The blockchain promise rolls on. The vision expands. Now blockchains will enable enterprises to reimagine their business networks, from financial markets to supply chains.
According to Arvind Krishna (senior vice president, Hybrid Cloud and director, IBM Research), blockchains will do for transactions what the Internet did for information. For example, in capital markets, use of blockchains will improve dispute resolution and settlement times.
Krishna identified blockchain’s ability to reduce “friction in transaction systems” as the technology’s core benefit. By removing factors that slow down or interfere with the efficient transfer of goods and services. What is really going to drive blockchain’s growth is its ability to go “outside the enterprise” and drive savings across every transaction. Krishna added “making it scalable, making it easy, making it possible for a lot more people to adopt the technology is where a lot of technologies and companies flounder.”
$300B of benefits and 3 principles for blockchains?
Krishna estimates that $300 billion in underlying costs of global commerce can be optimized with blockchain, across:
- capital markets
- supply chains.
IBM’s position is that for enterprises who want to adopt blockchain technology, there are three broad principles. Blockchain initiatives must:
- build in the open; this provides the transparency, interoperability and support required to enable adoption (As an IBMer he identified Hyperledger, the open source collaborative effort created to advance cross-industry blockchain technologies hosted by the Linux Foundation, as the best path forward to achieve strength and technical stability.)
- leverage permissions and identity so there are no anonymous participants in a blockchain network; data must be consistent and protected — a critical point for both enterprises and regulators alike
- form in a technology environment which enables security, confidentiality, auditability, reliability and scalability.
Krishna three examples of work IBM is doing with blockchains:
- Walmart for a food safety traceability pilot
- Maersk’s and digitized global trade platform
- DTCC’s Trade Information Warehouse service to manage record-keeping and payments in derivatives trading.
The lesson from these examples, Krishna argued, is that blockchains will improve the physical world as well as achieve GDP benefits for countries and profit growth for companies. Blockchain will do for transactions what the Internet did for information.
What does it mean?
Rapid adoption of blockchains in enterprises needs expanding ecosystems (it is no accident that IBM recently announced its Blockchain Founder Accelerator. Such ecosystems must leverage experience. If they do those who follow will learn from those who lead.
Reimagining business networks, as a concept, this delights. Whether it is practical amid ever more intensive enterprise competition is the question which remains unanswered.