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Praise for Blockchain for Business
“Much has been written about blockchain in the past few years:
what it is and what it is not (at various levels of detail), as well as
the technology’s long-term strategic value for companies,
industries, and economies. However, what we’ve been missing is
a practical, operational, ‘how to’ set of steps for creating,
implementing, and operating a blockchain-based solution. This
book aims to fill that gap. It’s an invaluable tool for anyone ready
to take the plunge and start taking advantage of this remarkable
technology.
“Most technologies can be implemented one business at a time.
Not so with blockchain. Blockchain is particularly valuable when
applied to a collection of companies working closely together as a
business ecosystem, such as a supply chain. Blockchain for
Business goes into great detail about what it takes to organize
and manage such an ecosystem, including the technical and
business models that in the end drive the decisions about
whether to join or not, and the governance necessary for a
smooth, efficient operations. It also nicely explains the necessary
technical expertise and management roles needed to
successfully create and operate blockchain frameworks and
applications.
“Blockchain for Business is an invaluable tool for anyone ready to
take the plunge and start taking advantage of this remarkable
technology.”
—Irving Wladawsky-Berger, Research Affiliate, MIT; Columnist, WSJ
CIO Journal; VP Emeritus, IBM
“Jai, Jerry, and Nitin have written the guidebook to address the
critical knowledge gap that exists between the hype of blockchain
and cryptocurrencies and the pragmatic utilization of blockchain
technology for transforming businesses. Blockchain for Business
leverages their firsthand insights and provides a practical
approach for business and technical leaders to leverage a proven
methodology to drive successful blockchain projects that deliver
trust and transparency for all participants.”
—Marie Wieck, General Manager, IBM Blockchain
“Understand how to capture the power of the trust machine. This
book contains a wealth of resources and tools for those looking to
apply blockchain solutions in a business environment. A mustread for enterprise executives.”
—Perianne Boring, Founder and President, Chamber of Digital
Commerce
“Jai, Jerry, and Nitin nailed it! Blockchain for Business addresses
the critical question business leaders are attempting to answer:
How does my business derive real, measurable value from
blockchain? This is a practical guidebook for both the business
and technology leader to help identify business value from
blockchain technology in the form of new growth opportunities,
sustainable competitive advantage, time savings, cost reductions,
and risk mitigation—turning blockchain into business results!”
—D. Keith Pigues, CEO and Founder, Luminas Strategy, Coauthor
Winning with Customers: A Playbook for B2B
“Blockchain for Business is a must-read for executives looking to
define blockchain’s potential to transform business processes.
Jerry, Jai, and Nitin have comprehensively described the key
steps business leaders should take to identify the right scope,
select the best technology, and establish an appropriate business
model and governance structure.”
—Arvind Krishna, SVP, Hybrid Cloud and Director of IBM Research
Blockchain for Business
Jai Singh Arun
Jerry Cuomo
Nitin Gaur
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ISBN-13: 978-0-13-558135-3
ISBN-10: 0-13-558135-4
1 19
Dedicated to
My mom and dad, Saroopi Devi and Phusiya Ram, who gave me
existence in this world; my siblings, who encourage me with
admiration; my darling Varshal, who strengthens my soul with love
and inspires me; my daughter Saachi and son Yogya, who enlighten
me with joy every day.
And in memory of my loving brother Mr. Omprakash Arun (1968–
2013); my angel sister Ms. Babita Arun (1988–2016); and my
respected father-in-law Mr. Chandrahas Mayekar (1943–2016).
—Jai Singh Arun
My darling Steph. Not since Lennon and McCartney has there been
a more prolific pair of composers like the two of us.
—Gennaro Cuomo
My parents, for their unconditional love; my spouse Ritu, for her
unconditional support; and my son Neil, who inspires me every day.
—Nitin Gaur
Contents
Foreword
Preface
Acknowledgments
About the Authors
Chapter 1 Introduction to Blockchain
Blockchain Beliefs
Enterprise Blockchain
Why Blockchain Matters
The Trailblazers
Founders
Scope: Dream Large and Act Incrementally
Motivation: Driving Momentum within the Ecosystem
Governance: The Total Is Greater Than the Sum of the
Parts
Blockchain for Good
Reducing Foodborne Illnesses
Eliminating Big Data Breaches
Preventing Counterfeiting
Blockchain Questions from Business and Technology
Leaders
Does Blockchain Apply to My Industry and Business
Objectives?
How Does Blockchain Drive Top-Line Growth and
Competitive Advantage for My Business?
What Value-Added Business Models Does Blockchain
Present?
How Does Blockchain Network Governance and
Design Work?
Do I Need a Dedicated Blockchain Development
Team?
What Is the Cost of Implementing Blockchain?
Other Questions
Chapter Summary
References
Chapter 2 Opportunities and Challenges
Disruptive Elements
Transparency
Immutability
Security
Consensus
Smart Contracts
Opportunities
Transformative Power of Blockchain
Transformative Opportunities
Challenges
Scope
Motivation
Governance
Technology
Chapter Summary
References
Chapter 3 Understanding the Technology Landscape
Blockchain: A Technical Perspective
The Four Building Blocks
Why Blockchain?
Blockchain as a Consumable Technology
Blockchain for Enterprises
Enterprise View of Blockchain: Technology and
Business Domain
Litmus Tests to Justify the Application of Blockchain
Technology
Technology, Business, and Regulatory Considerations
for Blockchain
Essential Maturity Imperatives for Enterprise Blockchain
Token Revolution
Asset Tokenization: Essential to Powering the NextGeneration Digital “Instance” Economy
Introduction to Tokenization: Understanding the Token
Revolution
Various Industry Definitions
Token Valuation Models and the Instance Economy
Understanding Digital Asset (Token) Fungibility:
Opportunities and Challenges Related to Token Valuation
and Blockchain Ecosystems
Defining Fungibility
Considerations for Meaningful and Sustainable
Blockchain-Powered Business Networks
Enterprise Integration: Coexisting with Existing
Systems of Record
Blockchain Network Extensibility
Blockchain Project Sustainability
Chapter Summary
References
Chapter 4 Business of Business Models
Path to Blockchain Enterprise Adoption: A Prescriptive
Approach
1. Identify an Appropriate Use Case
2. Devise a Business Blueprint: Distilling an Existing
Business Process
3. Map the Business Blueprint to Technology Tenets:
Devising a Technology Blueprint
4. Ensure Enterprise Integration with (Legacy)
Enterprise Systems
Business Modeling and Design
Business Model Considerations
Chapter Summary
Chapter 5 Developing a Governance Structure for Blockchain
Networks
Governance Structure and Landscape
Technology Infrastructure Governance
Network Membership Governance
Business Network Governance
SCTrustNet
Business Network Governance
Network Membership Governance
Network Infrastructure Governance
Chapter Summary
Chapter 6 Building a Team to Drive Blockchain Projects
Enterprise Structures in a Decentralized Economy
Centralized Structure
Decentralized Structure
Hybrid Structure
Roles of an Enterprise in a Blockchain Network
Founders
Members
Operators
Users
Building an Effective Team
Project Team Roles
Intraprise Synergy
An Example of a Blockchain Project Team
Blockchain Technology Solution Team
Chapter Summary
Chapter 7 Understanding Financial Models, Investment Rubrics,
and Model Risk Frameworks
Understanding Blockchain Project Financial Fundamentals
Blockchain Investment Rubric
Proof of Concept or Design
Business Valuation
Governance and Risk
Growth and Scale
Return on Investment Modeling
Net Present Value
Internal Rate of Return
Benefit–Cost Ratio (BCR)
Payback Period
Risk Modeling
Blockchain Model Risk Framework
Chapter Summary
References
Chapter 8 Looking Ahead: What Does the Future Hold?
The Network of Networks
Blockchain at the Nexus of Technology
Blockchain and Artificial Intelligence
Blockchain and the Internet of Things
Blockchain and Quantum Computing
Blockchain Opportunities and Challenges: What Lies
Ahead?
Overall Summary
References
Index
Foreword
I’m delighted to provide some context for this enormously thoughtful
and eminently practical book, Blockchain for Business.
When Alex Tapscott and I wrote the first edition of Blockchain
Revolution in 2016, we characterized blockchain as a platform for
conducting transactions of value. We explained that for nearly four
decades, we had the Internet of information. It vastly improved the
flow of data within and among firms and people, but it didn’t
transform the deep architecture of the firm. That’s because the
Internet was designed to move information from person to person. It
wasn’t designed to solve what cryptographer David Chaum called
the “double-spend problem,” the ability to spend a single digital dollar
in two places online.1
1. David Chaum. “Blind Signatures for Untraceable Payments.” Advances in
Cryptology: Proceedings of Crypto 82 (January 1982): 199–203.
Now for the first time ever we have a native digital medium for value,
through which we can transfer any asset—from money and music to
votes and intellectual property—peer to peer in a secure and private
way. Trust is achieved not necessarily by intermediaries like banks or
governments, but by cryptography, collaboration, and clever code.
Based on the success of the book, Alex and I founded the
Blockchain Research Institute (BRI), a think tank dedicated to
investigating blockchain use cases and the leadership required to
drive experimentation and change in an organization. Our
membership has grown to include global corporations, governments,
nonprofit organizations, and members of the blockchain start-up
community.
IBM’s CEO, Ginni Rometty, recognized the transformative potential
of blockchain technology early on, and IBM became a founding
member of the BRI. Gennaro “Jerry” Cuomo, co-author of this book,
participated in the opening panel of the BRI’s first all-member
summit in the fall of 2017. His contributions were invaluable to the
executives in attendance. Since then, we’ve expanded the program
to nearly 100 projects across 10 industry vertical groups and nine Csuite roles in both the public and private sectors. IBM has been an
active member, open to sharing what its teams have learned in their
collaborations with Walmart and the Brooklyn Roasting Company on
food traceability, with Maersk on digitizing global shipping, and with
Unilever on tracking digital ad buying.2
2. Reshma Kamath. “Food Traceability on Blockchain: Walmart’s Pork and Mango
Pilots with IBM.” Journal of the British Blockchain Association (June 12, 2018).
jbba.scholasticahq.com/article/3712-food-traceability-on-blockchain-walmart-spork-and-mango-pilots-with-ibm; IBM Corporation and Brooklyn Roasting
Company. “Transparency from Farm to Cup.” The Blockchain Bean, May 1, 2017.
www.ibm.com/thought-leadership/blockchainbean; Larry Dignan. “Unilever Aims to
Force More Digital Ad Transparency, Plots Blockchain Pilot with IBM.” ZDNet,
February 12, 2018. www.zdnet.com/article/unilever-aims-to-force-more-digital-adtransparency-plots-blockchain-pilot-with-ibm; Nicky Morris. “Maersk/IBM Complete
Supply Chain Blockchain Pilot.” Ledger Insights, August 9, 2018.
www.ledgerinsights.com/maersk-ibm-supply-chain-blockchain-pilot-tradelens.
The crucible of common experience leads to similar thinking. That’s
probably why these themes of Jai Singh Arun, Jerry Cuomo, and
Nitin Gaur’s book, Blockchain for Business, resonate so much with
our own—and in my view, are spot on.
Digital identity. Jai, Jerry, and Nitin highlight the role of digital
identity throughout Blockchain for Business. Indeed, Jai is a
thought leader in this area, the co-author of one of IBM’s important
works, “Trust Me: Digital Identity on Blockchain.”3 This is a big
deal, and it was a big idea of the paperback edition of Blockchain
Revolution. Alex and I underscored the need for self-sovereign
identities, using blockchain as a means of bootstrapping our
identities and enforcing them in any context without a third party.
We reported on the work of the Decentralized Identity Foundation
(DIF), a consortium of which IBM is a member. DIF was formed to
combine “decentralized identities, blockchain IDs, and zero-trust
data stores that are universally discoverable.”4 Its working groups
are focusing on three big areas—identifiers and discovery, storage
and computation of data, and attestation and reputation—with an
eye toward developing use cases and standards.5 IBM has
contributed a lot to these endeavors, working with ATB Financial,
Evernym, the Sovrin Foundation, and Workday on verifiable
credentials, and with SecureKey Technologies on a new digital
identity and attribute sharing network with a mobile app, among its
many collaborations.6
3. Jai S. Arun and Alexander Carmichael. “Trust Me: Digital Identity on Blockchain.”
IBM Institute for Business Value, April 2017.
public.dhe.ibm.com/common/ssi/ecm/gb/en/gbe03823usen/gbe03823usen00_GBE03823USEN.pdf
4. Identity.Foundation. “Decentralized Identity Foundation” n.d. identity.foundation.
5. Identity.Foundation. “Working Groups.” n.d. identity.foundation/#wgs.
6. Dan Gisolfi. “Decentralized Identity: An Alternative to Password-Based
Authentication.” Blockchain Unleashed: IBM Blockchain Blog. IBM Corporation,
October 5, 2018. www.ibm.com/blogs/blockchain/2018/10/decentralized-identityan-alternative-to-password-based-authentication; Adam Gunther. “Collaboration:
Unlocking Decentralized, Digital Identity Management through Blockchain.”
Blockchain Unleashed: IBM Blockchain Blog. IBM Corporation, April 4, 2018.
www.ibm.com/blogs/blockchain/2018/04/collaboration-unlocking-decentralizeddigital-identity-management-through-blockchain.
Opportunities and challenges. Concerted effort to transform
obstacles into opportunities has been the most important factor in
the blockchain’s success thus far. Executives need to understand
the regulatory uncertainty, the level of energy consumed by proofof-work consensus mechanisms, the efforts of governments such
as China and Russia to limit individual use of cryptocurrencies,
and the fears that blockchain technology will be a job killer, to
name a few areas of concern. We wrote quite a bit about these
issues, and we applaud the authors for tackling them head-on.
Business models. The business models for blockchain are largely
decentralized networks, subject to network effects such that when
the number of nodes increases, so does the size of the business
model. Jai, Jerry, and Nitin have described four important business
models: founder-led networks, joint ventures, the consortium, and
business ecosystems. They outline a four-step process for moving
from pilot project to enterprise integration. It’s very hands-on.
Governance. The blockchain space is full of formal and informal
leaders. Some have executive roles in start-up, blockchain
consortia, and regulatory bodies, and others possess vision and
talent that are both compelling and influential. We wrote
extensively about the need for governance networks—
multistakeholder networks in the domains of standards
development, policy guidance, community advocacy, knowledge,
and education, among others. Jai, Jerry, and Nitin were wise to
cast these issues in practical terms of permissioned and
permissionless blockchains, with on-chain and off-chain
governance of protocols and the applications that run on them.
These issues will be critical to the scaling, interoperability, and
crisis management of these systems over time.
Team building. Here’s where the rubber meets the road in
enterprise blockchain pilots. IBM has vast experience in this area,
assembling teams across divisions within its own firm and working
across industries and national boundaries. The authors provide a
guide to getting the right people on the team and then managing
the project effectively, so that the enterprise can leverage success
and learn from failure.
Financial models. The financial services industry has become
somewhat of a Rube Goldberg contraption that performs eight
basic functions: verifying identity, transferring payments, holding
savings, making loans, trading assets, investing capital, insuring
assets and managing risk, and accounting. Smart contracts and
distributed applications running on distributed ledgers are
challenging incumbents in each of these eight areas. Initial coin
offerings are already disrupting venture capital. Conversely,
incumbents could transform their businesses for the better, if they
embrace blockchain. IBM is working directly with American
International Group on a smart multinational insurance contract for
Standard Chartered Bank, and with the Bank of Montreal,
CaixaBank, Commerzbank, Erste Group, and UBS on their global
trade finance platform called Batavia.7
7. Suzanne Barlyn. “AIG Teams with IBM to Use Blockchain for ‘Smart’ Insurance
Policy.” Reuters, June 15, 2017. www.reuters.com/article/us-aig-blockchain-
insurance-idUSKBN1953CD; Giulio Prisco. “IBM, Five International Banks Pilot
Blockchain-Based Platform for Trade Finance.” NASDAQ.com, April 26, 2018.
www.nasdaq.com/article/ibm-five-international-banks-pilot-blockchain-basedplatform-for-trade-finance-cm954045.
Jai, Jerry, and Nitin have provided a sound blueprint for constructing
an enterprise blockchain strategy, from identifying appropriate use
cases to driving top-line growth and establishing a competitive
position. We agree—now is the time for leaders to act, and
Blockchain for Business should get them moving.
—Don Tapscott,
Cofounder and Executive Chairman
Blockchain Research Institute
Co-author, Blockchain Revolution
Preface
Because blockchain has the potential to drive the re-imagination of
processes and business models in a distributed and decentralized
manner, it can be a transformational technology for many
businesses. Many business and technology leaders, however, might
overlook its potential usage and value for their business and
industry, or associate it primarily with Bitcoin and cryptocurrency
applications.
Although blockchain is the foundational technology underpinning
Bitcoin, it has broad applicability to multiple industry use cases and
enables compelling value propositions beyond the financial world.
The capabilities of blockchain for enterprise use cases beyond
cryptocurrency are not well understood, and the potential for
transforming business models in new ways by using blockchain is
not obvious for many reasons. A business-driven technology usage
perspective requires a balance between pragmatism and a vision for
business outcomes.
Who Is This Book For?
There are many good books available today that address the highlevel potential of blockchain technology or go deep into technical
implementation and programming topics. The primary intent of this
book, however, is to address the distinct gap between high-level and
deep technical concepts.
This book is a practical guide for leaders who need to understand
and evaluate how blockchain technology can transform their
organizations’ business processes and models. It provides a simple
and pragmatic overview of blockchain technology and its capabilities
and value from a business perspective. It describes various realworld examples, implementation approaches, and industry-specific
and cross-industry use cases. In addition, it provides leaders with the
insights that are needed to define potential business models and
governance structures, establish teams in decentralized or hybrid
enterprises or ecosystems, and understand the costs and return of
investment. Also, this book brings clarity to the current state of the
technology and its evolution and describes how leaders can better
prepare to take advantage of upcoming capabilities.
Many leaders who are still unsure about how to drive transformation
with blockchain technology start by identifying a right business use
case; defining a business model and governance structure;
establishing a team; and determining costs, return on investments,
and a financial structure. This book addresses these concerns for
business and technology leaders by providing an integrated view of
business and blockchain technology.
What Is Covered in This Book?
Our goal is to cover all of the key topics with which you need to be
comfortable in order to positively impact your organization as it
evaluates and implements blockchain technology. Even if you are
already familiar with some of the basics, the early chapters will
reinforce your understanding of important concepts and explore
general use cases. As you dive deeper, you will be systematically
introduced to the specific steps and details that will enable your
organization to successfully implement a blockchain solution. Feel
free, however, to jump directly to the chapter that most directly
impacts your current role and answers your most immediate
questions. You will also find references for further study throughout
the chapters to fill in any gaps or provide more detail, depending on
your level of experience or organizational role.
Chapter 1: Introduction to Blockchain
The introductory content in Chapter 1 shares critical perspectives of
blockchain technology so that leaders can realize its beliefs and gain
a true understanding of enterprise blockchain concepts and
capabilities. You will learn why blockchain matters for your business.
You will learn about trailblazers and key aspects, including how to
carefully select a scope for your blockchain project and motivate
participants in a blockchain business network while ensuring
governance. This chapter also shares some transformational
examples of blockchain for social good, and shares “top of the mind”
questions and answers that are related to blockchain technology.
Chapter 2: Opportunities and Challenges
You might be wondering what opportunities and challenges you
might face when you implement a blockchain network. Chapter 2
describes these topics, including how blockchain can apply to your
industry and business objectives. It describes how blockchain
technology’s disruptive elements drive transformation across
traditional organizational structures, business models, and
ecosystems. These elements also fundamentally open endless
opportunities in many industries to innovate and challenge the status
quo. The primary challenges for a blockchain project’s success are
specific to the scope, motivation, and governance, rather than the
technology.
Chapter 3: Understanding the Technology Landscape
Chapter 3 defines the overall blockchain technology landscape and
addresses the trust divide between an enterprise (permissioned)
blockchain and a public, permissionless blockchain. Enterprise
blockchain design and enterprise integration impact the cost of the
solution deployment and the longevity of the application, so
economic incentives are a vital component of any blockchain
network. This distinction is vital for the valuation of crypto assets and
to ensure the continued and sustained growth of a blockchainpowered business network.
Chapter 4: Business of Business Models
When you are ready to adopt blockchain into your enterprise, it is
important that you pick the correct business and technology model
for your business and industry. You want a model that provides
economic incentives for joining a blockchain network, such as the
creation of value that exceeds what you can achieve alone. The
correct model will also help you combat the disruptive forces that
blockchain creates, which is imperative if you want to compete under
this new economic paradigm. Chapter 4 describes the possible
business models that you can choose, which include joint venture,
consortium, NewCo, business ecosystem, Build–Own–Operate
(BOO) or founder-led networks, and Build–Own–Operate–Transfer
(BOOT) or founding consortium–led networks.
Chapter 5: Developing a Governance Structure for
Blockchain Networks
So, you have a model for your blockchain network and are ready to
implement it. The first thing you need to do is set up a governance
structure, which ensures that you and your ecosystem partners have
a common vision and goals for the blockchain network. With a
governance structure in place, the ecosystem partners know how
their blockchain network is managed. Chapter 5 describes how to set
up the governance structure, which addresses industry-specific
requirements and ensures a tight linkage between the business
model and the technology blueprint. By adopting a common
governance structure, all participants adhere to a common set of
objectives, fair and equitable use of network resources, and rules of
engagement.
Chapter 6: Building a Team to Drive Blockchain Projects
You must gather many different people to build the team that will
drive the creation of your blockchain network. Creating a blockchain
project requires enterprise-level roles, such as founders, members,
operators, and users, and other roles, such as steering committee
members, project managers, blockchain consultants, engineers, and
many more. Using “the best of the best” from each enterprise to
develop a blockchain network is known as intraprise synergy. By
using this concept, you empower each participant in the blockchain
network with the decentralized authority and autonomy to use their
skills as part of the broader network. Chapter 6 describes this
concept and its many parts in detail.
Chapter 7: Understanding Financial Models, Investment
Rubrics, and Model Risk Frameworks
As you might have surmised by now, there are many challenges
surrounding the technical complexity of blockchain. One such
challenge is the plethora of financial models, investment rubrics, and
frameworks (structures that aim to scale blockchain networks with
the greatest efficiency) that are available today. Which do you
choose? Chapter 7 helps you make that choice. By following the
guidance in this chapter, you can help ensure a methodical,
quantifiable, and measurable deployment of resources while
effectively managing risk, all at scale. With the correct mixture of a
strategic approach, business design, financial rubric, GRC
framework, and access to technology acumen and the correct talent,
a blockchain-powered business network can transform industries
and businesses while being disruptive and immensely profitable.
Chapter 8: Looking Ahead: What Does the Future Hold?
This chapter prepares you for the future as the evolution of
blockchain technology as the network of networks in a decentralized
economy becomes more pervasive. You learn about the nexus of the
blockchain technology, which includes artificial intelligence, the
Internet of Things, and quantum computing, and see how these
intersections can add value to your business. Also, this chapter
provides readiness advice for critical areas from a futures
perspective.
Acknowledgments
It was an inspiring effort to find the gap in the current blockchain
books out there in the market, but it was a very challenging task to fill
that gap with a truly pragmatic and business value perspective.
However, with the collective wisdom and more than seven decades
of technology and business leadership experience, a decade of
blockchain technology expertise, and thousands of customer
interactions among three of us, this expedition was absolutely
rewarding and heartening.
Writing a book is a journey, and during this journey there are many
people who directly or indirectly help you reach your destination. We
are very fortunate and sincerely thankful to have such a supportive,
encouraging, and tremendous tribe, consisting of our family
members, colleagues, and editing and publishing team members
who graciously helped us make this journey successful.
First of all, we sincerely thank the professional and awesome
publishing team from Pearson—our executive editor Gregory
Doench, a great partner and pleasure to work with who made the
entire book writing process very smooth and timely for us; production
editor Julie Nahil; copy editor Jill Hobbs; and project manager
Rachel Paul.
Second, we are indebted to many of our colleagues who provided
exceptional help throughout, including Steven Stansel from IBM
marketing services (previously IBM Press), who walked us through
with the overall book writing process, reviewed and refined the initial
book proposal, and introduced us to the Pearson team; Wade
Wallace from the IBM Redbook editing team, our first-gate editor
who polished the language, caught grammar inaccuracies, and filled
the messaging gaps before handing it over to the Pearson team;
Colby Murphy from IBM Blockchain marketing, who helped us with
marketing support and specially with the looking ahead and futures
content; Tim Richer and Steven Mikolajczak from IBM Blockchain
marketing, who provided overall process support to ensure content
sanity and adherence to marketing and legal guidelines; Peter Reith
from Jerry’s team, who helped him with book tasks, timing, and
resources; Shaun Lynch from the IBM Blockchain design team, for
the creative book cover design; and Steve Kim, also on the IBM
Blockchain design team, for design consultation. Our special thanks
to Marie Wieck, IBM General Manager, Blockchain, for her kind
support, enabling us to work with Pearson on the book and also
providing early book review and a review quote. And special thanks
as well to Arvind Krishna, SVP Hybrid Cloud and Director of IBM
Research, founding leader of IBM Blockchain technology, for his
invaluable guidance and leadership in this space and his early book
review and review quote.
Finally, we are very grateful to the following people: Don Tapscott,
thought leader, author of Blockchain Revolution, who provided an
unbiased review of the manuscript and graciously wrote the
Foreword; Dr. Irving Wladawsky-Berger, technology leader and
research affiliate at MIT, columnist at WSJ CIO Journal, and VP
Emeritus, IBM, who candidly reviewed the manuscript and provided
a sincere and awesome quote. To Dr. Keith Pigues, CEO and
Founder of Luminas Strategy and coauthor of Winning with
Customers—a Playbook for B2B, who provided instrumental and
constructive guidance on simplifying the content and focusing on
delivering value for the audience, reviewing the manuscript, and
writing a review quote. To Perianne Boring, Founder and President
of the Chamber of Digital Commerce, who is a driving force behind
promoting the acceptance of blockchain technology through
education and advocacy and working closely with governments,
private organizations, policymakers, regulatory agencies, and
industry—she is a great friend and leader from global blockchain
community who helped us with manuscript review and provided a
review quote in a timely manner.
Most importantly, Jai would like to thank, from the bottom his heart,
his awesome wife, Varshal. She is a true inspiration and sparked his
thoughts and encouraged him to write the book. While working
herself full-time as senior program manager for information privacy
and security at Cisco Systems, she did double duty for several
months taking care of everything at home: their two young children’s
school, club, and sports activities many evenings, and over
weekends by herself for all the piano, dance, taekwondo, and
painting classes, and soccer, basketball, and volleyball practices and
games. Thank you so much, darling. Jai would like to extend his
thanks to his daughter, Saachi, and his son, Yogya, for their
understanding and for allowing Daddy to spend ample time to write
this book, missing many great moments of their activities. Also, Jai is
eternally grateful to his mother, Saroopi Devi; father, Phusiya Ram;
and mother-in-law, Chitra Mayekar, who have been calling him from
India every other day during this period, asking about his well-being
and showering their blessings on him. Jai and Varshal’s siblings from
India—Suchita, Ramesh, Amey, Vijay, Sunita, Anita, and Vinita—
have been a great support and motivational backbone.
Beside Jai’s family, of course, this would not have been possible
without his coauthors. He truly enjoyed this memorable book-writing
experience shared with them and sincerely thanks Jerry for his
extraordinary leadership and technology vision. He thanks Nitin for
bringing unique insights and true balance from his hundreds of client
interactions to the critical topics of the book. Finally, he appreciates
and thanks his management team, including Bruce Hawks, Venkat
Raghavan, and Sanjay Tripathy, for their direct and indirect
motivation and support.
In the spirit of Jerry famously saying, “Blockchain is a team sport,”
Jerry would like to acknowledge Team Cuomo: starting with his
lovely wife, Stephanie; his dad and mom, Jerome/Pop and
Rita/Reetz; his daughter and son-in-law, Rose/Robo and Christophe
B.; his son, Gennaro/Bud; his sisters, Stephanie/Ses and
Andrea/Agia; and his many wonderful in-laws, aunts, uncles, nieces,
nephews, and cousins. Each person has helped shaped Jerry’s
smile. He thanks the Mind the Gap band (Aydo, Barry, Marc, and Lin)
for putting up with practices he missed.
And “Blockchain Jerry” would not be that without his workmates. He
knows that by only naming a few, he will get in trouble for leaving
people off the list, but he has to, at least, thank the current
leadership team of the “IBM chain gang” that supported him in
getting blocks on the ledger: Arvind K., Marie W., Bridget Van K.,
Ramesh G., Brigid M., James W., John McLean, Gari S., Krishna R.,
Chris F., Sharon C., Anthony O., Kathryn H., Mark P., Peter R., Andy
C., Bobbie C., Meeta, Mihir S., David H., Gale F., Steve K., Tim R.,
Alan D., Alan B., Adam G., Dan G., Eileen L., Rob S., Rachel J., and
Michael B. . . . and John W. Jerry has special thanks for Colby
Murphy for helping guide his pen in the right direction. Last but not
least, Jerry thanks his coauthors, Jai and Nitin, for ensuring that
when Jerry agreed to help write this book, it was treated as a
transaction on the blockchain that once committed could not be
undone. This team has defined Jerry and made him who he is today
—and he is so thankful for that.
Nitin would like to acknowledge his wife, Ritu, for her support and for
handling things on the home front and taking care of their son, Neil.
While jobs and related travel can be extremely demanding on
everyone’s time, writing a book adds to the ordeal. It is at such times
that a nudge and encouragement can do wonders for energy levels,
so he thanks both Ritu and Neil for supporting him through this
journey.
Also, he would to thank his coauthors: Jerry for his mentorship,
leadership, and support, and Jai for shepherding him through the
process and making sure every single detail was covered. He also
thanks Tim Richer from IBM Marketing for his support, Wade
Wallace for an early draft edit, and Jill from the Pearson team for
timely edits and responses. Special thanks to Greg Doench from
Pearson for his guidance on the publication process.
About the Authors
Jai Singh Arun is a senior program director at IBM’s corporate
strategy team and drives strategic product management and
business development of IBM Research innovations within the areas
of blockchain, artificial intelligence, and cybersecurity. He has over
two decades of global, cross-functional business and emerging
technologies leadership experience, building multi-million dollar
software, systems, and services businesses.
Jerry Cuomo leads IBM’s engineering and product initiatives on
Blockchain. He holds the prestigious title of IBM Fellow and is
recognized as one of the most prolific contributors to IBM’s software
business, producing products and technologies that have profoundly
impacted how the industry conducts commerce over the World Wide
Web.
Nitin Gaur is an IBM distinguished engineer and worldwide director
and leads IBM’s global blockchain labs and services. He is
responsible for strategy and for developing IBM’s digital currency
technologies and offerings, such as stable coins and digital fiat. He
pioneered IBM’s enterprise blockchain strategy and advised IBM
decision makers, business partners, and clients on the use of the
technology.
1
Introduction to Blockchain
Blockchain will do for transactions what the Internet did for
information.
—Ginni Rometty, CEO, IBM
Blockchain is a technology that is poised to usher in a new way of
conducting business that will change everyday life for the better.
Blockchain empowers groups of institutions to achieve better
outcomes by creating new growth opportunities that together are
greater than the feats that any single member could achieve alone.
Blockchain makes it possible to reimagine many of the world’s most
fundamental business interactions and opens the door to new styles
of digital interactions yet to be imagined. It is now regularly showing
its potential to vastly reduce the cost and complexity of getting things
done across industries, government agencies, and social institutions.
Most people who have heard of blockchain associate it with the
cryptocurrency Bitcoin. Although they are related, these two
concepts are not the same. The potential uses for blockchain are far
broader than the applications for cryptocurrency. Also, whereas the
Bitcoin network operates on permissionless membership principles
and extends anonymity, a permissioned blockchain network governs
its membership with known entities.
The full benefits of blockchain will be realized through its broadest
use across the broadest set of industries. We have participated in
hundreds of blockchain projects across the supply chain
government, healthcare, transportation, insurance, chemicals and
petroleum, and many more industries. From those experiences, we
have developed three key beliefs.
Blockchain Beliefs
We have the following beliefs about blockchain that reveal its vast
promise:
Transformative: We believe that blockchain is a transformative
technology that can radically change the way businesses
interact. At the center of a blockchain is a shared immutable
ledger. Each member of a blockchain network has an exact
copy of the ledger that is kept current as it updates over time.
After a transaction is entered, it cannot be changed. With this
shared copy of the truth:
Net new growth opportunities are discovered because
new trusted business models are identified.
Sustainable competitive advantage is gained through
participation in a new decentralized economy with new
business models.
Time is saved because multiparty transactions can be
processed immediately.
Costs are reduced because overhead is eliminated by
having businesses transact directly with each other.
Risk is mitigated because the ledger acts as an immutable
audit trail.
Open: We believe that blockchain must be open to encourage
broad adoption, innovation, and interoperability. Organizations
such as the Linux Foundation’s Hyperledger Project, with
hundreds of members across all industries, have provided a
breeding ground for business-savvy blockchain software. Only
with openness will blockchain be widely adopted and spur
innovation for business.
Ready for business: We believe that blockchain is ready for
business use today. A new breed of blockchain technology is
now available that has been engineered from the ground up,
under the governance of the Hyperledger Project, to handle the
demands of enterprises and provide a foundation that ensures
good ethical business behavior.
Enterprise Blockchain
The basic blockchain concept can be defined quite simply: It is a
shared, decentralized, cryptographically secured, and immutable
digital ledger. However, enterprise blockchain enriches this definition
with a few key attributes:
Accountability: Network members are known and identified by
cryptographic membership keys with assigned access
permissions by business role. Without such accountability,
compliance with regulations such as the Health Insurance
Portability and Accountability Act of 1996 (HIPAA) and General
Data Protection Regulation of 2018 (GDPR) would be nearly
impossible to achieve.
Privacy: Although members are known to the network,
transactions are shared only with those members that need to
know about them. Enterprise blockchain uses various
techniques to achieve privacy, including peer-to-peer1
connections, privacy channels,2 and zero-knowledge proofs.3
Scalability: Supporting an immense volume of transactions is
critical to enterprise scenarios. Because transactions are not
typically throttled in enterprise blockchains as they are in
networks like Bitcoin, they can be carried out immediately. Any
particular enterprise’s transaction rates will depend on many
factors, including the number of peers and the complexity of the
smart contract. Transaction rates measured in thousands of
transactions per second are certainly achievable.4
Security: Enterprise blockchains are fault-tolerant. With faulttolerant consensus algorithms, the network continues to operate
even in the presence of bad actors or carelessness. An example
of a fault-tolerant consensus algorithm is RAFT.5
Motivational: An enterprise blockchain benefits from a built-in
incentive system to help accelerate the adoption curve. You can
think of this driver as a “loyalty point” or a “token” that delivers a
motivational and economic incentive for network providers and
consumers.
Enterprise blockchains are often incorrectly characterized as private
networks. In reality, access to an enterprise blockchain is controlled
by “the governors,” who set the policy establishing how new
members can participate in the network. The visibility (public or
private) of the network depends on how it is governed. Thus, it is
true that enterprise blockchains are permissioned, but not
necessarily private.
Why Blockchain Matters
Blockchain matters because no business operates in isolation.
Multiple institutions can achieve more together than any single
institution can alone. By implementing business processes that
leverage the collective knowledge of the group, processes can
become orders of magnitude more cost-efficient. New processes—
processes that were not possible before blockchain—can be
created. This opens up new opportunities and can create a
competitive advantage for many businesses.
For example, the U.S. Food and Drug Administration (FDA) recently
adopted food labeling regulations6 that require manufacturers to
notify the public of “sugar added” to food. But how does a company
that produces protein bars, for example, know with certainty that the
ingredients it is using contain sugar—and more importantly, how can
it prove that fact if challenged? When it operates as part of a trusted
food blockchain, in which ingredient suppliers record food
information to a blockchain, the company marketing the protein bar
can easily show the provenance of each ingredient, from farm to
convenience store. This approach saves both time and money.
Additionally, the same blockchain can be used to prevent foodborne
illnesses and to enable the participating companies to trace bad
ingredients that might be causing such illnesses. Because the food
industry must follow numerous regulations (for our own safety and
well-being), you can easily imagine how an enterprise blockchain
would be essential to making this scenario work. In particular,
blockchain can address the following concerns:
Accountability: The blockchain means that you can prove your
institution is who you say it is to the FDA and other companies.
Privacy: Your competitor will not know from which vendor you
are buying your sugar and at what price.
Scalability: You can track many food records.
Security: You must trust all the information, and information
access must be resilient.
Motivation: Economic incentives provide an incentive for
members to contribute data.
The Trailblazers
The blockchain trailblazers are off to the races, having implemented
live networks that are demonstrating real business value today.
Consider these examples of early trailblazers:
The Trade Finance solution7 that is convened by We.Trade
The Identity Verification (verified.me)8 solution that is convened
by SecureKey
The Foreign Currency Exchange9 solution that is convened by
CLS-Group
The Event Ticketing10 solution that is convened by True Tickets
The Autonomous Car11 solution that is convened by Car eWallet
The Internet of Loyalty12 that is convened by Loyyal
These solutions are real, running applications—not proofs-ofconcepts. They serve as production systems with multiple members,
adding blocks and exchanging value daily.
Founders
The trailblazers who founded these networks have many things in
common. Most notably, behind these solutions you will find a set of
imaginative individuals who exemplify the dominant connector
archetype.13 For instance, Greg Wolfond14 from SecureKey has an
inclusive personality and naturally promotes a culture of working
together toward a common goal. As a solution convener, Greg has
maven and salesman archetype qualities, which instills in others the
excitement and motivation to participate in a multi-institutional
solution working toward a mantra of “The group can produce a better
outcome than any individual institution alone.”
By working closely with these solution founders and following trends
that are observed from hundreds of blockchain engagements, we
have learned what it takes to move an idea to a live network.
Specifically, these founders have balanced scope, incentives, and
governance to produce a live network.
Scope: Dream Large and Act Incrementally
Blockchain solution founders dream large and act incrementally.
They aim to unleash the transformative power of blockchain, but
realize that their “moon shot” requires an “Apollo program” that lays
out a set of steps that ultimately move the solution to production.
Trailblazing founders agree that the solution scope must be
business-driven. Most founders set goals that are disruptive, leading
to a new way of conducting business. At the same time, their
minimal viable product (MVP) goal is more basic, usually focused on
demonstrating one facet of the disruptive business model, which is
more likely to yield an initial cost savings versus a new revenue
stream for solution members. Rather than “ripping and replacing,”
some founders initially keep their current business-to-business
systems in place while they run their distributed ledger technology in
parallel to add new functions to an existing business process; in
doing so, this approach enriches—rather than replaces—the
process. We call this a “shadow ledger.”
Similarly, although successful solution founders realize that a
decentralized solution is the goal, only a minimal viable ecosystem
(MVE) of members must participate to launch the solution. Solutions
that commence with more members take longer to activate than
solutions that start with fewer members. Membership considerations
are critical and must be addressed up front. New members might be
hesitant to join a network in which their competitors are also
participating. However, having competitors participate makes the
ecosystem more trusted and vibrant because trust is gained through
a diversity of members. The right governance and incentive system
can help.
Motivation: Driving Momentum within the Ecosystem
Successful founders understand how to motivate the members of
their network. This motivation is often accomplished by creating an
economy of buyers (data consumers) and sellers (data providers)
within the solution. Motivation is created by balancing obligations
and rewards.
For example, the SecureKey solution provides “privacy protecting”
ground rules (defined in chaincode) for how data are exchanged.
This set of rules also ensures that digital asset providers “get paid”
when digital asset consumers “pay” to have identity attributes
verified. The ground rules create the backbone of a digital
marketplace, which motivates participation through better accuracy,
lower-cost verification, greater speed, and a better overall user
experience.
Asset tokenization is an emerging technique that is used by
enterprise blockchain founders to provide a motivational incentive
system. In many cases, the token is native to the solution and can
play a role akin to that of loyalty points. For example, one solution
introduces a native carbon credit token that is awarded to a network
member when that user conserves energy. The user can exchange
the token for discounts on debit card purchases that are made via a
debit card provider that, like the local energy company, is also a
network member.
Governance: The Total Is Greater Than the Sum of the
Parts
Governance is mandatory within a blockchain network, and a
blockchain solution’s likelihood to go live is increased to the degree it
is written down. The best founders are “referees” who bring together
the group on multiple levels. In each case, a “board of stakeholders”
is convened to define the rules that are inherent in the solutions and
converge on the scope and motivation.
Workgroups are typically defined to focus on business models, legal
concerns regarding intellectual property (IP) rights and liability,
technical design, and architecture. Proper business governance
encourages participation and removes uncertainty and the risk of
business obligations (which are embodied in smart contracts).
Proper technical governance ensures that the blockchain solution
can be managed in a decentralized way so that deployment of new
smart contracts or the invitation of new members happens with
consent from the group.
The first graduating class of blockchain trailblazers has already had
their solutions go live, with “blocks on the chain.” They are dreaming
large but starting incrementally, motivating a group of diverse
members to participate in a solution through incentives and an
inclusive governance process.
Blockchain for Good
The trust model that underlies blockchain networks provides a
natural setting for solutions that are unmatched in delivering social
good. Blockchain is poised to deliver strong business returns.
Moreover, when used correctly, it can deliver user experiences that
are respectful of user privacy and literally save lives.
Here are three examples that illustrate how blockchain for social
good is also good for business.
Reducing Foodborne Illnesses
Has this ever happened to you? You are rushing through New York’s
LaGuardia Airport trying to make a flight. You are hungry and grab a
salad before hopping on the plane. An hour into the flight, though,
you do not feel well.
In 2006, a nationwide outbreak of Escherichia coli15 was linked to
bagged spinach. It took regulators two weeks to conduct the
backtrace and determine the exact source of the outbreak. During
those two weeks, many people got sick and one person died. Tons of
good spinach was unnecessarily discarded—wrongfully wasted—
because we could not tell the good spinach from the bad.
IBM Food Trust Network16 consists of several major food companies,
including Walmart, Unilever, and Nestlé. This network enables
supply chain visibility across these members (and their ecosystem)
to quickly pinpoint the sources of contamination. The network is
already showing results that can reduce the impact of food recalls
and limit the number of people who get sick or die from foodborne
illnesses.
With blockchain, network members can track the provenance of
ingredients as they travel from farm to fork. Recently, Walmart did an
experiment that traced the origin of sliced mangos from Walmart
stores back to the farm. This process showed a radical improvement
from the approximately 7 days it took to conduct the backtrace by
using traditional methods down to 2.2 seconds by using an
enterprise blockchain platform. Frank Yiannas, Vice President for
Food Safety at Walmart,17 says, “That’s food traceability at the
speed of thought with blockchain.” This is an inspiring example of
blockchain changing everyday life.
Eliminating Big Data Breaches
Has this ever happened to you? You are renting an apartment. The
real estate company asks you to share information about every
aspect of your life—where you live, your mother’s maiden name,
your Social Security number, your place of employment, and a credit
statement from your bank. You repeat this process when you sign up
for a new smartphone and when you visit the doctor for a checkup.
You have bits and pieces of information, including user IDs and
passwords, scattered all over the Internet. Then, you get a notice
from a major service provider that your data were stolen! This
scenario is scary and frustrating—and all too realistic: An estimated
15.4 million consumers were hit with identity theft in 2016, according
to a Javelin Strategy & Research 2017 Identity Fraud Study.18
The days of big data breaches appear to be numbered, though, with
the emergence of the Verified.Me network created by SecureKey.8
The Canadian Verified.me network is live and hosted by the major
banks of Canada. With the Verified.me smartphone app, you can
take control of your digital identity attributes. The app provides a
simple experience for signing up for (and signing in to) Internetbased services. Acting as a digital rights management system for
your identity, the app enables you to give permission to the real
estate company to electronically ask the questions that are required
to rent an apartment. Similarly, you give permission to trusted
institutions (such as banks, state or province motor vehicle
departments, and your employer) to answer the real estate
application questions.
With blockchain, the verification process takes place in real time and
with unprecedented respect for your privacy. The solution is
designed so that there is no central database of identity information.
Instead, the blockchain ledger is used as a digital rights
management system, storing permissions and proofs by which the
user grants institutions rights to access your identity information.
Without a central “data honeypot,” the attack surface of an identity
breach is radically changed, making it difficult for bad actors to walk
away with a “big score.”
Blockchain also prevents your digital data from being tracked. You
might not want the real estate company to know with which bank you
do business. With “triple blind data exchanges,” the data requester
never knows who the provider is, the data provider does not know
the requester, and the network operator knows neither of those
parties.
Blockchain enables only the necessary information to be exchanged.
If you are using Verified.me to prove your age to enter a bar, you
must prove only that your age is 21 or older; you need not show your
driver’s license, which also includes your address. The National
Institute of Standards and Technology,19 along with other privacy
agencies, views this approach as the best strategy for protecting
users’ privacy.
Preventing Counterfeiting
Has this ever happened to you? It certainly happened to one of the
authors. A friend, who had a headache, asked for an aspirin. I went
into the road-warrior aspirin bottle that I keep in my notebook bag
and gave him one. Before he took it, he scrutinized the pill and
asked, “What are you giving me?” It didn’t look like any aspirin he
had ever seen. I said, “I think it’s an aspirin.” He responded with a bit
of terror in his voice, “You THINK?” The pill had a number on the
side, which I quickly searched on my phone and revealed to be a
generic form of Tylenol. Phew!
This sort of issue is rapidly becoming a widespread concern. The
World Health Organization estimates that 1 in 10 medical products
now circulating in low- and middle-income countries is either
substandard or falsified, including pills, vaccines, and diagnostic kits.
Examples include cough syrups for children that contain powerful
opioids, and fake antimalarial pills made of only potato and
cornstarch.
The Crypto Anchor Verifier project20 from IBM Research Lab aims to
use artificial intelligence (AI) technology with blockchain to prevent
counterfeiting. The technology uniquely identifies a physical asset as
a corresponding digital asset to trace provenance. The manufacturer
can place a digital cryptographic fingerprint of an aspirin on a
blockchain so that the pill can be verified for authenticity as it
progresses across the supply chain.
The Crypto Anchor Verifier provides a lens attachment for a standard
smartphone. This app leverages AI technology to perform light
spectral analysis against a physical asset. It captures microscopic
properties, viscosity, and other identifiers, and produces a unique
digital identifier for physical goods. When immutably placed on a
blockchain, the “fingerprint” of that digital good can be checked again
by the Crypto Anchor Verifier at customs, at a point of purchase, or
immediately before you swallow your medication.
These examples show the promise of blockchain. It is energizing to
see blockchain changing everyday life for social good. With this
benefit as a motivation, we continue to solve the business and
technical problems that will unleash many similarly inspiring uses of
an enterprise blockchain.21
Blockchain Questions from Business and
Technology Leaders
Blockchain is both a disruptive technology and a transformational
one. As you think about leveraging blockchain for your business, you
might have several questions in mind. As we have shared the
blockchain technology and its business value with hundreds of
business and technology leaders from many different industries, a
predominant set of questions emerged. We did our research and
rounded up the most searched terms as they relate to blockchain for
business. Figure 1.1 shows these terms and their associated volume
of interest.
Figure 1.1 Most searched blockchain for business terms.
After observing the data from our study, we inferred the top six
questions that business leaders might have about blockchain. Each
of these questions is introduced here and explored in further detail
throughout the rest of this book.
Does Blockchain Apply to My Industry and Business
Objectives?
Blockchain will most certainly impact every industry, including yours.
In many cases, blockchain solutions will affect specific industries and
cross-industries. For example, the trade, financial, and food-supply
industries already are connected by blockchain. Blockchain will
transform the way many industries do business, but it will not be the
answer for every business objective.
How Does Blockchain Drive Top-Line Growth and
Competitive Advantage for My Business?
As blockchain enables trust and transparency across businesses, it
opens up new opportunities for new business models, new
ecosystems, and new economic environments with secure,
distributed business transactions. These new opportunities will drive
new revenue streams for many businesses and enable them to
leapfrog the competition by adopting a transformational technology
and potentially disrupting some competitors from the value chain.
For example, a digital trade chain can simplify a trade finance
platform and provide access to more trading partners and more
business, and a “know your customer” (KYC) application can use
blockchain to reduce the friction and time to verify and onboard
clients faster.
What Value-Added Business Models Does Blockchain
Present?
Blockchain will both enhance many existing business models and
create new models. To ensure that we have defined a clear path to
enterprise blockchain adoption, we must focus on both business and
technology models. We can take a singular use case that has an
industry and enterprise impact and apply business and technology
value analysis that results in a business architecture and technology
blueprint, along with requirements for compliance, audit, and
enterprise integration. The aforementioned artifacts drive an
adoption model that enlists and surfaces hurdles and challenges,
and factors in the costs and economic viability of the blockchain
solution. Permissioned networks might also need to uncover the
correct incentive and economic model to compel enterprises to join a
platform that uses the notion of creation, distribution, and sharing of
rewards that benefit all stakeholders. It is imperative that industries
start the journey to explore the correct business model that enables
value creation and elevates the modernization efforts that many
industries desperately need to combat disruptive forces.
How Does Blockchain Network Governance and Design
Work?
When members join a blockchain network, there must be clear
protocols in place to govern and operate the network. In the
enterprise space, we must define a simplified governance
framework, in which we create a governance model that is inclusive
of the principles of game theories, incentives, penalties, flexibility,
delegation, and network mechanisms of coordination. These core
principles must be included in all governing aspects of a blockchain
business network, including the technology infrastructure
governance, network membership governance, and business
network governance.
Do I Need a Dedicated Blockchain Development Team?
In short, the answer to this question is yes—but you do not
necessarily need a new team. Any developer can be a blockchain
developer, because a typical blockchain solution is composed of
80% application and 20% blockchain framework. Applications can be
written in languages that your development team already knows,
such as Node.js, Go, Java, JavaScript, and Python. The framework
component can be managed by blockchain platforms. Like the
application component, the associated smart contracts can be
developed in familiar programming languages. Therefore, a
development team whose members use the knowledge that they
already have can easily become a blockchain development team,
with 80% of the team focused on the application and 20% of the
team focused on the framework.
What Is the Cost of Implementing Blockchain?
The cost of implementing blockchain can be calculated by using
variables that are specific to your project or use case, participants,
technology, business model, and return on investment (ROI)
expectations. However, getting started on your blockchain journey is
cost-efficient because blockchain platforms such as Hyperledger,
Ethereum, Corda, and Quorum are open technologies or open
source, and even enterprise platforms like IBM Blockchain offer free
tiers to help you get started.
Other Questions
Here are some other questions that might be of interest as ponder
enterprise blockchain. All these questions will be covered as you
continue through this book.
What are the advantages of adopting blockchain?
What are the top challenges in implementing blockchain?
Are there guides to help with implementing blockchain?
Which scalability concerns arise with blockchain?
Which type of IT infrastructure is needed to implement
blockchain?
How do I think about designing a blockchain solution?
Which speed and data acceleration factors must be addressed
to meet transactional requests?
Chapter Summary
We hope that this introductory chapter has piqued your curiosity
about blockchain and its enormous benefits. Imagine a world where
your data are secure, fewer people die due to foodborne illnesses,
and counterfeiting is a worthless endeavor due to the instant
verification of fakes—to name just a few of the benefits of
blockchain.
If these benefits are not enough for you, think about how your
business can benefit from showing accountability to governments
and other entities, safeguarding its business moves while remaining
efficient, scaling the enterprise to new levels, keeping its data
accessible while also keeping it secure, and profiting from
contributing data to the blockchain network.
If this sounds amazing to you and you are eager to learn more about
the opportunities that are provided by a blockchain network, continue
with Chapter 2. It explores more of the opportunities that blockchain
can create for your enterprise, but also highlights some of the
challenges that you must overcome to reap its copious and profitable
benefits.
References
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2. “Channels.” Prerequisites: Hyperledger–Fabric Docs Master
Documentation. Hyperledger, 2017. hyperledgerfabric.readthedocs.io/en/release-1.0/channels.html.
3. “Zero-Knowledge Proof Standardization.” An Open
Industry/Academic Initiative, 2019. zkproof.org/.
4. Vukolic, Marko. “IBM Research: Behind the Architecture of
Hyperledger Fabric.” The Analytics Maturity Model (IT’s Best Kept
Secret Is Optimization). IBM, 2018.
www.ibm.com/blogs/research/2018/02/architecture-hyperledgerfabric/.
5. Ongaro, Diego, and John Ousterhout. “In Search of an
Understandable Consensus Algorithm (Consensus Version.”
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6. Center for Food Safety and Applied Nutrition. “Labeling &
Nutrition: Changes to the Nutrition Facts Label.” U.S. Food and
Drug Administration, Center for Drug Evaluation and Research,
2018.
www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsReg
ulatoryInformation/LabelingNutrition/ucm385663.htm.
7. Condon, Mairin. “We.Trade Blockchain Platform Completes
Multiple Real-Time Customer Transactions.” We.Trade, 2018. wetrade.com/article/we-trade-blockchain-platform-completesmultiple-real-time-customer-transactions.
8. “Your Identity in Your Control.” Verified.Me, SecureKey
Technologies, 2018. verified.me/.
9. “CLSNet.” Oversight Committee, CLS Group, 2018. www.clsgroup.com/products/processing/clsnet/.
10. “True Tickets.” True Tickets, 2018. true-tickets.com/.
11. “Introducing Car EWallet.” Car EWallet, ZF Friedrichshafen AG,
2018/. car-ewallet.zf.com/site/carewallet/en/car_ewallet.html.
12. “Loyyal.” Loyyal, 2018. loyyal.com/.
13. Gilkey, Charlie. “Maven, Connector, or Salesperson: What’s Your
Archetype?” Productive Flourishing, June 28, 2018.
www.productiveflourishing.com/maven-connector-or-salespersonwhats-your-archetype/.
14. “Meet the Team: Greg Wolfond.” SecureKey Technologies, 2018.
securekey.com/about-securekey/meet-team/.
15. “Multistate Outbreak of E. coli O157:H7 Infections Linked to Fresh
Spinach (Final Update).” Centers for Disease Control and
Prevention, October 6, 2006. www.cdc.gov/ecoli/2006/spinach-102006.html.
16. “IBM Food Trust.” IBM Food Trust: IBM Blockchain. IBM, 2018.
www.ibm.com/blockchain/solutions/food-trust.
17. Mearian, Lucas. “Why a Walmart VP Had a ‘Religious Conversion’
to Blockchain.” Computerworld. IDG Communications, April 27,
2018. www.computerworld.com/article/3269431/blockchain/why-awalmart-vp-had-a-religious-conversion-to-blockchain.html.
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2017, According to New Javelin Strategy & Research Study.”
Javelin, 2018. www.javelinstrategy.com/press-release/identity-
fraud-hits-all-time-high-167-million-us-victims-2017-accordingnew-javelin.
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Publication 800-63B. National Institute of Standards and
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Authentication.” The Analytics Maturity Model (IT Best Kept Secret
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21. Cuomo, Jerry. “Simply Defining Enterprise Blockchain.” LinkedIn,
2018. www.linkedin.com/pulse/simply-defining-enterpriseblockchain-jerry-cuomo/.
2
Opportunities and Challenges
Trust is the most important element that drives both a successful
transaction in a business and a meaningful personal or social
value exchange in a society.
—Jai Singh Arun
Aside from the Internet, which actually emerged at the end of the
20th century, blockchain is the most disruptive technology of the 21st
century. It radically unravels the trust, transparency, and
accountability issues in business, and opens endless opportunities
for innovation across industries.
In recent decades, businesses and trade have crossed geographic
boundaries and become global and open in many ways.
Nevertheless, the most fundamental challenge remains trust. In
many situations, would-be partners have either limited or no trust,
which is why an intermediary is often required between two or more
parties to complete their business transactions. Examples of such
intermediaries are banks, insurance agencies, trade agencies,
government agencies, credit agencies, and identity bureaus.
The transformational shift that blockchain delivers is a new way to
forge trust among distrusted partners. This shift will disrupt the way
that they—and you—do business. It brings many new opportunities
and a shared or peer-to-peer economy for every industry and
organization, including intermediaries, to reimagine and transform
their business processes and business models. However, every
opportunity comes with an initial challenge. Blockchain adoption is
challenging when you try to address too large a scope, there are no
motivations or incentives for participants, and the governance
structure is cumbersome and has many stakeholders.
Disruptive Elements
What makes blockchain so disruptive? Blockchain intrinsically
bridges the trust gap in our business networks and our societies by
co-developing a shared copy of the truth. Five critical elements of the
blockchain technology drive this disruption: transparency,
immutability, security, consensus, and smart contracts (Figure 2.1).
How you see these disruptive elements—that is, your perspective of
each of them—suggests ways to transform your business.
Figure 2.1 The five disruptive elements of blockchain technology.
Transparency
Blockchain provides end-to-end visibility of your business
transactions with a single source of truth that is replicated or shared
across the distributed ledger in your business network. Based on the
permissions that are given in a private or public blockchain-based
business network, you can see the full trail of a transaction. In the
past, this transparency has not existed in business networks that
involve multiple participants. Thus, the new transparency disrupts
many intermediaries or third parties in your business network by
enabling direct peer-to-peer connection and exchange.
Imagine a supply chain network with a single source of truth across
the value chain.
It is difficult to get real-time visibility of shipments in a logistics and
supply-chain business because such a complex network includes
multiple participants (users of goods, retailers, distributors,
manufacturers, suppliers, and brokers), each of which keeps its own
record of a transaction, and whose records are never synchronized.
A blockchain-based supply chain network provides greater visibility
and transparency that drives efficiency and higher value.
Immutability
After you record a transaction into a blockchain, no one can delete it.
If you try to modify the transaction, the blockchain appends another
update record to the transaction, which is visible to the participants in
the network. Each transaction in a blockchain is encoded into a data
block and uniquely signed and timestamped. Each block is
connected to the blocks before and after it. These blocks cannot be
altered or modified; they are linked together to form a chain that is
immutable and irreversible. An immutable history of transactions
eliminates the counterfeiting and fraud challenges faced by many
businesses.
The blockchain-driven provenance process eradicates counterfeiting
by using immutability and transparency.
Counterfeiting is the biggest challenge globally for legal and financial
documents and valuable goods, such as drugs, food products, luxury
clothes, and jewelry. It costs companies more than 7 percent of their
annual expenditures, amounting to almost $4 trillion each year on a
global scale.1 The immutable digital record and history of transfer of
an asset or good are identifiable and visible to the participants within
the blockchain network, so this approach blocks fraud and tampering
attempts in a system or process.
Security
Blockchain provides a highly secure transaction system that is
almost impossible to hack. Every transaction record on a blockchain
is cryptographically secured with digital signatures, along with a trail
of the transaction updates. Participants in the network have their
own private keys that are assigned to a transaction or any update to
an existing transaction. Therefore, security vulnerabilities are easily
identified and inherently prevented. Every transaction is replicated or
shared across the distributed ledger, which means that hackers must
look at every ledger and find the same data or record across all the
ledgers, which is difficult.
Security, privacy, and compliance are bolstered by a distributed
ledger, transaction integrity, high availability, and auditability.
The security of business-critical data and transactions is a primary
concern in any organization and across all industries. Digital
transformation of such data and transactions, in turn, is the key
driving force of further complexity in today’s business world and
brings up new security issues. Global cybersecurity spending was
expected to exceed $114 billion in 2018, according to analyst firm
Gartner,2 and Statista predicts that it will total more than $234 billion
by 2022.3
Most organizations keep their business and customer information in
a centralized system. Unfortunately, such centralized systems are
vulnerable to attack. Blockchain applies a decentralized approach, in
which the transaction data are replicated across the distributed
ledger. Thus, even though one of the ledgers is not active, the other
ledgers have a copy of the transactions and ensure availability. Each
transaction is validated or consented to by network participants
before it is posted in the ledger. Although you can identify the
members in a blockchain, they can maintain their anonymity and
privacy, which is important for organizations to ensure trust. Having
an untampered transaction history in blockchain delivers readily
available auditability for compliance and regulation purposes.
Consensus
The network participants in blockchain use a consensus mechanism
to eliminate the need to rely on central authorities and third parties to
validate business transactions. The foundation of cryptocurrency, for
example, is a public blockchain that requires miners to validate the
currency transactions. This process, which is called proof of work or
mining overhead, involves a huge amount of computing power and
energy. In contrast, permissioned blockchain includes trusted
participants on the network and uses consensus algorithms that
validate transactions anonymously without mining overhead, and
with a fraction of the computing power and the energy costs that are
used in a public blockchain.
Consensus drives fair participation in a business network with
democracy.
On a global scale, unfairness is more than 50% in economic
structures where benefits and burdens are not fairly distributed
across the country government according to a BBC poll. Many
businesses spend billions of dollars every year to deal with
unfairness issues, while others lose billions of dollars every year
without being aware of unfairness. Many intermediaries in the legal,
business, and government arenas take advantage of unfairness and
deceptive practices for their own economic or financial benefits.
Blockchain technology has the potential to replace the unfairness in
government and businesses with a truly democratic and transparent
approach toward transactions.
Smart Contracts
You can think of smart contracts as self-executing electronic
contracts that state the legal and business terms of an agreement
between business partners. Smart contracts in blockchain are
business logics that are programmed and embedded into a
transaction record that enable business process automation. Such
contracts allow transactions and agreements to be executed among
various business participants without engaging the services of a
central authority, legal system, or arbitrator. Business process
automation is possible by using smart contracts because the
transactions in blockchain are trusted, transparent, and immutable.
Smart contracts fuel business process innovation with automation,
speed, and compliance without hefty costs and risks.
Even though automation and agility are increasing in business or
legal contracts management, the average cost of processing and
reviewing a basic contract has increased by 38 percent in the last six
years and now averages $6900, according to the International
Association for Contract and Commercial Management (IACCM).4
The global legal services market alone is expected to top $1 trillion
by 2021, based on a Statista report.5 Think how much you are
spending on your contract management services and how much
potential smart contracts have to save money, enable contracts to be
processed faster or almost instantaneously electronically, and
reduce risks through application of transparency and immutability.
Initial estimates suggest that blockchain technology can reduce the
execution time of business contracts from days to minutes, from
manual to automated, at a fraction of the current cost, essentially
without any legal entity becoming involved.
Next, we’ll explore how these disruptive elements from blockchain
can uncover new opportunities for your business’s transformation.
Opportunities
Many individuals and organizations (sometimes unintentionally)
thwart positive changes in business due to their inability to see how
new innovative technologies can revolutionize the future. Emerging
technologies bring new opportunities and change our lives by
changing the way that we think and operate. Two of the revolutionary
technologies that we witnessed in the 20th century were personal
computers and the Internet. The next significant transformative
technology of the 21st century is blockchain.
Gartner forecasts that the business value that is driven by blockchain
will amount to $3.1 trillion by 2030.6 The true business value will be
driven by the new opportunities that users envision to transform their
businesses in various use cases across a wide range of industries,
from cryptocurrency to cross-border payments, food safety to
provenance, supply chain to trade finance, clinical trials to healthcare
exchanges, digital rights management to royalty settlements, digital
identity to land registry, and many more. Blockchain presents
endless opportunities.
Transformative Power of Blockchain
Blockchain technology drives transformational opportunities in three
ways so that enterprises, economies, and ecosystems flourish. This
transformation trilogy is composed of new organizational structures,
new business models, and new ecosystems (Figure 2.2).
Figure 2.2 The blockchain transformation trilogy.
Distributed Organizational Structure
Most modern organizations, whether public or private, are highly
centralized, and they typically institute bureaucratic governance that
benefits monopolies. Partners in that network are driven to compete
adversely. All too frequently, a command-and-control–driven
approach intended to gain short-term benefits disables the
innovation agenda in these organizations. The centralized structure
in such an organization has either limited or no visibility, trust, and
transparency across the business. These challenges drive higher
costs, reduce agility, add inefficiency in operations, and create an
unhealthy and unsustainable culture within the economy.
Now imagine how you might use blockchain to revive a centralized
organizational structure that drives freedom of innovation and
autonomy in the participating business networks. The distributed
nature of blockchain technology, along with the emphasis on
consensus and smart contracts, delivers a self-governing business
network with a greater autonomy that flattens traditional enterprise
structures into a distributed and shared structure. Business
transactions are managed in a distributed and shared ledger that
offers transparency and visibility across the network without any
complex and hierarchical nature. Imagine a new government
structure for a country that is free from fraud and bureaucracy and
transparent to its citizens.
This new distributed structure enables organizations to be highly
cost-effective, efficient, and faster in delivering services and
business results.
Trusted Business Model
Business models are primarily a construct indicating how
organizations bring a set of capabilities to create and deliver value to
their clients and partners by maintaining relationships, ensuring
stickiness, and differentiating products and services from those of
their competitors. The traditional business models are process-heavy
and require the presence of many stakeholders, intermediaries, and
third parties due to limited trust and transparency. These
characteristics drive inefficiencies, higher costs, and sluggishness in
the business. Recently, however, new models have emerged that
have disrupted traditional models, such Uber (taxi service), Airbnb
(short-term housing rental), and Netflix (movie rental).
Blockchain presents many opportunities beyond cryptocurrency for
organizations to disrupt traditional business models by using peer-topeer exchange with trust, digital and automated execution of
business contracts, and agreements with smart contracts. The
intermediation between third parties is handled by distributed ledger
and transparency, and transaction integrity is ensured with security
and cryptography.
Blockchain injects trust into business transactions. It fundamentally
changes the state of trust in business models by making it dynamic,
so that business models can be defined as either trusted, semi-
trusted, or untrusted. A public, private, permissioned, or consortia
blockchain establishes trust with the correct governance structure
and policy.
Organizations’ brand and reputation systems that are built on
blockchain can provide assurance of truth and transparency through
their business records, which can visibly demonstrate
trustworthiness to their potential clients and partners.
Examples of such business model transformations include the
following:
A music distribution model in which music files are exchanged
directly from creator to the listeners and monetized without any
distributors
A remittance model in which money is transferred from a sender
to a receiver without a financial institution acting as an
intermediary
An open market model that connects buyers and sellers directly
without an exchange intermediary
Decentralized Ecosystem
An open approach toward business transactions’ trust and
transparency in a network that is driven by blockchain promotes a
transformational journey for the network’s participants. In this
approach, organizations and systems cooperate, and value is cocreated and contained in the network.
As blockchain delivers distributed organizational structures and
trusted business models, it fosters new emerging trusted
marketplaces and economy-to-exchange value. Peer-to-peer models
are driving the new ecosystem of players and eliminated the roles for
intermediaries. This systematic change fosters the creation of new
consumers, competitors, microeconomies, profit pools, and a
distributed ecosystem. Decentralized, ecosystem-driven markets are
impossible to compete with.
The following examples illustrate new ecosystems that can emerge
as part of distributed environments:
Start-up funding is reinvented by using initial coin offerings
(ICO) and tokens.
A “know your customers” (KYC) service is created and used
within a business network and eliminates the traditional KYC
that was redundant for each organization.
Assets and land registration in developing nations can leapfrog
traditional rural and urban development and real estate
governance ecosystems in developed nations.
A trading and investment model runs without a clearinghouse.
Achieving these kinds of advances is not a matter of mastering the
blockchain technology; instead, it requires rethinking your current
market role, value streams, and existing business ecosystems, and
finding opportunities to transform your business. This is a new
radical shift in businesses in which many elements must be
redesigned, such as organizational structure, business model, and
ecosystem.
Transformative Opportunities
This section examines some of the industry-specific transformational
opportunities that may be driven by blockchain, beyond Bitcoin or
cryptocurrency.
Banking and Financial Markets
Blockchain capabilities deliver banking innovations to revamp the
experience for customers by reducing transaction times from hours
to seconds, eliminating manual processes, and eradicating
unnecessary intermediaries in trade finance, digital identities, and
cross-border payments. With blockchain, you can conduct business
rapidly and securely, moving from paper-based to blockchain-stored
transaction records, which can enable easier expansion to
underserved markets, such as small and medium enterprises.
Trade Finance
Banks continue to struggle with manual processes and stringent
requirements for managing, tracking, and securing domestic and
cross-border trade transactions. For example, processes for
corporate trade financing letters of credit are typically paper based
and fragmented, which can make financing more challenging for the
50 percent of smaller enterprises that might not have credit sources.
Blockchain-based smart contracts can automatically store, secure,
and exchange contract details and financial terms; coordinate trade
logistics and payments via an integrated real-time network; and
streamline digital trade processes. With blockchain, ledger
transactions can flow from one small enterprise to another one
through a trusted bank. Larger firms can also benefit by better
tracking of trade finance transactions.
For example, IBM and eight European banks have created
We.Trade, which is a multiple-bank collaboration that is building
trusted digital trade chain connections with smaller enterprises.
Digital Identity Verification
Requiring clients to repeatedly provide identifying information can
erode customer satisfaction and cause transaction delays.
Onboarding clients for checking accounts or mortgages or migrating
them from one bank to another requires strict compliance with KYC
standards.
On IBM Blockchain, identification documentation can be
consolidated with managed access and permissions without storing
the actual identifying information. This supports KYC due diligence,
helps secure personal information, and enhances client satisfaction.
For example, IBM and SecureKey Technologies are building an
identity-sharing ecosystem with Canadian banks that will enable
clients to instantly verify identities when opening new accounts.
Other uses include driver’s license applications and requests for
utility services.
Insurance
Blockchain can simplify and secure multiparty operations at the heart
of the insurance industry. Whether interacting with customers or
dealing with other parties, blockchain can reduce the challenges that
are presented by multiple parties that keep their own records.
As transactions occur, insurers can rely on blockchain’s distributed
ledger technology to update and validate information against other
records in the network; reduce management costs for policies,
claims, and relationships; streamline operations; and enhance
customer satisfaction. Companies can also capture opportunities
and revenue through new business models or new insurance
products.
Complex Risk Coverage
Employees, policy holders, adjusters, and agents who cannot view
insurance policy information usually need human help, which
increases the chance of errors, delays claims resolution, and
increases costs. The challenge escalates with complex insurance
programs or managing policies in multiple countries, which can
involve strict legal and regulatory adherence. Blockchain can resolve
many of these obstacles to smooth operations.
For example, using IBM Blockchain, AIG and Standard Chartered
converted multiple policies into “smart contracts” that provided a
single, consolidated view of policy data and documentation in real
time. The solution enables visibility into coverage and premium
payments, delivering automated notifications to network participants
after payment events occur.
Group Benefits
Organizations offering group benefits often rely on a complex
network of administrators, providers, employees, and others to
manage those benefits. Different versions of the same data require
consolidation to ensure eligibility and access to benefits.
For example, IBM Blockchain can be the vital link across a vast
ecosystem of third-party administrators and service provider
networks. Its shared ledger transparency can help employers reduce
errors, which results in improved claims processing, better provider
management, and lower operational expenses.
Healthcare
Blockchain can transform healthcare enterprises and increase the
quality of care by enabling new ecosystems and new business
models to evolve. Healthcare information that is stored on a
blockchain can change the way that providers store clinical
information and how they share information within their own
organization as well as with other healthcare partners, payers, and
patients.
Blockchain decentralizes healthcare information, increasing data
availability, efficiency, transparency, and trust. However, it requires
careful planning to make the most of the advantages it brings. The
blockchain infrastructure that IBM is helping to build provides
enterprises with a solid platform for both immediate and long-term
business solutions.
Patient Consent and Health Data Exchange
Disparate record-keeping systems can result in patient consent
forms and medical histories that are incomplete, conflicting, or
ambiguous. By comparison, blockchain-stored records can be used
to provide complete, longitudinal health records for individuals, giving
all patients more control over their own information through verifiable
consent. With blockchain, every patient record reflects the bestknown medical facts, from genomics data to diagnostic medical
imaging, and data can be reliably transferred when needed, with no
need for a central gatekeeper.
Clinical Trials Management
Clinical trials of healthcare interventions generate mountains of data,
which requires healthcare administrators to keep reliable and
consistent records for peer review and to meet regulatory
requirements. Blockchain tools, in concert with electronic data
capture (EDC), allows clinical data to be automatically aggregated,
replicated, and distributed among researchers and practitioners with
greater auditability, provenance tracking, and control compared to
complicated conventional systems.
Retail and Consumer Goods
Blockchain is removing obstacles and increasing visibility for
consumer products and retail business transactions. Greater
transparency through a shared and immutable ledger enables
businesses to establish a climate of trust across areas such as
invoicing and payments, the consumer supply chain, and global
shipping. Through the use of a distributed and trusted database, a
blockchain solution reduces barriers that might otherwise impede
business, such as siloed management and regulatory systems, timeconsuming settlement processes, and uncertainty between entities
conducting transactions.
Blockchain speeds transactions, builds trust between participating
members, and opens the door to cross-industry and global business
opportunities.
Commerce
All too often, lengthy invoicing and payment processes across
diverse systems lead to delays in verification and payments,
triggering disputes and driving up the cost of doing business in
today’s global markets. Blockchain helps remove friction from such
commerce by providing a common chain of information visibility that
is shared across vendors and purchasers.
For example, a major consumer goods company used IBM
Blockchain to reduce the complexity and ambiguity it encountered in
invoice processing. The solution cut processing times from five days
to one and trimmed processing costs by 50 percent. The company
plans to expand its new model to numerous other supplier
relationships.
Supply Chain Management
Disparate systems that are used by multiple entities across a supply
chain can block visibility across the ecosystem, creating an
atmosphere of distrust and leaving all parties at risk. For example,
trust in the food supply has suffered due to a lack of industry
transparency between suppliers, processors, distributors, retailers,
logistics providers, and consumers.
A blockchain-based food supply chain provenance like IBM Food
Trust is a collaborative solution that unites growers, distributors,
processors, retailers, and other food industry stakeholders to
efficiently and securely trace food through every step of the supply
chain. The IBM Blockchain–powered solution helps ensure food
safety from farm to store through rapid end-to-end traceability of data
and access to compliance certification.
For example, Walmart and IBM have partnered to help improve food
safety by using IBM Food Trust. The first blockchain food safety
solution to run production data for products across the food system,
it allows early adopters to confidently and securely share data with
their food supply chain partners.
In another supply-chain application, IBM and Maersk have
announced a joint effort to streamline shipping through creation of an
efficient and secure global trade digitization platform based on IBM
Blockchain. The proposed venture will address needs for
transparency, simplicity, and open standards as goods move across
borders and trading zones.
Government
From issuing identification and registering property to administering
elections and enforcing laws, government must ensure stringent data
stewardship to protect citizen information, maintain trust, and ensure
the accuracy of public records. Governments face challenges unlike
those encountered in any other domain: Data architects,
administrators, and privacy officers must protect citizens’ personal
information, yet keep vital information accessible when needed.
Scaling complicates life for government administrators, too: The vast
scope of mandated services and the large workforces that are
needed to provide them can lead to fraud, waste, and abuse,
allowing significant errors to slip into vital public records.
Asset Registration
We rely on government to accurately record and track our homes,
businesses, cars, and more, so as to verify ownership and ensure
smooth financial transactions. Accurate and accessible registries are
crucial to engender trust and transparency in government. Despite
this need, today’s registries suffer from slow, duplicative processes
and an overreliance on error-prone, incomplete, and manual data
entry. Blockchain enables government agencies to increase the
accuracy and efficiency of publicly held records by linking ownership
of an asset to a single and shared ledger without disrupting the
existing registry data.
Fraud Prevention and Compliance
All too often, fraud, information privacy abuse, and accidental data
exposure plague government data transactions. Moreover, siloed
legacy systems and processes within government frequently result in
multiple versions of multiuser data sets. In the absence of a single
version of the truth, the risk of fraud and the difficulty of ensuring
compliance increases each time a data set is accessed, because
there is no way to distinguish between correct and incorrect entries.
Blockchain creates a shared and trusted ledger that sequentially
appends cryptographi...
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