In preparation for the first Blockchain Technology Conference in Dubai which will be happening on May 30. Dubai StartupHub caught up with Anthony Butler, IBM Cloud Chief Technology Officer, MEA.
Blockchain has become a such a huge area of interest. There’s an event in Dubai on 30th focused on the topic, we have seen the launch of different initiatives focused on exploring its uses, and many organizations across industries are now talking about it. But what is it?
The simplest way to think about the blockchain is that it is a ledger, like you might maintain in your business, except that it is digital, shared, replicated, and permissioned. This means that’s all the participants in a business network, such as a supply chain, can read and write from the same system of record securely whilst the ‘permissioned’ aspect means that they can only see or access what they are allowed to.
That sounds simple enough. Ledgers will be familiar to most people. But why is it such a big deal?
This might sound simple but the benefits are actually potentially very significant: imagine being able to take entire business networks and reduce the cost, time and margin of error in coordinating between them since, rather than use paper or other techniques that might have taken days to execute, each participant can write and read from the same replicated digital ledger. All the trust issues that plague traditional approaches are mitigated. Transactions that might have taken days to execute can now take place in seconds or minutes; inefficiencies that introduced costs can be removed and transaction costs reduced significantly; and contracts can be digitized as ‘smart contracts’ so that they execute autonomously on top of the blockchain.
Is this something that just impacts business?
This isn’t something that necessarily just impacts businesses. We all interact with each other, with governments, and with businesses; and, when there are errors, delays or costs, we all pay a price – whether it’s an opportunity cost or an actual cost. For example, regardless of the jurisdiction, property sales often involve lengthy delays in settlement, transfer of title and so on; this is an everyday transaction that could be fundamentally transformed if each of the participants could interact with a shared ledger. The rules governing the movement of the asset (in this case, the house) would be represented as a smart contract and executed independently on the blockchain: removing risk, cost and accelerating the speed at which the transaction can execute. It’s really exciting for business and government; but also for consumers who will benefit from a much better experience.
Bitcoin is often mentioned alongside blockchain or used interchangeably sometimes. What’s the relationship between the two?
Blockchain and bitcoin are different things. This is a common misconception though and many people even assume they are the same or assume that use of blockchain implies or requires the use of bitcoin. This isn’t true. Bitcoin is a cryptocurrency, an anonymous form of digital currency. The way to think about Blockchain and Bitcoin is that Bitcoin was really the first use case for Blockchain. In other words, bitcoin runs on a blockchain but the blockchain for business doesn’t require bitcoin and, unlike the bitcoin implementation, it’s permissioned: meaning it doesn’t necessarily have to be open to the entire world to access but can be made available to a discrete network.
What industries are affected by this?
It is possible to find examples across industries. Much of the early work has been driven out of the finance sector but we are now seeing some extremely interesting use cases emerge from government, manufacturing, and even healthcare. If you think about any business network, whether a supply chain or the relationship between individual and government, there’s the potential to transform interactions in a profound way.
How are different industries adopting blockchain and what are the benefits?
Some of the earliest use cases were in banking and related to payments. If we take, for example, the Letter of Credit. It’s a foundation of international trade and hasn’t really evolved for hundreds of years. It’s slow, takes a lot of interactions between banks and other intermediaries, and ultimately it is costly due to the many participants but also because of the time it takes to execute. This is an area where blockchain can really drive significant benefits by enabling all these participants to write to a common ledger at internet-speed and have confidence in its security.
If we take government, then there’s a lot of work underway at the moment to explore how blockchain can be used to transform the way in which land titles are recorded and transferred; how business registrations take place; and even the disbursement of taxes. There’s huge potential in government and, once we extend the aperture to include government to business interactions, the opportunities become even more significant. For example, one of the simplest use cases for blockchain is around regulatory compliance: imagine if a regulated industry wrote to a blockchain that the government regulator could inspect. It would reduce or remove the need for expensive and time-consuming audits and investigations as the government could get a real time view into the regulated organization or entities.
Supply chain is a cross-industry use case but also exciting and an area where I see lots of traction. The ability to maintain an immutable ledger that each participant in a supply chain can write to opens up some interesting possibilities around supply chain security and provenance. Counterfeit goods are a major challenge in some industries, such as luxury products or pharmaceuticals. Imagine if the life of a product could be traced from the point at which it was manufactured (or even from the point at which the components it was made from were manufactured) all the way through to when it landed in the hands of the consumer and the consumer could look up the product on a blockchain to understand its origins and be assured of its authenticity.
Then there’s a plethora of use cases around the internet of things where blockchain can play an important role. Think, for example, about autonomous vehicles and the need to resolve disputes in the event of an accident. If vehicles were recording their movements and other data in a shared blockchain then, in the event of a collision, fault could be automatically established by a smart contract on the blockchain and insurance claims processed automatically. It’s difficult to imagine an easy solution to these problems of the future without the blockchain.
What is the relationship of this to startups in Dubai?
The interesting thing about the blockchain ecosystem has been that whilst enterprise and government has recognized the value and possibilities that this technology enables; much of the innovation and earliest offerings have been driven by startups. It’s hard to keep track of all the pairings of enterprise and startups in this space; and that’s a good thing for startups, in particular, if they can identify pain points or use cases in industries and build out blockchain-based solutions. The building blocks to do this are now available. There’s the Hyperledger project under the Linux Foundation and blockchain is now available in the cloud for people to experiment with and create their own applications. There’s a willingness of enterprise and government to look at this technology. Factor in the forward-looking position of the Dubai government with regards to blockchain, as exemplified by the establishment of the Global Blockchain Council, and the local interest across industries, and it’s almost a a perfect storm of opportunity for a regional startup looking to create value in this space.
You will be on a panel at the Blockchain conference this month in Dubai. Can you say a little more about it?
I’ll be speaking at the Keynote Blockchain event in Dubai on 30th May. It’s sponsored by Smart Dubai and Museum of the Future. My company, IBM, is the Technology Partner for the event. The event will bring together senior executives, CEOs and others across industry to listen to speakers talk about blockchain and its uses. It promises to be an interesting event and I’m looking forward to the dialogue. I also hope it will be the first of many here.