This week on Chain Reaction we had a chat with Dave Gorman, Global Blockchain Labs Enablement at IBM. We discussed the need for greater interoperability, simplification and ease of use in blockchain technology, and why blockchain might make dodgy spinach a thing of the past:
IBM has been pioneering a number of projects in the field of blockchain – what do you see as the primary advantage of blockchain over existing technologies?
IBM has been in the transaction processing and enterprise arena for decades. When we started looking at blockchains, we began to realise how the technology could be used across a decentralised network to ensure trust. This, for us, is the key advantage of blockchain – a distributed, cross-enterprise, cross-network model across multiple organisations with built-in trust and no need for a single trusted authority. There have been many waves and technological revolutions in recent decades and we believe Blockchain is the next one which will go on to make a real difference.
Each of the current major players in the blockchain marketplace has its strengths and weaknesses – do you see a market leader emerging or is it likely that eventually we will see more interoperability between these systems?
Interoperability will be massively important as we go forward. IBM has been working very closely with Hyperledger as a premier member of the project. The reason we decided to become part of the project goes back to our initial discussions with companies about blockchain. Many companies were attracted by the idea of a decentralised trust network and by smart contracts but they were less interested in, or even put off by, the idea of cryptocurrencies and proof of work. These aspects were seen as a barrier to moving ahead with the technology – especially when you are dealing with heavily regulated sectors like banking or government services, which are subject to money laundering regulations and have a strong need for privacy and knowing the identity of other parties in a network.
As a result of this feedback, IBM approached the Linux Foundation, since we had worked successfully with them in the past on open standards. We found a number of other companies were also approaching the Foundation at the same time which gave rise to the creation of Hyperledger, with IBM as a founding member. A set of technologies is now coming out of the project which are suitable for cross-industry use but not reliant on proof of work. This is not to say that public blockchains are not useful – they are clearly becoming very successful in the marketplace. In the future, I am sure we will see linking between both private-private and public-private blockchains. Blockchains will become a toolbox with different options for different uses.
At a recent event we both attended at Tech UK, there was a lot of discussion around both applications of blockchain in the energy sector and about smart cities. Can you tell me a bit about the types of projects you see happening as a result of the implementation of blockchain-based technologies outside of financial services?
About a year or so ago, the discussion about blockchain technology was largely dominated by financial services companies and regulators, governments and central banks. Being aligned to the technology rather than to any one industry has allowed me to see other use cases and applications coming onstream outside of these areas. For example, IBM has been working with Walmart on the provenance of food in the supply chain. The project came about partly as a result of previous outbreaks of salmonella in the US which came from pre-bagged spinach being sold in supermarkets. In these instances, it is very difficult to work out where the problem has arisen in the supply chain. Eventually all spinach had to be recalled from the shelves until it turned out that the infected spinach came from one small farm. This caused a significant reaction from the public and had a major impact on the US stores involved. We also have had similar food scares here in the UK, such as the horsemeat scandal. As a result of thinking about these problems, Walmart and IBM began working on tracking food provenance using blockchain, which now allows us to track the food directly from the farm to the end consumer.
This sounds like an amazing innovation, which many other industries can also benefit from?
Yes, the same type of approach is being applied in shipping too with Maersk and IBM now running a live blockchain pilot. When you are dealing with vast numbers of shipping containers, not to mention their contents, which may be subject to spoilage, this type of approach can offer enormous cost savings and efficiencies. Many of the processes involved are still manual such as hand delivering certificates to the port authorities – around 15% of costs come from the paper trail. These paper processes which have been built up over decades are ripe for innovation. If you are able to then combine blockchain with other technologies like smart contracts and Internet of Things (IoT) sensors which can monitor weather conditions, humidity, and temperature, suddenly you are opening up even more possibilities – not just cost savings but new services too. A client might be able to refuse a shipment or pay less for a product if the shipment is going to be delayed and food spoiled due to bad weather, or companies might be able to do a series of micro-payments as the goods move around the world, or car manufacturers could easily target and recall faulty components if a problem is discovered. Supply chain management is getting a lot of interest because it really meets the requirement for a blockchain use case.
How can we solve the problem of the lack of experience Blockchain developers in the industry? Isn’t this a barrier to moving ahead at speed?
There might, however, still be a skills shortage in system architecture and project management. In some of the large global consortia and multinational projects setting the rules of the game will be very significant as competitors may need to be collaborators on the same network requiring different levels of control at the consortium level versus the organisational level. This is not necessarily a technical problem as such but more of a business decision requiring a high degree of project management experience and skill.
What would you like to see happening in the application of Blockchain technology that is not happening right now but could be possible in a few years’ time?
This technology is still young but there is already so much potential for the technology as it stands today. What is most needed at the moment is actually some simplification – of usability, of terminology and of how to interact with blockchains. The explanation I gave earlier of being able to model a project is a good example which provides potential users with a greater level of comfort.
The growth of interoperability and standards is also important – particularly the work being done by the International Organization for Standardization (ISO) and the UK standards group, BSI. This will help the growth of the technology as a whole. It’s not yet clear whether all blockchains will be geared to a standard but this work will help the general direction of travel. The growth of voluntary co-operation by the community on standards is helpful too. Longer-term there is room both for really blue sky thinking and also work on the more pragmatic aspects. There are clear issues in different industries that we can use the current set of features offered by blockchain technology to fix. The end user may not always need to be aware they are using a blockchain but the customer will benefit from greater efficiency.
Looking 5-10 years ahead, we may see a very different outlook where blockchain really develops into the online network of transactions akin to the current internet of data. The societal impact of this could be huge – from banking the unbanked to enhancing the way we do charitable giving. Seeing beyond business approaches, the ethical and societal impact of blockchain technology are both important and exciting.
You can find Dave on Twitter.
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