How Blockchain Will Change Your Life

The technology’s potential goes way beyond finance.

By Ginni Rometty



Until the mid-1990s, the internet was little more than an arcane set of technical standards used by academics. Few predicted the profound effect it would have on society. Today, blockchain—the technology behind the digital currency bitcoin—might seem like a trinket for computer geeks. But once widely adopted, it will transform the world.

Blockchain offers a way to track items or transactions using a shared digital “ledger.” Blocks of new transactions are added at the end of the chain, and encryption ensures that it remains unbroken—tamper-proof and error-free. This is significantly more efficient than the current methods for logging and sharing such information.

Consider the process of buying a house, a complex transaction involving banks, attorneys, title companies, insurers, regulators, tax agencies and inspectors. They all maintain separate records, and it’s costly to verify and record each step. That’s why the average closing takes roughly 50 days. Blockchain offers a solution: a trusted, immutable digital ledger, visible to all participants, that shows every element of the transaction.

Financial institutions are becoming early adopters: The World Economic Forum estimates that 80% of banks are working on blockchain projects. CLS, the world’s largest multicurrency cash-settlement system, is implementing blockchain in the foreign-exchange market. The Bank of Tokyo-Mitsubishi UFJ has developed a smart-contract prototype for multiparty business transactions. China UnionPay is using blockchain for loyalty programs that operate across multiple banks.

But the potential goes beyond finance. We at IBM estimate that applying blockchain to global supply chains could generate more than $100 billion in annual efficiencies. Toyota and the U.S. Postal Service are exploring this already.

Visa and DocuSign are working on a blockchain system that enables a car buyer to sit in the driver’s seat, configure the aspects of a lease on the dashboard, and drive away immediately.

La’Zooz, an Israel startup, has a blockchain ride-sharing app that allows drivers to connect directly with customers, without needing a middleman like Uber or Lyft.

All of this is promising. But for blockchain to go beyond pilots, the technology needs a system of transparent governance. Remember what guided the development of the internet: not-for-profit groups like the Internet Engineering Task Force and the World Wide Web Consortium.

Their involvement gave businesses confidence that the internet would be stable and based on open standards.

The same must be true for blockchain. More than 80 leading finance and technology organizations, including IBM, have joined the Linux Foundation Hyperledger, a project aimed at creating an enterprise-grade blockchain framework. More than 600 additional firms have already applied to join the consortium.

There’s one more lesson to draw from the early days of the internet. If you had understood in 1995 the opportunities and threats it would ultimately present to your company or industry, what would you have done differently—to become the disrupter rather than the disrupted?

That is where we are with blockchain today.


Ms. Rometty is the chairman, president and CEO of IBM.

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