ID – How do you know it’s you in the blockchain?
Wieck posed the question: “How can you replicate going into a bank and producing an ID to transact digitally?” She pointed out, “If you think about it, by showing a driver’s license you are providing more information than you want to: address, date of birth, etc.”
IBM is working with Canadian SecureKey, which has a network of all of the major banks, the Government of Canada, and Rogers Communications to be able to verify digital identity. SecureKey is a triple-blind system that gives you ownership of your identity. If someone needs access to your identity to confirm a transaction, they will request only this specific information from you to transact. For example, you go to a bar, the bouncer will need to verify your age and showing a driver’s license gives away more information than needed. By using this blockchain, without providing more information than needed, your age would be confirmed. So, for other transactions, you would be able to provide only the information needed to transact and not more. Essentially, you take control of your own identity. Wieck drew a bigger picture by saying, “Imagine that you can control your own credit report and remove a third-party credit reporter that is vulnerable to hacks? It’s a much, much better system to keep your identity safe.”
During her more than 25 years with IBM, Marie Wieck has had a different technical and executive roles within IBM’s hardware, software, and services units. In January 2017, IBM named Wieck to her current position as general manager of blockchain. She is responsible for IBM’s participation in the Hyperledger project: an open blockchain ecosystem for developers and service providers.