IBM to invest more in Bitcoin technology

IBM is becoming the biggest backer of technology similar to the digital currency Bitcoin, according to the Wall Street Journal. In the coming year, the company will begin testing another version of its software that uses blockchain for transactions, providing a simpler experience for customers who rent IBM hardware, according to IBM.

IBM is building a new blockchain standard and said on Feb. 16 it wants to make the computer code it developed available to a free, open-source project called Hyperledger.

The company also plans to launch a new service to help software developers better build data blockchain services for host computers and RFID tag devices.

In addition, IBM plans to establish a network called "IBM Garages" in London, New York, Singapore and Tokyo where customers can experience its blockchain software.

IBM CEO Ginni Rometty will announce the company's blockchain project at a press conference on the 16th. The company said that two of its customers - the London Stock Exchange Group and the Japan Exchange - are exploring how to better use blockchain code in their businesses.

IBM's effort is one of many that are trying to use blockchain to manage online transactions in ways other than bitcoin, while several companies including Nasdaq and JPMorgan Chase are also exploring the potential of such software.

Blockchain has attracted attention because it offers a way for different institutions to share information in a public ledger of revenues and expenditures that cannot be tampered with. Some technology experts say it could one day be possible to replace many record-keeping systems in use today with a digital system.

IBM thinks blockchain could be used to coordinate back-end systems when it leases computer equipment. Others think blockchain could also be used to track stock or real estate ownership or process international financial transactions. “I think the adoption of distributed ledgers will make the space occupied by data nearly infinite,” said Arvind Krishna, a senior vice president at IBM.

But David Sica, vice president of NYCA, a venture capital fund focused on financial services technology, said all the interest in blockchain is just speculation and there is not enough data to measure its actual utility.

Still, Sika expects IBM's entry into the nascent blockchain market to drive more large companies to experiment with the technology. "I think IBM's entry into this space is a big deal," he said. "I wouldn't be surprised if these companies eventually push for productization like IBM did, because they've been doing it all along. These companies are surprised to be in production with a company like IBM because they have to deal with it for life."

Krishna said that with Hyperledger, IBM intends to make the blockchain faster, more compact and easier to use. IBM also expects it to provide more benefits to users of IBM hardware. The software can be used on all computers running the open source Linux operating system, but Krishna said he believes the software can be used not only on IBM mainframes but also on some low-end systems.

"Many corporate customers use their own trading systems on the mainframe," he said. "This will definitely increase the workload of the mainframe."

Krishna said IBM has done some internal testing of blockchain, but he hopes that will allow the company to find more ways to measure the benefits of the technology by the end of this year.