Published 16. Dec. 2016
Blockchain - the Next Internet?
Trying to explain a completely new technology is like holding a slippery soap in your hands. In a nutshell, Blockchain is a distributed database technology that helps to create cost-efficient business networks without requiring a centralized point of control. It is kind of an operating system for interactions.
To give an example, think about the lifecycle of a car. Blockchain makes the whole value chain visible from production to wreck yard and helps to track down and manage the different phases, owners, and money transfers.
Why should one be interested in Blockchain?
“Well, it has potential to become as big as the Internet. It may transform the way business transactions are conducted globally. Having said that, I need to remind, that although technology itself is revolutionary, it takes time to create business applications”, says Timo Koskinen, CTO of IBM Finland.
This is certainly something that is going to happen during the next years. IBM is a founding partner of a project called Hyperledger, which is a collaborative effort led by Linux Foundation. Its mission is to advance Blockchain technology by identifying and addressing important features for a cross-industry open standard for distributed ledgers (digital record of who-owns-what).
What are the benefits of the new technology?
In short, Blockchain establishes trust, accountability, and transparency while streamlining business processes. Implementation consists of two kinds of records: transactions and blocks. The block holds time-stamped batches of recent valid transactions and the linked blocks form a chain on which blocks reinforce the previous ones. Technology is known by bitcoin, however, the Blockchain 2.0 or Industrial Blockchain is another story. It is often described as a distributed shared ledger system. With distributed ledgers, virtually anything of value can be tracked and traded securely.
“In practice, Blockchain can be used to help companies manage the flow of goods and related payments or enable manufacturers to share production logs. It has a great potential to vastly reduce costs and the complexity of getting things done. It is secure, private, scalable, and auditable. Technology itself enables benefits, but one needs to build a business logic first”, Koskinen says.
“To gain results, we need to create a cross-industry open standard. Development should be open and modular. That is the reason why IBM has collaborated with Linux Foundation. Basically, we have outsourced our research and development work, altogether 44, 000 rows of codes for the project. Co-sourcing is the core of our philosophy.”
But is it going to change the world as radically as predicted?
That will remain to be seen, but this is a direction we are heading to.
“Today this may seem like a scifi-movie, but tomorrow it may already be too late to join the movement. We need to constantly evaluate the opportunities created by new technologies and Blockchain is one of the most promising ones. Potentially, it will have huge implications on different areas like logistics, banking and finance, or on the public sector. However, results may totally differ from what we now believe. Looking back, hardly anyone predicted the implications of the Internet either.”
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