IBM has announced that it will soon release its own, open source version of blockchain software — the public ledger system that lets Bitcoin work. It’s not a move to reinvent cryptocurrency, but an ambitious attempt to allow individuals and large corporations alike to make full use of everything the internet makes possible. It has the potential to decentralize the internet, making it both safer and more versatile in one fell swoop.
A blockchain is just a database with special provisions built in to make it public and agreed-upon by all users — and that transparency is what makes tampering with the blockchain easy to detect. With a trusted, mutually visible place to store basic information, it’s possible to do things like send money over the internet; there’s no need to worry about fraud when the whole transaction is controlled by the info in the blockchain, which is available for you to review at any time. This has taken the form of blockchain-based securities trading, which speeds up the process from days to minutes, while bringing risks down to “zero.”
But the logic behind the blockchain doesn’t need to be limited to financial transactions. So-called “smart contracts” can put this sort of ability in anybody’s hands. This could make setting up an online store fairly trivial for private citizens, or allow people to easily sell their home directly, without the need for an intermediary. You could sign on to a smart contract as a mortgage and secure its rules according to the agreed-upon rules entered into the blockchain.
Now, in cases like a bank loan, the security and safety aspects are less important since banks keep decent records and insure everything. But efficiency is still an important advantage for large institutions, and that could even (maybe) get passed along to the customer in the form of savings. An institution need not be as enormous as a bank, however, to offer security with working blockchain technology, however.
The versatility of the blockchain model was demonstrated by IBM itself earlier this year, when itannounced its unrelated ADEPT program: Autonomous Decentralized Peer-to-Peer Telemetry. This offers a way to decentralize the Internet of Things, and keep everything coordinated through a form of blockchain. A different project, Etherium, bills itself as “how the internet was supposed to work,” using blockchain-based contracts to make tamper-proof online platforms. The simple ability to keep reliable public records can allow all sorts of interesting applications.
This isn’t the first time people have imagined the emergent possibilities of contracts based on the blockchain, but it’s the first time the concept has been backed by a company as large and powerful as IBM. Big Blue has a history of successfully pushing open source software solutions, and with its name and reputation behind their blockchain idea, IBM could convince major companies to get on board.
Of course, in Bitcoins there is the idea of “mining,” in Etherium the idea of gathering “ether” — the fuel that keeps a blockchain running is the computational time donated by users to validate transactions and secure the overall system. Bitcoin incentivizes this by handing out Bitcoins as a reward, and ether does much the same — it’s unclear how IBM’s version will accomplish this goal.