BETTING ON BLOCKCHAIN: Business, trust and governance models needed, IBM says

Ramesh Gopinath, vice president of blockchain solutions at the information technology firm, a pioneer in the development of blockchain technology, said these three areas “are the things that will make or break your solution.”

“To IBM, blockchain is about a trusted information-sharing platform for business. Once you realize that, you quickly get to ‘this isn’t a financial services story or a supply chain story – it’s going to transform every industry,’ ” Gopinath told Fastmarkets in an interview.

“There’s an information sharing problem in that nobody has a single version of the truth across an ecosystem. These are big problems that we can solve by being the convener of the ecosystem and bringing all the parties together… building a solution that is built on the foundation of decentralized trust,” he said.

A key project for the company has been IBM Food Trust, designed to create visibility and accountability in the food supply chain. The network uses blockchain technology to connect growers, processors, distributors and retailers through a permissioned, permanent and shared record of food system data.

In this way, it’s possible to track a blueberry fruit and nut bar from the farm to the shop shelf.

The project came about two years ago, when IBM decided that the food industry required a collaborative platform and approached one of its biggest players, Walmart, to work with it on the technology.

“They were skeptical to start with,” Gopinath said. “Then we did some proof of concepts – mangoes in the USA, pork in China – and in May 2017 we decided that the project had legs.”

But IBM wanted competitors and other retailers to be in the picture as well in order to get a minimum viable ecosystem. “We needed a few suppliers and retailers in food to come together, to collectively define what the platform should look like to meet their needs,” he noted.

According to Gopinath, IBM Food Trust is about the product as well as the key capabilities within it: the governance, data and membership aspects, such as who can join the ecosystem, who can see the data, who holds the data, who gets insight from the data and whether those insights are shareable and sellable.

“These are questions we had to answer to the satisfaction of everybody in the ecosystem,” he said.

It was critical to prove to the food community that the data was safe, “and that someone else can’t see something that you don’t want them to see,” Gopinath told Fastmarkets.

“That’s what we’ve been doing for the past 10 months, and I’m pleased to say we’re past that. All the participants in IBM Food Trust are now comfortable with it, and we’ve come a long way,” he said. “We created a trust model for any blockchain solution – and that’s the list of guarantees that any community at large gets out of the platform.”

Trust has to be decentralized, he said, and comes from a set of parties running copies of the blockchain database, known as “trust anchors.” Under the governance policy, the community – not IBM – decides upon the trust anchors running the blockchain nodes.

“Even though we’re investing in the solution, there’s an advisory council that selects who runs the trust anchor nodes. There is a notion of a trust model which basically gives a set of guarantees to the community,” Gopinath added.

Now up and running, IBM Food Trust allows participants to securely trace products in seconds rather than weeks, helping to mitigate cross-contamination, the spread of food-borne illness, unnecessary waste and the economic burden of recalls. This also aids freshness, increases shelf life and reduces product loss, as well as ensuring the quality of goods, tracking authenticity of products and certifying provenance across the entire supply chain.

“Blockchain as a technology no doubt is in early-days stages but we’re ready for prime time in certain classes of solutions, no question, and the technology will improve over time, too. We are the undisputed leader in this technology at this point in time and aim to remain successful in all our solutions,” Gopinath said.

“Technology challenges do exist, but they are to me minor, simple, easy issues that smart ideas and smart people will resolve,” he added.

And what about expanding blockchain into other commodities, such as minerals, metals and energy?

“There are plenty of projects ongoing within IBM. Watch this space!” Gopinath said.