For all the hype surrounding the potential for blockchain systems to transform many industries, the technology has yet to have much of an impact on businesses. But 2018 is shaping up to be a critical year for the budding sector: more companies are increasing their investments in blockchains and expanding test programs, says Ramesh Gopinath, vice president of blockchain solutions and research at IBM.
“I call  the year of blockchain production,” Gopinath says. “It’s still early days,” he adds, but he expects IBM’s customers and partners to roll out dozens of “enterprise-grade” blockchain-based systems in the coming months.
Blockchains are shared online ledgers used to record transactions across a network of distributed computers, making it difficult to tamper with the record. IBM (NYSE: IBM) and other advocates praise blockchains for their ability to enhance security and transparency, thereby strengthening trust among the parties using the systems—or that’s the goal, at least. Blockchains underpin Bitcoin and other cryptocurrencies, but the ledger technology could be useful in a variety of sectors, supporters say.
“For us, blockchain is all about trust in business transactions,” Gopinath says. “While the technology itself has its origins in Bitcoin and cryptocurrency, we view that as one application of the underlying capability.” (In other words, don’t expect IBM to jump into the “initial coin offering” craze.)
Xconomy sat down with Gopinath on Monday at the MIT Media Lab in Cambridge, MA, where he was attending MIT Technology Review’s Business of Blockchain conference. He shared some updates on the progress IBM has made in blockchain. It’s worth tracking because the Armonk, NY-based tech firm is considered one of the early leaders in this emerging sector, and the traction of its blockchain business might help signal whether the technology is living up to the hype.
Right now, it’s tough to say. Gopinath declined to share how much revenue IBM is generating from its blockchain products and services. But the investments in blockchain by IBM and its customers are growing.
IBM has been working on blockchain technology for about three years, and it officially launched a blockchain business about 16 months ago, Gopinath says. About 1,500 IBMers are now working on blockchain products and consulting services, he says. Big Blue has developed a blockchain software platform built on open-source Hyperledger software from the Linux Foundation; IBM also helps clients set up and manage their blockchain systems. Thus far, IBM has worked on 400-plus blockchain projects spanning retail, financial services, healthcare, media, the supply chain, and more.
Two of those projects were showcased on stage at the business conference Monday. In one, Walmart (NYSE: WMT) and nine other major brands are using IBM software to help track their food supply chain. In the other, IBM has formed a joint venture with Maersk, the European shipping and logistics company, that is developing blockchain applications for supply chains. In both cases, the idea is to take a largely paper-based process involving dozens of partners—who are often located around the globe and have different systems for tracking goods—and make it digital, more efficient, and more transparent.
Those goals are especially important when it comes to food. When there’s an outbreak of food-borne illnesses, it’s difficult and time-consuming for companies and food safety regulators to pinpoint the source of the problem. Blockchain systems can make that easier, said Frank Yiannas, Walmart’s vice president of food safety, during a presentation at the event.
Yiannas recounted an experiment in which he and his colleagues attempted to track the origins of some fruit he purchased at a store near his office. It took the team nearly seven days to go through all the documents and find where the fruit came from, he said. With IBM’s blockchain system, they’re able to perform the same task in about two seconds, he said. So far, the system has been used to track millions of packages containing about 20 different food products, and perform more than 100,000 traces of their origins, he added.
“We’re working with IBM to capture as much information as we can in the food system to really know” where food came from—“and have proof,” Yiannis said.
Blockchains could deter suppliers from falsifying records, Yiannis said. It’s the “idea that you will now have a digital footprint that leads back to your door,” he said. “We know that accountability is a powerful deterrent to unscrupulous behavior.”
Of course, there are still kinks to work out. The software has to be set up so that all supply chain partners—from the mango farmer in Mexico, to the shipping company, to Walmart itself—can easily and inexpensively integrate it into their business processes, Gopinath says.
And there are interesting questions around who owns the data and what they are able to do with it, he says. (IBM operates the network upon which the blockchain systems run, but the “nodes” of that network—the distributed machines that record each transaction in the ledger—are controlled by the various members of that network, he says.) IBM is making progress solving those challenges, Gopinath adds, but he doesn’t share further details.
One area to watch is the intersection of blockchain and artificial intelligence technologies. IBM, which has invested heavily in A.I. in recent years with its Watson initiatives, is already developing products that combine the two technologies. For example, it worked with Everledger to perform data analytics on the startup’s blockchain-based system for tracking the supply of diamonds. The idea is that the A.I. software can analyze the data much more quickly and reliably than humans can.
“All of the blockchain solutions that are out there will [get] a tremendous boost when A.I. is applied on top,” Gopinath says.
Interestingly, Gopinath says blockchain technology can enhance A.I. as well. A.I. software generally requires large data sets to train the algorithms, and the quality of that data matters. Blockchain systems could help A.I. developers ensure the information being fed to the algorithms is trusted, Gopinath says.
“A.I. can be made much more secure with blockchain,” he says.