How blockchain is reshaping the world of business

IBM Blockchain edited final

By Bridget van Kralingen, Senior Vice President, Global Industries, Platforms, and Blockchain for IBM

In recent weeks, the chorus of crypto naysayers, led by analysts, banks, regulators, and governments, has grown louder. But while the future of cryptocurrencies may be cloudy, one thing is crystal clear: The blockchain technology that underlies these new forms of currency is here to stay.

Digital currencies are just the first application of blockchain to go mainstream. Blockchain networks can record and manage any transferable digital asset representing goods or information — whether a share of stock, a streamed song, your healthcare records, or an international cargo shipment — as our work with clients has shown.

I believe blockchain, and the new business models that are being shaped by the technology, could democratize access to data and help improve trust and accountability across our digital economy.  

As this happens, major positive benefits for business and society will take hold.

Beauty in blockchain

While the blockchain technology used to power new cryptos may not be as sexy as the digital tokens that seem to triple in value in the blink of an eye, blockchain is serving as the backbone to explore dynamic new business models far beyond finance, from healthcare and food safety to government and global trade.

The beauty of blockchain rests on its ability to create a single, shared version of a trusted ecosystem. A distributed ledger, blockchain networks enable the verification and storage of transactional records to be divvied up among a network of computers. There is no central authority or middleman that transactions must pass through. Each node on the network has an exact copy of the record, making it near impossible for anyone to tamper with or change it.

Think about a collector buying a work of art, or a fine wine. These transactions may often rely on incomplete records and personal assurances. On a blockchain network, the buyer would be able to see the product’s origin and history of ownership, as well as the conditions it was stored in — a digital record of its provenance.

That’s the true power of decentralized, peer-to-peer systems. No single party controls the data. Knowledge and value are distributed among a network’s participants, harkening back to the early, idealistic days of the internet before a handful of companies gained control of our data and commercialized it for their own benefit.

An OS for trust

I like to think of blockchain as a new operating system for building trust. That’s why we are so excited about its potential to enable new models of collaboration and value creation for businesses, governments, and individuals.

However, for that to happen, important obstacles need to be addressed because not all blockchains are created equal.

For example, blockchain networks, such as those underlying popular cryptocurrencies, require a computationally intensive system of mining. That can slow down transactions and consume enormous amounts of energy, making it hard to scale. Also, the anonymous nature of these networks makes them inhospitable to broader use in business where a greater degree of transparency is required.

Another key attribute for broad blockchain adoption is the ability to create networks where members are known to one another and can define the level of sharing they are comfortable extending. In this permissioned environment, only relevant parties in a workflow may see the information, allowing businesses to conduct transactions while minimizing the risk of revealing confidential or competitive information and building trust and greater collaboration.

At IBM, we’re advancing blockchain networks that meet the real-world needs of business. Networks that include these four fundamental requirements: accountability, privacy, scalability, and security.

This is why the work by The Linux Foundation to advance Hyperledger is so vitally important. Their approach — enterprise-grade software built on open standards — has already attracted more than 200 organizations, including IBM, to advance cross-industry, interoperable blockchain software.

By sharing a foundational software layer we envision a world of multiple blockchains, public, private, or a mix of both. Participants can build applications to suit their specific needs, while being assured that their applications can work seamlessly with other blockchain systems as they evolve.

IBM has worked on hundreds of blockchain projects around the world that demonstrate the potential of this revolutionary technology and we’re now seeing a new blockchain-based economy take shape.

They range from supply chain applications that can track the provenance of goods from diamonds to mangoes, enhancing food safety and fair trade, to streamlining global shipping and cross-border payments. Some of the most encouraging uses of blockchain could potentially benefit the world’s poorest citizens by providing a bridge to the banking and financial system and validating property rights and ownership.

But reducing inefficiencies and friction in commerce is the low-hanging fruit. I believe blockchain technology will spark brand new applications and innovations yet to be dreamed up. On that, you can put your trust.

This post is sponsor content from IBM and was created by IBM and Insider Studios.

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