IBM Pushes Blockchain into the Supply Chain
15 July 2016 - 7:10AM
Dow Jones News
By Kim Nash
International Business Machines Corp. said Thursday it has
launched a platform for companies to test "blockchain"
record-keeping technology in their supply chains.
The service is an attempt to expand the use of blockchain beyond
the financial services industry, where the technology underpins the
bitcoin digital currency and is used by banks and exchanges to
track financial transactions. While firms such as Nasdaq Inc.,
Depository Trust & Clearing Corp., J.P. Morgan Chase & Co.
and Bank of America Corp. are experimenting with blockchain, only a
handful of companies, including Toyota Motor Corp., have explored
using it to monitor their supply chains.
A blockchain is a data structure that makes it possible to
create and share a digital ledger of transactions. It uses
cryptography to allow anyone granted access to add to the ledger in
a secure way without the need for a central authority. Once a block
of data is recorded on the blockchain ledger, it's extremely
difficult to change or remove. Proponents say these traits make
blockchain well-suited for logging and monitoring large amounts of
data, such as short-term loans or the millions of parts coursing
through the aviation industry's supply chain.
IBM's new service lets supply chain customers build and test
blockchains in a secure cloud using a version of the company's
LinuxOne system. The service is aimed at companies that need to
track high-value items through complex supply chains. One of the
inaugural clients is Everledger, which helps companies track the
provenance of diamonds, allowing buyers to screen for stones mined
in regions where forced labor is common or where proceeds from
previous sales were used to fund violence.
Everledger is building systems to record the movement of
diamonds from mines to jewelry stores and has been using various
blockchain tools, including Bitcoin's ledger. Everledger is testing
IBM Blockchain for a global rollout possibly by the end of the
year, said CEO Leanne Kemp.
Today, many diamond transactions rely on paper, which can be
altered or forged, Ms. Kemp said. "It's a 150-year-old industry
that trades in trust."
By creating a permanent record that can't be altered, blockchain
is well-suited for tracking diamonds and other goods where buyers
want to know the origins and previous owners, said Bill Fearnley
Jr., a research director at International Data Corp.
"Valuable assets of any kind could be tracked better, with an
unerasable history, on a blockchain," he said.
IBM is working to establish itself as a force in the blockchain
business, developing code and hosting labs where customers can
experiment with blockchain software.
Supply chain is the most likely application for the technology
after financial services, said Jerry Cuomo, IBM's vice president
for blockchain.
Suppliers may also be starting to feel pressure to try
blockchain systems, Mr. Fearnley said.
"Financial services firms are in the middle of how things are
bought and paid for. When they embrace a technology, others must
follow to continue doing business with them," he said.
(END) Dow Jones Newswires
July 14, 2016 16:55 ET (20:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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