Blockchain is not bitcoin — it's far more

Blockchain is not bitcoin — it's far more
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Most people who have heard of blockchain probably associate it with the cryptocurrency bitcoin. While it’s true that blockchain provides the underlying technology that helps cryptocurrency exchanges, the reality is that the potential uses for blockchain are far broader than digital currencies. 

At IBM, for example, we have hundreds of blockchain projects underway in diverse industries, including supply chain, food safety, government, healthcare, travel and transportation, chemicals and petroleum, insurance and more. 

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On Wednesday, I have the honor of testifying before the House Committee on Science, Space and Technology about the emergence of this technology. I will share how blockchain is used currently and will be used in the future — and specifically how government can use blockchain to positively impact both U.S. competitiveness and our citizens.

 

This interest in blockchain for government couldn’t come at a better time. Our policymakers are wise to explore the science of blockchain technology and its potential and emerging applications beyond cryptocurrency.

Blockchain has the potential to vastly reduce the cost and complexity of getting things done across industries and governments. At the same time, it will help to unleash new business models as these networks take hold and bring parties together in new ways.

At the center of a blockchain network is the notion of a shared, immutable ledger. This ledger records all the transactions that take place within a network and distributes exact copies of that record, cryptographically protected so they cannot be changed, to all members on the network. In this way, something powerful happens: a single, shared copy of the truth is created, embedding a new level of trust across networks.

It is important to note however, that not all blockchains are created equal. Bitcoin operates within a network of anonymous participants, while other enterprise-class blockchains are openly governed and feature permissioning to handle interactions between known parties.

For broad business and government use, enterprise blockchains will be the preferred approach — particularly those built on open-source technology — because they meet four fundamental requirements: accountability, privacy, scalability and security. 

American companies are already leading the way by incorporating blockchain into the way we do business — with potentially transformative results. 

For example, in the area of food safety, a coalition of 12 companies, including Walmart, Unilever and Nestle, are working with IBM to apply enterprise blockchain to the challenge of provenance and transparency in the global food supply chain.

Every year, 400,000 people around the world die from foodborne illness. Blockchain is being used to quickly pinpoint the source of contamination, reduce the impact of food recalls and limit the number of people who get sick or die from foodborne illness. 

Or, consider the work IBM is doing with Maersk, the world’s largest shipping company, to create an industry-wide trading platform for those public and private sector organizations responsible for ocean freight. This industry accounts for 90 percent of goods shipped in global trade.

Currently, one shipment of goods between two ports can generate a sea of paper and information exchanges between 30 different public and private organizations. Blockchain is being used to help track, in real time, millions of shipping containers across the world by providing a trusted, tamper-proof, cross-border system for digitized trade documents.

When adopted at scale, the solution has the potential to save billions of dollars of waste, increase global trade and improve economies.

Just as blockchain benefits business ecosystems, it also holds great potential for the public sector to reduce costs and deliver better and more innovative services.

We’re already seeing several federal agencies and local governments engage in pilot projects, including the FDA and CDC, both of which are exploring how it can be used to improve public health. We believe there is an opportunity for the U.S. government to do more in a few important key areas. 

First, let’s focus efforts on projects that can quickly and positively impact U.S. economic competitiveness and our citizens, then use the knowledge gained to inform policy and regulation related to different blockchain use cases.

The Congressional Blockchain Caucus has already begun this critical work by assessing projects in digital identity, payments and supply chains. This work can fuel initiatives to help citizens in other areas, like public health, taxation and land registration.

In the same spirit of citizen benefits, we should continue to encourage further collaboration between government, academia and the private sector to prepare our citizens for the high-skilled jobs of the future that will involve building and working with blockchain technologies. 

Second, we should look for ways to fuel innovation in the broader ecosystem of U.S. businesses by encouraging blockchain projects as part of the Small Business Innovation Research (SBIR) program that is part of existing research budgets in a number of agencies today.

Finally, and perhaps most importantly, when considering regulatory policy, recognize the vast differences between blockchain’s use in cryptocurrency from the broader application of blockchain across many other industries.

Doing so will help avoid unintended consequences that could stymie the innovation and development surrounding blockchain and will ensure that the U.S. maintains its leadership position with this promising technology. 

We believe blockchain is ready for government, and we look forward to working collaboratively with Congress to ensure our government is ready for blockchain. 

Jerry Cuomo is vice president of blockchain technologies for IBM.