IBM launches Blockchain Platform amid a consortium dedicated to global food safety

IBM just launched its Blockchain Platform, along with a series of consulting services to enable organizations to quickly activate, develop, operate, govern and secure their own blockchain-enabled business networks. The new platform was honed over two years in more than 400 client engagements across several industries, including financial services, supply chain and logistics, retail, government, and healthcare. The platform includes contributions through open source collaboration in the Hyperledger community, and is based on the new Hyperledger Fabric v1.0 framework and Hyperledger Composer blockchain application development tool. IBM's strategy is not exclusively focused on developing blockchain technology. It includes efforts to assemble consortiums that can use blockchain's unique capabilities to solve cross-industry and inter-enterprise business problems, and that may potentially bring life to new businesses and business models. To wit, the consortium working with IBM to improve the global food supply chain using blockchain includes Dole Food Company, Driscoll's, Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestle, Tyson Foods, Unilever and Walmart.

The 451 Take

We believe it was wise of IBM to launch its new Blockchain Platform within the context of an actual use case, since many organizations are puzzled by how blockchain differs from traditional approaches to distributed application and database designs. In essence, and when correctly understood by potential users, the qualities of blockchain technology enable a level of security, transparency and trust that hierarchical, point-to-point or centrally controlled business networks cannot duplicate. IBM is pioneering new business models and new business networks among and across industry participants. Its Blockchain Platform is the enabler, providing means for participants in business networks to develop common applications, govern the use of the business networks, and operate them globally for high performance and reliability. As is usual with all things IT, the technology is the easy part. The hard part is bringing together potential industry participants to unite in a common cause and adopt a new way of doing business. Minimal viable ecosystems, as they are called, may be hard to come by, but it seems that IBM is off to a good start.

Context

We have previously discussed the vendor's commitment to making blockchain technology ready for use by enterprise customers. IBM's plan to support blockchain's continued open source development, deliver it as a service for developers, and support the market with consulting resources to promote and advance the use of the emerging distributed-ledger technology across multiple industries is now bearing fruit.

Strategy

IBM wants to play a leadership role in developing, governing and operating multi-party blockchain-based business networks. Its strategy is to use blockchain technology to build and run distributed applications that solve unique data transparency, synchronization and trust problems across multiple parties that must work together to execute common business processes. Supply chains, global trade, healthcare, regulatory compliance, insurance and banking (among others) are examples of multi-party distributed ecosystems whose members are stakeholders to common business processes. Supply chains execute procurement and distribution of goods; global trade coordinates financial guarantees, logistics and government compliance; healthcare orchestrates patient information among providers and insurance carriers; and all drive financial transactions to manage the flow of money.

The new IBM Blockchain Platform runs in the IBM Cloud and comes to market after roughly two years of open source community work and more than 400 client engagements testing the technology as a new way to develop distributed multi-party process-oriented applications. It is built on the Hyperledger Fabric v1.0 runtime designed for enterprise requirements. Development of blockchain applications is done with Hyperledger Composer in a cloud sandbox. It includes governance tools to control multi-party business networks. The compute resources for blockchain application execution in the IBM Cloud have been tuned for performance and resilience, with 100% encryption for security, and made available globally with 24x7 support.

The stickier technical challenges in creating a blockchain business network are all the machinations needed to bring multiple parties up on a blockchain. IBM simplified this effort by including a network wizard tool in its Blockchain Platform. It enables consortium (business network) leaders to invite participants, automate the creation of peer nodes and IP addresses, define rules for governance, and other tasks.

Technology

A common question is, 'Why do I need blockchain? Why can't I use current cloud services, application development and integration technologies I already have to solve these types of problems?' The answer boils down to how the distributed ledger qualities of a blockchain enable data and transaction transparency, and how it garners trust among multiple distributed parties that must work together to deliver business value.

What makes blockchain technology unique is its ability to reduce the possibility of security breaches, even by its own operators and participants. Blockchain technology is distributed via nodes. Collectively, the blockchain enables techniques across theses nodes to reach consensus (a means for all parties to agree or disagree), establish provenance (to track the chronology of ownership/ledger entries/changes of state), secure immutability (controls assuring that ledger entries cannot be modified after created) and establish finality. It encrypts all data and allows each participant to update the ledger without the need for a central authority. Blockchain enables a level of security, transparency and trust that hierarchical, point-to-point or centrally controlled business networks cannot duplicate.

Customers

IBM doesn't necessarily seek specific enterprises as customers for its blockchain offerings. Rather, it seeks to act as a catalyst to craft networks of enterprises working together to execute common business processes using blockchain. IBM makes money through membership fees in each blockchain business network. Fees were not discussed, but are likely to be based on number and type of participants, and transaction volumes.

Bringing up a blockchain business network requires what is referred to as a minimal viable ecosystem (MVE), or membership sufficient to deliver the business value intended among participants. In other words, it's not enough to have a group of suppliers to be participants in a supply chain if there are no buyers of the suppliers' wares. Getting to MVE is the tricky part – and why establishing blockchain business networks is challenging. Nevertheless, IBM claims to support 10 such projects. Among those beyond the food safety consortium are Maersk for trade logistics, Everledger for diamond provenance, China's UnionPay for loyalty programs, and Bank of America Merrill Lynch and HSBC for trade finance. IBM even uses it for its own IBM Global financing operations.

Competition

AWS has teamed up with Digital Currency Group to create a blockchain-as-a-service offering for financial services firms.

BlockApps is an emerging vendor that is commercializing blockchain technology as an enterprise-grade application development and integration platform. It's building on the latest enhancements to proven blockchain open source implementations and tackling real-world business problems that it believes blockchain can help solve.

Chain Inc offers its Chain Core platform based on the Chain protocol. It's positioned as an enterprise-grade blockchain infrastructure designed to build financial service applications.

Ethereum, a Swiss nonprofit, is a decentralized platform that runs smart contracts on a custom-built blockchain. It enables developers to create markets, store a registry of debts/promises and move funds based on rules (e.g., futures contracts). It is also used as a foundation for several other blockchain startups.

Microsoft offers Blockchain-as-a-Service to develop, test and deploy blockchain applications. It recently announced its Coco Framework, which is intended to reduce the complicated development techniques needed to meet the operational and security needs of enterprises. It also offers a distributed governance model for Blockchain networks – establishing a 'network constitution' whereby members can vote on all terms and conditions governing the consortium and the Blockchain software system.

Oracle views blockchain as an encrypted, distributed database shared across multiple computers or nodes that are part of a community or system. In September 2016, it first filed for a patent that describes the use of 'pipeline blockchains.' We believe new product announcements are imminent.

R3 leads a consortium partnership of over 80 leading banks to design and deliver distributed ledger technologies to global financial markets. It collaborates with its partner banks on research, experimentation, design and engineering to bring the users of blockchain technology into the design and production process.

Swirlds uses blockchain as part of its software platform designed to build distributed applications that run in serverless cloud services.