By Edd K. Usman
The local office of tech behemoth IBM is pulling out all the stops to preach the virtues of “blockchain” — a technology, the company said, worthy of the hype as the next biggest thing after the Internet.
IBM describes blockchain as “a shared ledger technology allowing any participant in the business network to see the system of record (ledger).” As described online, “blockchain reduces the costs involved in verifying transactions, and by removing the need for trusted ‘third-parties’ such as banks to complete transactions, thereby lowering the cost of networking and allowing several applications.”
In technology circles, blockchain is more known as the platform on which Bitcoin, the digital currency, is based. Presently, blockchain, though still in its infancy, has caught fire in the digital age because of its potentials to light up business and become a catalyst, among others, for new revenue streams.
“While innovations in technology are introduced every day, only a few profoundly impact the way people live and work. Blockchain is one that is set to cause a dramatic shift in global trade, as we know today,” IBM said.
Led by IBM Philippines president Luis Pineda, the company gave a glimpse of blockchain and its far-ranging effects on people’s lives and work during a recent media roundtable held at the Bonifacio Global City.
Manoj Pattabhiraman, architect of open-source solutions at IBM Asia Pacific, discussed how blockchain can provide benefit for organizations in the Philippines and around the world.
“Internet is different, blockchain is different. What we are saying is that it will revolutionize the way we work. For instance, if your account is hacked, others in the chain will see it and it will invalidate the transaction. This will stop the hacking on its tracks,” said Pattabhiraman.
To make the audience easily understand blockchain’s impact and benefit, Pattabhiraman provided various use cases, one of them in his home country of India.
One such scenario is a farmer getting a loan from a bank. The traditional way, he said, is that once a loan is approved, the farmer claims the money from the bank. Because the farmer is not monitored by the government and the lending bank, there is no stopping him from splurging the money on a TV set, a smartphone, or whatever he wants.
The result, as in the case of India, agriculture productivity did not improve even with the government’s program aimed at helping farmers, he said.
Pattabhiraman said if the situation is done in a blockchain, every phase of the transaction is shared and known by every organization involved in the loan program, and that a borrower (farmer) will be monitored all the way until he gets the fertilizer and seeds.
Lope A. Doromal Jr., chief technologist of IBM Philippines, said blockchain is also now being used in the Linux Foundation’s “Hyperledger Project,” of which IBM is one of the 122 members. “The Hyperledger Project is an implementation of blockchain that is being managed as an open-source project of the Linux Foundation,” he said.
Doromal said IBM is ready to assist customers who may want to adopt and implement blockchain by downloading the code from the Linux Foundation and installing it on their servers. He said IBM can also work with customers who are not comfortable with blockchain’s cloud implementation. “We will be the one to download the code and install it to their servers,” he said.
While individuals may try blockchain through IBM’s cloud platform Bluemix, Doromal said the company is training its sights on government agencies, banks, telecommunications firms, and logistics companies as they are connected to many networks.
“A very common use of blockchain is the Letter of Credit (LC),” he said, referring to the financial instrument used by banks and businessmen to ensure payment of goods. Doromal explained that under this set-up, the seller will require the buyer to put money in escrow with a specific bank to make sure that he (seller) is paid once the goods are delivered.
“But within a blockchain implementation of LCs, we will involve the importers, the exporters, the logistics company. So, instead of papers going around, it will be faster,” he said.