Blockchain Moves Beyond the ‘Walled Garden’ Stage
On Halloween 2008, a mysterious paper entitled Bitcoin: A Peer-to-Peer Electronic Cash System appeared on a cryptography mailing list. Its author used the pseudonym Satoshi Nakamoto and to this day no one is sure of their true identity. Nevertheless, the the paper unleashed a revolution.
While the Bitcoin paper's objective was to establish an alternative currency—an idea that resonated in the midst of the global financial crisis—it soon became clear that the underlying technology, called blockchain, could be of even greater utility as a distributed database.
Only now, more than one decade later, is the vision finally taking shape. To understand what blockchain's future could look like, consider IBM's recent initiatives to build communities around peer-to-peer networks in financial services, identity, and supply chain.
Perhaps blockchain's greatest opportunity is to help streamline supply chains. IBM has two major efforts in this area. It partnered with Maersk to create TradeLens, which aims to digitize global shipping, and it created Food Trust, which focuses on agricultural products.
Unlike the original vision spelled out in the Nakamoto paper, these initiatives don't use a proof-of-work system for verification, but are permissioned blockchains in which each participant is identified and known—and therefore accountable—to the others in the blockchain network. Essentially this verifies members before transactions take place, much as Global Entry and TSA Precheck do at airline security checkpoints.
making the connection
To understand where all this is going, look at the evolution of the internet. At first, it was merely a network that connected research labs to reduce friction and increase collaboration. Later, it became public and "walled garden" services such as Compuserve and America Online connected ordinary people to larger information networks.
The real value was unlocked when the internet started connecting networks, creating the opportunity to build completely new business models such as Amazon and Google. It was the businesses created on top of the infrastructure, rather than the infrastructure itself, that changed the world.
Blockchain today is probably in a stage similar to that of the internet's walled gardens. The types of networks that IBM has set up tend to focus on a single function, such as transferring money or streamlining supply chains. That's useful, but combining those communities into a single marketplace unleashes far greater value.
"Much like the internet was able to organize separate databases into an interlocking, networked marketplace, we see the potential to link separate blockchains together into a greater ecosystem that will lead to new business models," says Marie Wieck, general manager of blockchain, IBM. "It will allow people that aren't currently able to collaborate to effectively partner and create new value through communities of innovation."
That's the future taking shape today. Those "communities of innovation" will give rise to the new business models from which the next Amazon or Google can emerge.
When Bitcoin first appeared, many assumed it would evolve into a new layer to the financial system. What's happening now is far more profound—a new layer to the internet, which will be far more secure and far more flexible than what we have today.
Much like the first Internet, it will evolve into a platform that will support new business models—and possibly entirely new industries—for decades to come.