How IBM will use blockchain as a commercial backbone

About four years ago, Jerry Cuomo and other IBM technologists began studying blockchain, thanks to the phenomenal growth of Bitcoin and later of Ethereum as cryptocurrencies based on the decentralized registry that was both secure and transparent.

Now Cuomo is vice president of IBM Blockchain, and interacts with over 1,500 blockchain experts at Big Blue. Working with the Linux Foundation, IBM has created its own fast and secure Hyperledger Fabric to create a more robust version of the blockchain that can adapt to the needs of modern commerce and its millions of transactions per second. Hyperledger Fabric is gaining momentum as an infrastructure to create reliable networks in a wide variety of industries. Earlier this week, IBM announced that it is providing the Blockchain Platform for with the use of blockchain to allow consumers to exercise control over the use of their personal data.

And Cuomo is spreading the word about the benefits of blockchain to all kinds of industries. Recently, IBM has signed an agreement with the Maersk shipping giant to create a blockchain-based supply chain where it is possible to instantly track the goods shipped to the original source in a couple of seconds. 94 companies have joined the commitment.

IBM is working with Walmart and others to identify sources of food contaminated at the original source in an attempt to reduce hundreds of thousands of deaths in the year. Big Blue is working with the US Food and Drug Administration to explore how the blockchain can ensure patient consent for the transfer of health data.

Here is a modified transcript of our interview.

VentureBeat: Do you blockchain, or cryptocurrency, or both?

Jerry Cuomo: I & # 39; m blockchain. I'm an equal opportunity employer for any type of application you want to write on blockchain.

VentureBeat: How long have you focused on this?

Cuomo: Since 2014. This was the great awakening for everyone. I was a CTO for IBM's middleware business. A large part of this was the products that deal with transaction processing. While we were doing a lot of things – cloud, artificial intelligence and mobile – the business transaction processing part had flattened out a little. There are not many big news. But I always kept an eye on things that were new developments in transaction processing.

When I saw what was happening under Bitcoin, I got excited, excited like everyone else on the cryptic side. But I was really excited to apply this to other uses. IBM certainly addresses businesses and businesses. I became very curious about how we can apply this technology to allow companies to collaborate. It is not a complete secret, or difficult to imagine. Generally, in the world, a group of institutions or people can get more than any single member of that group. One plus one is equal to three or anything else you want to call the adage on the power of the group. It seemed that this could be a unique way to transform a supply chain, on one side of the fence, or how commercial finance works, on the other side of the fence.

We had the spark of what could be. Once we started to practice this with some of the conventional technologies of 2014, in the years of the blockchain that was a long time ago. Ethereum was the gold standard and is still very popular today. It's fantastic in what it does. But that's what did not start hitting our fears. We are trying to create a decentralized network between the institutions, but this institution must be responsible. The EU, the privacy of pre-GDPR data, or I have a HIPAA requirement, many of these networks require members to be known and have a certain level of responsibility. I must be able to prove to an auditor that these events have taken place and I have behaved in this way. This is what started to make us scratch our heads. How do we do it with conventional blockchain?

We invented a series of ideas and tried to apply them to Ethereum. We came across a couple of roadblocks, one of which is the lack of modularity in the first Ethereum code base. The other is the licensing model. It was an LGPL license. In IBM, or any institution that wants to market something, it would be very difficult to market something with an LGPL license. Last but not least, it was not really a unified board of directors for Ethereum.

In short, we decided that we had to take another path. The path we took was to start building a blockchain for business from scratch. We did not try to do it alone. We went to the Linux Foundation and presented us with companies that thought like us. Together we formed the Hyperledger project. Within that project there are a number of open-source projects, one of which is Hyperledger Fabric. IBM contributed a lot to that project, as did State Street and Fujitsu and Hitachi and many other companies. We are very invested in this.

  IBM and Maersk are collaborating.

Above: IBM and Maersk are collaborating.

Image of Credit: IBM / Maersk

That forms the basis of IBM Blockchain, which is a platform as a service offering. It is the basis for various solutions initiatives we have built with the likes of Wal-Mart, Nestle and Unilever. TradeLens, which is a commercial finance network with the likes of Maersk. This is our strategy. As I said, blockchain for business is not just a slogan. There are some really hard engineering things we had to do to provide the qualities necessary for the business.

The distillano usually up to four. Probably there are still some, but four real succinct attributes. One is the responsibility. We obtain it through the authorization. You may have heard of authorization blockchain. Simply put, members require a membership card, a public and private key issued through a decentralized certification authority. Now you are responsible. You are known for the network. While you are known for the network, the second is privacy. While you are known, you should be able to interact privately. In finance, there are many bilateral contracts and things like that. You do not need all users on the network to see your business. You only need the people who are involved, who need to know.

The other concerns performance and scalability. It is known that Ethereum and Bitcoin do not intentionally perform high transaction rates. They are not designed for the way mining works and how they want to ensure, in a very clever way, that blockchain networks are based solely on building trust. These blockchains create trust while maintaining anonymity. It works for that case of use, for the currency, something that tries to emulate money, which is a bearer instrument. But they had to work in security networks, as the group with the largest computer could not invade the network. They put butterfly valves in which they hamper performance. But a corporate blockchain must support a huge volume of transactions, potentially thousands of people per second. That was the third one.

The fourth is security. A blockchain network must only continue to work. He must tolerate guilt. In other words, it needs to keep functioning if there are bad actors in the network, and still approximately comes with the right answer. Or even sloppy actors, who in a blockchain of permission are probably more the case. You have someone running on less reliable hardware that fails from time to time. The network can not stop because a member is disappearing from time to time.

These are the four qualities we have incorporated into Hyperledger Fabric. We started with the Linux Foundation and the Hyperledger Project – it was announced in 2015. Three years from the start we are really starting to see the first live networks that are happening, which is exciting. There are all kinds: big companies, small start-ups. There are hundreds of networks that use Hyperledger Fabric. We have 70 on our radar right now that we consider live, in the sense that they consider that system the recording system. They have multiple institutions that make transactions on a daily basis on that network.

Some of these are small. Some of these are large. Some of them are small-scale with big dreams. [laughs] Some are large-scale with gigantic dreams. We see everything in the middle. One of the things I've been talking about is: the exciting part of working on blockchain is working on middleware and helping to open the transactional web. Between the end of the 90s and the beginning of the years it was very interesting. I became a big fan of some Java based middleware users. Many websites we use on a daily basis still use this technology. But I could not necessarily say that technology was forever.

What I see happening with the blockchain – while there are all sorts of uses, I always see a theme in blockchain. It is used to protect people's personal identity or to ensure that the information provided to a clinical trial is correct. A drug you are taking is not counterfeited or the food that contains salmonella can be recalled quickly without affecting more people and without interrupting the entire production of spinach in the United States. These are all things that are good for you and me, not just for industry.

VentureBeat: I found myself in an interesting place on the blockchain. Most of what I do should be a game, so around 20% is technical, everything else. I cover a lot of big companies like IBM. That 20 percent has now been filled. There are a few blockchain stories a week. It gave me some knowledge, but it also confused me a little.

Cuomo: What confuses you, would you say?

Above: IBM is working with Hu-manity. co to guarantee your right to check your personal data.

Image Credit: IBM

VentureBeat: I see the basic compromise of security and transaction speed. The original Bitcoin was not created for the speed of the transaction, as you said. There are several parts that say they have the next generation answer to this. But they all seem very fragmented. I wrote a lot about Hedera Hashgraph, which is fascinating, but it's just one of many. How many different slices of this do we really need? Do banks have to make their own blockchain systems? Do the navigation lines need them? Everyone is making a different decision to similar problems, depending on how much they care about the security and the speed of the transactions.

Cuomo: There is a balance. What excites me, because I've seen trends evolve over time – I know some things for sure, or at least my story strongly suggests these things. One is, what we know today will be very different. For companies like IBM, I think we are doing very well in the blockchain space. In order to continue driving, we will have to change. It is evolving.

The material thing to measure: the use and the community. Let me explain. The most durable blockchain technologies will be those that are built in the open and that provide a fair platform for innovators, for people who have an idea. I'm not going to be stuck if there's a small group that's running the table on this. That's why we like working with the Linux Foundation. They can be really difficult sometimes in the way they govern, but it's good for technology. It usually breeds winners. Again, I'm a blind trust over there. They do not care if you are BM or a small startup. Rules are the rules. There is a separation between church and state between the board of directors and the technical council.

What is measured on the technical side are the contributions: not the dollar contributions, but the contributions to the code. You can contribute financially, you can contribute by code or a combination of the two. This favors a lasting environment. Again, it may not be what is here today, but those things – I believe, for example, that the Hyperledger project will evolve to be among the winners. It's Darwinian, as they do it.

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