IBM: How Blockchain will change business and society

The Linux operating system began with Linus Torvalds's sudden inspiration for a better way to connect his computer to the school's computer system. Now the Linux operating system is one of the mainstays of the 21st century economy. Linux has proven that we need the power of open source software to change the world.

Today, the Linux Foundation, a nonprofit organization that promotes mass innovation through open source, is launching an initiative along a similar trajectory. It has announced an open source project to realize the vast potential of blockchain.

Blockchain is a new generation of transaction processing application technology that builds trust, accountability and transparency while streamlining business processes. Imagine an operating system for interaction. It has the potential to greatly reduce the cost and complexity of doing things.

Open source is an essential model for developing blockchain technology, which will enable a large number of organizations to gather around it and gain all its advantages. Because of the open source rules, participants can trust that the technology will meet their needs, comply with industry standards, and ensure interoperability between blockchain applications. In addition, by sharing the basic layer, participants can focus their energy on the application systems, platforms and hardware systems of specific industries to support their business.

We believe that the best path forward for blockchain is for high-tech industries, governments and the business community to unify their efforts on an open source blockchain infrastructure, with transparent and collaborative governance. We also believe that an organization will be better served when it uses industry-specific or functional technology that is created and governed by the same principles.

For these reasons, we at the Linux Foundation launched the Open Ledger Project. Other early contributors include Accenture, ANZ, Cisco, First Credit, Deutsche Börse, DAH Digital Asset Holdings, DTCC, Fujitsu, IC3, Intel, JPMorgan Chase, London Stock Exchange Group, Mitsubishi UFJ Financial Group, R3, State Street, SWIFT, VMware, and Wells Fargo.

In addition to signing on as a founding member, we are developing an enterprise-grade blockchain software architecture, a term often chosen by the high-tech industry to describe this new architecture. We plan to promote new projects on the architecture and develop related intellectual property. In addition, IBM is helping our clients discover what blockchain can do for them and develop products for specific industries or across industries.

Blockchain began its development as a key element of the cryptocurrency Bitcoin, but it has proven to be a unique technology that allows valuable assets to be transferred from one place to another whenever needed.

In essence, blockchain is a distributed ledger shared via a peer-to-peer network. Each participant has a copy of the ledger data, and with the consent of both parties to the transaction, the transaction data can be propagated, added or changed across the entire network. This approach exempts participants from a lot of review and verification, which increases the cost and time required to complete transactions.

Blockchain also has many uses in business and society. Banks, investment banks, financial markets and insurance companies are pioneers exploring many possibilities, but its potential applications extend far beyond the financial services industry.

One of the more intriguing applications of blockchain is供应链管理, which is relevant to nearly every business and government agency.

Those responsible for corporate supply chain management must manage relationships with a large group of suppliers and also know what's going on with their suppliers' suppliers. They must handle not only financial transactions, but also plan and manage every step in the process of bringing a product or service to market. But because of all these independent but related interactions today, there is a lot of overhead, time delays, a lot of costs, and the possibility of errors.

Now, imagine blockchain being used in supply chain work. For example, an aircraft manufacturer, in order to holistically manage all its suppliers of parts, could create a blockchain-based system. Involving a new aircraft model, all suppliers would share exactly the same information at every step of the work: planning, designing, assembling, supplying and maintaining it. At the same time, the manufacturer would use other blockchain-based systems to manage financial relationships and connect transactions at each step.

Thanks to blockchain, trust and accountability can be built into the supply chain. Then there is compliance with government regulations, as well as compliance with internal rules and regulations and processes. The result: reduced delays in cost and time, improved quality, and reduced risk.

Over the past two decades, the Internet has revolutionized business and society, making individuals and organizations more efficient. However, the fundamental mechanisms of how people and organizations perform transactions with each other have not been updated in the 21st century. Blockchain can bring openness and efficiency to these processes in the Internet age we have come to expect.

Today’s announcement is an important first step toward delivering on this tremendous commitment.

Original article: http://www.ibm.com/blogs/think/2015/12/17/how-blockchain-will-transform-business-and-society/
Original author: Arvind Krishna
Senior Vice President and Director, IBM Research
Compiler: Wang Liren, Renmin Huijin
Compiler profile: Wang Liren, programmer, computational law practitioner, network and security engineer, has 18 years of experience as an IT executive and many years of experience in the financial industry. As the founder of Renmin Huijin Technology, he develops and provides property rights management technology for digital information based on blockchain.