|
Many people have heard of the cryptocurrency Bitcoin, but few understand its underlying technology, blockchain. Thanks to IBM and other companies, that situation will soon change. Jerry Cuomo, vice president of blockchain technology at IBM, explained that blockchain can completely change the way businesses interact with each other and solve traditional business connection problems, such as electronic data interchange (EDI). IBM Systems Magazine (ISM): Could you briefly introduce Bitcoin and blockchain? Jerry Cuomo (JC): Due to people's misunderstanding of cryptocurrency, it is urgent to popularize knowledge of blockchain technology. However, the application potential of blockchain is not limited to the financial field. Bitcoin is an interesting thing; it uses blockchain technology, a global network of cryptocurrency. Therefore, the business application of the blockchain design model is very wide. Bitcoin is based on a distributed ledger system, in which transactions are verified by the community of users. Of course, the community of users is an important part of the blockchain system, and each user has an identical copy of the ledger to ensure the authenticity of its contents. The visibility of transactions depends on how the blockchain is deployed. This design pattern is very interesting. It is well known for Bitcoin, and we hope to further popularize this technology by developing business use cases, such as supply chain and post-trade settlement, which are all related to economic activities. Blockchain can provide participants with unique business perspectives that we have not imagined before. We admire the developers who created blockchain and Bitcoin because they stand on the shoulders of giants. In the more than 20 years of computer science development, major breakthroughs have been made in the field of distributed computing. These advances have made blockchain and Bitcoin what they are today. We also stand on the shoulders of blockchain creators, but at the same time we have summarized new perspectives and views.
ISM: Can you give some specific examples? JC: Bitcoin is actually an anonymous network, so the participants of the Bitcoin network do not know each other's identity. But if the blockchain is to be put into commercial use, the identities of the participants must be interoperable. Therefore, we introduced the concept of private blockchain. Private chain is still a kind of blockchain, but the management method of network participants is different. Each participant must obtain a certificate issued by us to prove his identity. You can think of this network as a VIP club. Some users can issue transactions, but only a few can verify them. There is also a 'timekeeper' in the network who ensures the correctness and validity of timestamps and transaction order. Some members can run transactions, while the majority can vote on the validity of transactions. Therefore, the private chain we launched can completely change the rules of the game while allowing more business participants to enter, and the whole process is regulated. Authorization and control are important. The Bitcoin blockchain does not have the characteristics of privacy, confidentiality and auditability.
ISM: Are all of the above things that you mentioned part of the IBM blockchain software fabric? JC: Yes. About a year ago, we briefly studied several major open source blockchain projects and carried out proof-of-concept projects with customers in the Bitcoin blockchain network. We wanted to have a deeper understanding of the technology and its potential, but we found that most blockchain projects were obscure and difficult to communicate. So we decided to develop a new blockchain system ourselves. Then, a group of IBMers came together to develop a private chain system that is private, confidential, and auditable, and this system retains the basic principles of blockchain, including distributed ledgers. We then contacted the Linux Foundation. Because we believe that the only way to popularize blockchain depends on the public nature of the technology and the cryptographic P2P interaction. Industry regulators must understand this technology, and open source is the only way. We found that many companies coincided with us, and they all found the Linux Foundation, hoping to deploy blockchain business use cases in the same way. So we decided to launch the Hyperledger project with the Linux Foundation. We contributed about 44,000 lines of blockchain code written in recent months, IT permissions, and related patent applications to this project.
ISM: Can you elaborate on the application of shared ledgers in supply chains? JC: Let’s assume that several companies in a supply chain are willing to create and manage a blockchain network. The first step is to create the entire business network. The location where the participants store the shared ledger is critical, and our IBM cloud, also known as blockchain nodes, can solve this problem for them. If participants want to get a node, we can provide rental services and run the node on their behalf. For example, someone wants to ship goods stored in containers to other countries. Shipping companies are definitely part of the supply chain network, and they must ensure that the goods in the container pass customs inspection smoothly. Customs can verify directly on the chain to confirm that the goods have arrived at the port. Thanks to the application of the Internet of Things (IoT), the location and information of the container are verified and registered before it is sent to the border inspection. This saves the logistics company time. In addition, in this way, all participants in the supply chain can recognize the authenticity of the process because the records on the blockchain are unchangeable.
ISM: How complicated is it to build a blockchain network? JC: In general, achieving this goal requires a lot of work. A blockchain system involves all participants in the supply chain and even regulatory authorities, and coordination between the two parties takes time. But compliance is the prerequisite for establishing a blockchain system. A multinational company, such as IBM, has branches around the world submit reports to the headquarters in the last quarter of each year. The reports of each branch must be consistent with its actual situation. To ensure the authenticity of the records, the compliance officer must also participate in and understand the entire reporting process. Therefore, for this reporting process, we have established an internal shared account book. In this way, when reporting every year, our CFO does not have to verify each one. Blockchain can enrich existing business systems and reduce potential risks and disputes. Perhaps your company's current business processes have loopholes, and blockchain can help fix them. Blockchain reforms are mostly "gentle" and will not completely replace the traditional system that has existed for more than 30 years.
ISM: In IBM's view, is blockchain still in the experimental stage or can it be applied in real life? JC: JPX announced a number of projects with us. Our clients avoid using the term “proof of concept” to describe their projects, preferring instead “first project” because they don’t want to appear outdated. This is evidence that attitudes are changing.
ISM: Has IBM Bluemix already deployed blockchain technology? JC: Absolutely. We have deployed the first IBM blockchain cloud service specifically for developers to help them develop blockchain technology in a sandbox environment. Through this service, they can run our sample programs to study better deployment solutions.
ISM: What technologies can blockchain replace? JC: Let's take a multi-party interaction or transaction as an example. Information exchange between enterprises is usually done in this way: the information to be transmitted is ultimately derived by querying the own system of record (SoR) and the back-end system. The two companies record their own version of the facts in their respective systems of record, and then exchange information to synchronize or correct them. But if there are three, four or even five companies involved in the supply chain, the operation of electronic data interchange technology is quite complicated. But it is more convenient if each participant can be in a shared ledger. Each participant has a copy of the ledger and can view it at any time, so there is no electronic transaction involved. Systems such as electronic data interchange will gradually be eliminated because P2P is the trend of communication and exchange between enterprises.
| 
