IBM and its blockchain development roadmap

IBM is investing heavily in blockchain technology research and development to reshape the development of core industries. Here, we will detail several examples of how IBM uses blockchain technology to help business development and provide an expected analysis of the related economic benefits. Most investors believe that blockchain and Bitcoin (digital currency) are the same. However, most people do not understand the fact that blockchain is an "infrastructure" service and Bitcoin is just one of many applications. IBM is investing heavily in blockchain research and development to influence the development of core industries.

Blockchain Basics

Blockchain is a new technology that enables enterprises to communicate, trust and collaborate with each other. Blockchain is a distributed shared operating system where all nodes involved in transactions jointly maintain an unalterable transaction ledger. Each node involved in accounting has a copy of the transaction record, and these transaction records are trusted by all nodes. In theory, blockchain can simplify business processes while also ensuring credibility and transparency.

Blockchain Industry

There are no clear figures on how many companies are using blockchain, but the IBM Institute for Business Value released some data a few months ago:

• 70% of early adopters use blockchain to create new business models and attract new customers;

• 65% of banks expect to have blockchain solutions in place within the next three years;

• 80% of banks will redefine trade finance and corporate loans through blockchain technology, and have great potential to influence the development of their core industries;

• 15% of banks intend to fully implement blockchain business solutions in 2017;

• The following areas will be the areas where companies most expect to use blockchain technology to change: data processing (83%), retail payments (80%) and consumer credit (79%).

Another recent market forecast study shows that the blockchain industry will grow from $210 million in 2016 to $2.3 billion in the forecast period of 2021 (61.5% CAGR). Therefore, blockchain is in its early stages of development, but it does have huge potential to create business value.

Data on the market and companies involved is limited, but based on the article, IBM and Microsoft are both expected to be market leaders. IBM has demonstrated how they implement blockchain. We will also contact Microsoft to see if they are willing to demonstrate related projects.

Industries that blockchain will reshape

Food safety

Food safety is one area of ​​concern. Traceability of food is a challenge in China, and Walmart is using new technologies to proactively address the problem. By using blockchain, Walmart has built a trusted partner supply chain ecosystem.

Health Care

As medical organizations have the need to share patient information while focusing on user privacy, security, and continued prevention of cyber attacks, there is an increasing need to strengthen personal privacy, security, and reliable information flows in healthcare. Applications using blockchain technology can improve medical information processes and establish an ecosystem in the emerging digital industry.

Fintech

Banks and consumers are turning to fintech companies to reshape the entire financial industry. The rise of fintech is accelerating innovation in the payment and lending sectors, while also bringing new opportunities for blockchain. IBM is building a new blueprint for fintech by providing developers with tools, technology, training and programs to build and apply these new blockchain solutions. IBM's cloud ecosystem is helping fintech, startups, developers and software vendors to develop and design more agilely. For example, Singapore-based Eigencat startup uses IBM Bluemix cloud platform services to provide digital investment solutions for the financial market. The fintech company also uses Watson interfaces on IBM public cloud to develop cognitive-based intelligent investment solutions to expand its market share in Singapore. Another startup, FreshTurf, has pioneered a blockchain-based warehousing logistics and shipping express delivery network in Singapore by working with Singapore's BlueMix Garage cloud platform.

Several other IBM applications in the blockchain industry

• SBI Securities – A new securities trading platform and a test blockchain to improve the security of securities transactions.

• Japan Stock Exchange – Applying blockchain to low-frequency trading markets;

• Bank of Tokyo-Mitsubishi UFG – Using blockchain networks to manage and enforce business contracts among business partners;

• London Stock Exchange Group – exploring how blockchain can be used to manage trading risk and bring transparency to transactions in global financial markets;

• Kouvola Innovation – Using blockchain to transform the logistics value chain into a more cohesive process, providing a trusted view of the flow of every shipment;

• Kenya - The government is using blockchain to develop an immutable education management system. In order to reduce degree fraud and limit the black market for illegal diplomas, the Kenyan government is working with IBM to build a diploma issuance platform on the blockchain network;

• Points swap platform Arkea – uses blockchain to manage customer identity authentication, know your customer (KYC), and improve customer satisfaction; Bank of New York Mellon – designed and developed an asset lending application that uses the blockchain network to trade and transfer assets;

• Mizuho Financial Group – using blockchain for virtual currency settlement;

• Everledger - uses blockchain to track the production chain of diamonds and other valuable treasures;

• CLS Group – Collaborating with IBM to build a resilient, secure, and scalable payments network using Hyperledger Fabric.

IBM's investment in blockchain

IBM recently announced at its global headquarters in Munich that it will invest $200 million to develop Watson networks for IoT-related businesses. IBM is developing a new function through the Watson IoT platform to connect IoT-related data in blockchain ledgers. In addition, IBM has opened a blockchain innovation center in Singapore and has collaborated with the Singapore Economic Development Board (EDB), the Monetary Authority of Singapore (MAS) and IBM Research for the first time to accelerate blockchain innovation in finance and trade.

IBM's profit model for blockchain industry

IBM is using its Bluemix cloud platform technology to provide users with blockchain solutions. The platform offers two types of product services: the trial plan is free, but the more advanced security system is priced at $10,000/month. We contacted IBM and asked if they could provide financial data on their blockchain business operations, but they responded, "No financial data for IBM's blockchain business can be provided at this time." We attribute this situation mainly to the fact that IBM's blockchain business is still in its early stages of development and will not have a significant impact on IBM's profits. The global blockchain industry was valued at about $210 million in 2016, and this field is not yet critical to IBM. At the same time, according to our speculation, IBM now has about 50 paying users, generating about $6 million in revenue each year, plus other auxiliary revenues totaling about $50 million per year.