IBM’s Winston Yong: There’s a Lot More Good to Come out of Blockchain Than Just Cryptocurrency
It is important that major mainstream companies adopt blockchain technologies. It forms a use case for others to follow and learn from.
IBM, the global IT-giant, is one of the big players who are exploring blockchain and its applications. The company took on numerous initiatives over the last year, from supply chain infrastructure to its own stablecoin and blockchain browser.
We talked with Winston Yong, Chief Architect for IBM’s European Blockchain business unit, and Olga Kravchenko, Senior Consultant at IBM Norway, about the use cases for blockchain, IBM’s involvement with Hyperledger, Bitcoin, and technology adoption.
Nick Schteringard: The first question: blockchain, not Bitcoin, or Bitcoin, not blockchain? Your thoughts?
Winston Yong: So, Bitcoin is only one implementation of blockchain. Where IBM has decided to focus on is to make sure that the other characteristics of Blockchain, such as traceability and provenance are going to be useful to help society. That is more important for IBM. Hence, we have focused a lot on permissioned ledgers, where we are able to create supply chain efficiencies.
Olga Kravchenko: Right. In other words, we see blockchain as the two-way: the open and the closed one. Within the open ones, the application would be Bitcoin. Within the closed blockchains, you can name a lot of the technologies that are good to have, like Hyperledger Fabric that would host a lot of their applications on top.
Winston Yong: And if we only focus on things like cryptocurrency, then we are also using a lot of energy, generating all the energy to do the mining, to do the algorithmic calculation. Such energy, in IBM’s view, could be better harnessed to be good for the planet.
Nick Schteringard: Is it correct to call permissioned networks or permissioned ledgers blockchains? Is it correct from the technical side?
Winston Yong: Yes, I believe so.
Nick Schteringard: Okay, so you don’t believe that blockchain is suitable only for cryptocurrencies? Are there other applications?
Winston Yong: Yes. Think back about the time that Satoshi Nakamoto wrote his white paper. It describes the way blocks are chained together. Back then, Bitcoin was only his first application for it.
What we have now is all these people taking the base technology and applying it for other areas of good, such as asset management, the provenance of food, and supply chain of machinery, we’ve used it for digital identity and also for economic matching.
So we think that there is a lot more good that can come out of it than just cryptocurrency.
Nick Schteringard: Finish the thought: blockchain will empower…
Winston Yong: The people.
Nick Schteringard: Empower the people. And your version, Olga?
Olga Kravchenko: I mean, you can say whatever: empower the people, empower economies, empower transactions, empower countries. It just depends on how you use it, really, at the very end. Because it’s just technology.
What you do with it, what is the design, what is the intention—that’s what’s the most important. You can use it for good, or you can use it for profit, or you can use it for whatever. It depends on how you use it.
Nick Schteringard: Okay. So, is it correct to call Sawtooth Supply Chain a blockchain application rather than a framework?
Winston Yong: I think a framework is good from, let’s say, a technical perspective. You can have a framework, like a whole data architecture that caters to different types of food: food production, food packaging, etc.
But when it comes to the network, we may see multiple networks for different purposes and different use cases inside there. Eventually, these different networks will talk to each other. It is the concept of a network of networks that we in IBM are exploring a lot.
Nick Schteringard: Do you agree that IBM’s domination on the governing council of Hyperledger is a threat to the independence of the organization?
Olga Kravchenko: First of all, I don’t think we’re in a position to answer it. But the way I understand the Hyperledger Linux Foundation works is that in order for you to be promoted to the governing position, it is done by the majority of votes.
You need to be contributing. You need to be contributing with the code, with the checks, with everything. So you grow up to be recognized as the trusted adviser first and foremost, that has enough of the technological know-how and knowledge to be promoted up there to be deciding.
So, if the community has decided, I don’t think it’s in a particular matter for a company to say “yes” or “no”.
Nick Schteringard: Are IBM blockchain services based exclusively on Hyperledger Fabric?
Winston Yong: No. Of course, we start off with Hyperledger Fabric, because of our expertise and the availability of resources to do it. But we do do work in other types of chain codes as well.
Olga Kravchenko: Yeah, like Stellar, for example, right? We work with Stellar, we worked with Ethereum. We go with what we believe is the best fit for the use case. And then, of course, we have quite a heavy consultancy expertise on Hyperledger Fabric and the frameworks around that.
Nick Schteringard: Why should an enterprise choose IBM blockchain services rather than Corda Enterprise. Is there a substantial difference between, for example, TradeLens and Corda Enterprise?
Olga Kravchenko: There is no such thing as Corda Enterprise at the moment. Marco Polo is not live. Let’s put it there.
Winston Yong: The significant emphasis for IBM is about industrializing and making things production-ready. And that is one of the key emphasis that we have in blockchain services, that we help our clients get industrialized, to move away from proof of concepts or just experimentation.
When it comes to productionizing things, it is very significant that it relies on other areas, which are not blockchain-specific as well: security, penetration testing, latency, of all of these kinds of things.
Nick Schteringard: Do you see Ethereum Enterprise Alliance as a competitor?
Winston Yong: I think that the world of blockchain is growing so fast that there is space for all.
Olga Kravchenko: Yeah, exactly. The future is interconnected. The future is us and other companies working on the interoperability centers and patterns. There is a reason for that. It’s silly to believe that everyone in the world is going to join either us or someone else. So, of course, it’s going to be somehow sided.
So, you need to connect, eventually, and that’s why I think that the question of “why should they choose us over others?” is in a way incorrect. You don’t just come and say: “Hey, give me a blockchain!” You come with a business idea. The problem, the pain point, the functionality is what drives you.
And then, of course, there are certain preferences companies have. It could be simply “who do you have the most business with,” “what cloud do you use,” and “who do you trust most.” And that differs from geography to geography and industry to industry. That would drive a lot of the engagements, frankly.
Winston Yong: When you move blockchain projects away from experimentation into production, the main thing that you have to work with is the system of records, where are the data coming from.
And those kinds of things exist outside of the world of blockchain. The core banking system, the core insurance system, the warehousing system from SAP or sales ordering management system from Oracle. All of these are individual systems of records that you have to integrate and interface into a system.
IBM believes that our key differentiator is our ability to integrate conventional technology with emerging technology.
Nick Schteringard: The Hyperledger Consortium has an agreement with Ethereum Enterprise Alliance on common standards for blockchain applications and frameworks. Do you plan a similar agreement with R3 Corda?
Winston Yong: I think, out of the basis that we are all going to have to share standards, there are ongoing discussions between all the different players in the market about making things more interoperable, particularly around sharing data standards. So more and more of those discussions will happen.
It doesn’t take away the fact that we remain competitive, but above all, we need to be interoperable.
Nick Schteringard: Is it correct to say that IBM’s blockchain unit is focused more on Europe than other regions?
Olga Kravchenko: No.
Winston Yong: I wouldn’t say that it is because IBM put the focus on there. It has been our privilege to respond to the clients, and we found clients in Europe much more willing to adopt blockchain technology. And so, by default, we see the largest part of business being in Europe.
Olga Kravchenko: Once again, yes, sure thing, but you take IBM Food Trust. Their origins are in the U.S. You take TradeLens, sure, it’s origins are in Denmark. But it is a global business and the companies that are joining are across the globe, same as with Food Trust.
You can take we.trade, which is a purely European play, but in the future will grow global as well.
So I think it depends on who had the idea and how it was developed further on. And also the appetite. Blockchain has a bit of “how do you regulate,” “how do you upgrade the business,” and “how do you change the current status quo with the innovation.” In the beginning, there was a lot of interest in Asia, and now it’s more, at least on our side, interest in Europe. We just follow the client.
Nick Schteringard: Alright. So the main blockchain use case, for now, is supply chains?
Winston Yong: If I were to go around and count all the different projects that we see our clients involved in, I would say a large majority of them would have to do with the supply chain and the provenance of goods or services.
Olga Kravchenko: Yeah, that’s correct. And then you can also see a lot of financial services or identity-related services. And sort of how do you coordinate in between.
But supply chains are probably the most tangible use case that you can go to. It’s something that everybody understands, something that everybody appeals to. Supply chains are global and the need for a trusted source of data becomes more and more obvious for the parties.
Nick Schteringard: The last question is very simple. Do you have any clues why IBM is called “Big Blue?”
Winston Yong: There are many reasons and hypotheses for that. I think one of the main reasons is that our corporate color is blue. We have also been a large company that has gone through 108 years of existence and a lot of transformation. So I think the reasons are our work and our corporate color.
Olga Kravchenko: Yeah, I was gonna say it’s because of the blue-chip stock. It has been extremely stable and high-valued growth stock. So I think of the blue-chip as the reason behind “Big Blue.”
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