Image: Piyapong Wongkam/Shutterstock
IBM Research’s director Wendy Belluomini sees many benefits with the onset of blockchain technology, but none more so than smart contracts.
Blockchain’s potential to transform the financial sector has been well documented at this stage, with many major banks deciding that a transparent, distributed ledger system offers significant benefits over existing systems.
The same goes for the shipping sector, where companies such as Maersk Line are already investing millions of dollars in building a platform that will see 10m of its containers managed by blockchain by the end of this year. In doing so, it will help to manage and track the paper trail from these containers by digitising the entire supply chain process, to enhance transparency and security of sharing information among trading partners.
With the onset of the mass use of email and computers in the early 1990s, many predicted that the offices of the future would be paperless, without the clutter of reams of books and documents.
The problem is, here we are three decades later and my desk and home are still filled with paper documents and a digital mountain of unrelenting email.
This is where blockchain could come in, IBM Research’s director Wendy Belluomini said in conversation with Siliconrepublic.com, and it remains one of the lesser-discussed aspects of the technology.
This ‘shredding’ of the paper trail is exactly what Maersk’s collaborative research partner on the project, IBM, is looking to do.
‘I’ve stacks of paper for everything I’ve ever bought. But does it do anyone good sitting in a closet?’
– WENDY BELLUOMINI
Built on platforms such as ethereum, a ‘smart contract’ could allow for multiple parties to do away with lengthy and costly follow-up on transactions or legal agreements.
Picture yourself entering into the excruciating process of buying a house, but knowing that all of the parties involved – solicitors, estate agents, homeowners and homebuyers – all work from a single, transparent and instantly editable ledger on the blockchain. This could potentially remove hours of painstaking follow-up and double-checking as the smart contract would be programmed to do the necessary actions automatically.
“The overhead of signing a mortgage is enormous – it’s just a giant stack of paper,” Belluomini said. “I’ve stacks of paper for everything I’ve ever bought. But does it do anyone good sitting in a closet? If that was on the blockchain, you wouldn’t need that any more.”
As we saw earlier this year, smart contracts aren’t without their limitations, with many questions remaining over how flexible they could be to changing situations. However, Belluomini thinks it will be an interesting research exercise.
“It’s going to be a really fun development to watch as, slowly, each of these horrible paper-based processes that we have to deal with get turned into easy, blockchain-based things that we do.”
Wendy Belluomini, director, IBM Research. Image: IBM
IBM’s work with blockchain
IBM Research became heavily involved in blockchain research and development back in 2014, but research had been gradually building for some time before that.
This has led to recent partnerships with groups such as Stellar, a non-profit creating an open-source blockchain network for financial services, and KlickEx, a cross-border payments system delivering financial infrastructure for emerging markets to create a more efficient way to make international payments.
These are just two pieces in a much larger puzzle that needs to be solved but, once achieved, it could bring major benefits.
“I think there’s a big potential for blockchain to transform economies in these kind of spaces,” Belluomini said.
“That’s a longer-term thing because it’s not just a matter of getting a few companies together or even a large number of companies together; you also have to get governments involved to see how you can fundamentally transform how we track things.”
Pitching blockchain isn’t so straightforward
Despite all the promise that blockchain would suggest, IBM Research is still at the stage where it is trying to convince companies of its benefits, and this takes a bit of work.
A survey conducted earlier this year by Deloitte found that almost 40pc of senior executives at large US companies had little or no knowledge of what blockchain was. If you were to apply this to your average person on the street, the result would likely be much higher.
For Belluomini and IBM Research, when they’re pitching blockchain to potential clients, it’s best not to go right off the bat with the technology.
“If you start with technology first, you often lose people, especially in something like this. You have to start [with] values first and then you can get there.
“When you start explaining what it does instead of how it does it, it’s really much easier to understand.”
Having based its permission blockchain technology on the Hyperledger project – an open-source blockchain solution for cross-industry collaboration – IBM Research now hopes to not just establish blockchain technology in one company, but as part of a vast network.
“I would say the biggest challenge is not so much getting clients interested in the value,” Belluomini said, “but showing the value of blockchain is in the network. If you are just a single company, you could do something internally – but that’s not the point of it.”
