Blockchain DApps

IBM Considers Blockchain Highly “Important Phenomenon” But Unready for Enterprise Level, Calls for Open Source Development

Arvind Krishna, SVP and Director of IBM Research, indicated this week on Big Blue’s Smarter Planet blog that the company’s research division was investigating blockchain technologies in a big way.

It is of course well known in the industry that IBM has been researching the applicability of blockchain technology for Internet of Things platforms. Earlier in 2015, the IBM Institute for Business Value released a research paper on IoT that proposed the blockchain as a framework for machine-to-machine transaction processing. The same IBM think tank also revealed in January 2015 that it was working with Samsung on a use case involving the blockchain in IoT systems, called ADEPT or Autonomous Decentralized Peer-to-Peer Telemetry.

ibm-blockchain-adept1Krishna notes that IBM is examining the blockchain in even more broader applications, as a key to eliminating the complexities of people’s formal interactions. Over the past two decades, humanity has revolutionized business society through such disruptive technologies as the Internet and cloud computing but it has not overcome the “red tape of modern society” that extracts billions of dollars per year from global business. IBM believes this is a particularly compelling use case for the blockchain in financial transactions.

Although Krishna makes it clear that “IBM is not involved in cryptocurrencies,” IBM sees the technology as a very big deal.

Krishna notes:

To me, blockchain is the more interesting phenomenon. It’s a completely novel architecture for business–a foundation for building a new generation of transactional applications that establish trust and transparency while streamlining business processes. It has the potential to vastly reduce the cost and complexity of getting things done. Essentially, it could help bring to business processes the openness and hyper efficiency we have come to expect in the Internet Era.

Blockchain-based systems could help radically improve whole industries, beginning with banking and insurance. But its impact could be much broader. It could make a difference whenever valuable assets are transferred from one party to another and whenever you need to know for certain that a piece of digital information — anything from electronic artwork to the terms of a business agreement — is unique and unchangeable by any party without the agreement of all parties.

IBM understands the blockchain’s utility as a distributed ledger that is shared via a peer-to-peer network, maintains an ever-expanding list of data records, and that is propagated and updated through the network for every participant, and how this reduces the need to establish trust via traditional methods.

IBM - Krishna_Arvind-248x300
Arvind Krishna, SVP and Director of IBM Research

Krishna identifies the importance of the technology but that it still needs work to attain enterprise-level applicability, particularly in terms of security, and development should be pursued universally through open source methods.

We believe blockchain is an extraordinarily important phenomenon, which is why IBM is deeply engaged in moving it forward.

In our view, most blockchain implementations, and the tools surrounding them, aren’t yet ready for many serious business uses.  The concept and architecture are taking form, but some key capabilities and standards are missing or only now emerging. For instance, many enterprise applications require more extensive security capabilities than most of today’s blockchain implementations offer.

A number of companies are developing blockchain implementations, and we expect more to come. We believe that for blockchain to fulfill its full potential, it must based on open technology standards to assure the compatibility and interoperability of systems.  Furthermore, the various blockchain versions should be built using open source software rather than proprietary software, which could be used to suppress competition. Only with openness will blockchain be widely adopted and will innovation flourish.

According to Krishna, IBM’s research and development teams are working on different versions of blockchain that that it believes business, drawing upon its own research insights and other related open source technologies. They are exploring a variety of blockchain implementations with our clients, working up specifications and preparing to contribute to open source projects that aim to make blockchain ready for business.

In the ADEPT project with Samsung, IBM used the Ethereum protocol as the blockchain for transaction processing along with BitTorrent for file sharing and TeleHash for peer-to-peer messaging. With its ability to create binding contracts and potentially Decentralized Autonomous Organizations, the ADEPT team found Ethereum more compelling than Bitcoin but that it still needed a lot more to get beyond the testing stage.

In conclusion, Krishna points out:

Over the years, IBM has helped enterprises harness the latest advances in information technology. We filled that role when the Internet first emerged in the 1990s, and we took the lead in mainstreaming Linux, Eclipse,  Java, Spark and other open source technologies. Now IBM is committed to help make blockchain real for our clients and for business.

Today it’s imperative for the technology industry to work with companies in every industry to build applications to see how blockchain can best be used in business. We need to learn where the approach works and where it doesn’t.  Out of these efforts, the best ideas will emerge and we’ll be able to spot gaps in technology or governance that need to be filled.


Journalist, policy analyst, and evangelist of new, disruptive technologies including big data analytics, Internet of Things, and cryptocurrencies. Internet industry veteran with regional c-suite experience, and journalist credentials earned at, Internet World magazine, and Mecklermedia Corporation.
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