IMB bets on Bitcoin project and invests heavily in developing "blockchain" software

IBM is becoming the biggest backer of bitcoin technology, saying it will begin testing its own transaction software, called blockchain, in the coming year, making life easier for customers who rent its hardware.

In an effort to establish a new standard for "blockchain" software, IBM Corp. on Tuesday said the software would be named "Hyperledger" and made open source and free.

The company also plans to introduce new services to help software developers build blockchain services for mainframes and devices using radio frequency identification tracking tags.

In addition, the company plans to establish a network of so-called "IBM garages" in London, New York, Singapore and Tokyo, through which customers can experiment with blockchain software.

IBM Chief Executive Virginia Rometty is expected to announce the company's plans at a conference on Tuesday. The company said two major clients, the London Stock Exchange and the Japan Exchange, are looking to use blockchain code to grow their businesses.

Not only Bitcoin, IBM is trying to promote blockchain technology to manage online transactions. Many companies including Nasdaq and JPMorgan Chase are also seeking to enhance the potential of the software.

Blockchain is gaining attention because it makes it possible for different entities to share information on a tamper-proof common platform, and technologists say many record-keeping systems that still rely heavily on paper could get digital alternatives.

IBM believes that blockchain technology could be used to coordinate different terminal systems. Other companies believe that it could be used to track stocks, real estate owners and settle international financial transactions. IBM senior vice president Arvind Krishna said: "I think the places where distributed platforms can be used are almost unlimited."

David Sica, vice president of NYCA, said that despite the many benefits of blockchain, there is currently a lack of data to measure its real-world practicality.

However, Sika expects that IBM's entry into the blockchain market will drive more companies to test the technology. "I think it makes a lot of sense for IBM to get involved, and it wouldn't be surprising if other companies eventually get involved," he said.

Krishna said IBM hopes that Hyperledger will make blockchain faster, more scalable and easier to use. The company also expects the software to bring more advantages to users of IBM hardware. The software can run on any machine running the Linux operating system, but Krishna also believes that the software will be at home on any IBM mainframe.

"A lot of enterprise customers have transaction systems on their mainframes, and the workload will definitely increase," he said.

Krishna said IBM's internal blockchain testing is limited in scale, but added that he hopes the company will have better ways to evaluate the technology by the end of the year.