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IBM open sources most of its blockchain code to the IT community

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February 18, 2016

Earlier today, IBM confirmed it has open sourced a large part of its blockchain code it has been working on over the past eighteen months.

Big Blue is putting its name behind the Linux Foundation and its Hyperledger project. A bit similar to the Bitcoin project, but just a bit different.

The IT behemoth has dumped the Apache 2.0-licensed source on GitHub, providing a limited but functional developer environment to build upon.

IBM has pledged to maintain the code as others build on top of it, including big-name Hyperledger partners that include Intel, Fujitsu, Cisco, Goldman Sachs, JP Morgan, Accenture and a few others that are interested in the project.

Core elements in the code are a "consensus algorithm" which is critically vital for proper functioning of a decentralized system, and a contract template that helps people code agreements into the system in Java.

By now we are all aware of Bitcoin and the many issues it faced in the last two years. But nevertheless, blockchain technology is most well-known for being the foundation to Bitcoin itself.

With all the negative publicity and criminal activity surrounding Bitcoin users even since its foundation, big business is understandably not keen about the digital currency, in much the same way it wasn't excited about Napster and P2P sharing technology, but it does see huge potential in the ability to shift funds based on specific criteria across computer networks, if only they can be trusted that is.

In case you don't know, a few years ago there used to be a website called 'Silk Road' that was available on what is called the 'dark web' that used to sell illegal drugs, porn activity, illegal weapons, etc. The site sold millions of dollars of crime-related goods. The site has since been closed by the FBI and its owner is now avaiting prosecution.

Be that as it may, in theory, blockchain technology could represent the future in secure financial transactions done electronically, whether it's between banks, Wall Street brokerages, between companies or even individuals.

By building in other types of vital information, such as RFID chip data, it is possible to develop electronic contracts that shift funds between different parties without the need to go through third parties. That could save huge sums in transactional costs.

Blockchain-based technology is also a lot faster. With funds able to be sent almost instantly, it may be a deal breaker when compared to other technologies. Of course, the are several governments that are against it. One main reason is it will be hard to collect taxes out of transactions unless a pragmatic method is developed.

Here's how the technology works: a delivery contract could be carried out electronically. One company agrees to pay another x amount of dollars to deliver their product. Currently this approach requires multiple layers of review and approval before payment is made. The company has to reach agreement on the price and schedule, sign an agreement, deliver the product, then get confirmation it has delivered it and request the funds.

Those funds will typically go through a third party (usually a bank), and payment could be delayed for days while the banks balance up the hundreds of thousands of other transactions they are overseeing.

With blockchain technology, it is possible to reach agreement on the terms and have them entered as an electronic contract into the blockchain system. Think of this as a huge, globally-based giant ledger. Then, RFID chip data can be used to confirm that the product has been delivered.

Once that data enters the system, the funds can then be instantly and automatically transferred from one company to the other. If the system can be made to work, the potential savings in time and money are huge. And that's one of the many advantages of the technology, among others.

The most immediate uses are in things like insurance, stock transactions and banking, where vast quantities of fairly standard transactions (sometimes in the millions of dollars) are carried out each day.

However, blockchain's uses could easily be expanded to cover a wider range of industries, greatly increasing business efficiency and speed.

Additionally, governments could use it to improve their notoriously bureaucratic tendering processes and largely cut down on delays. Then, the healthcare industry could also share electronic medical records in faster and secure ways.

For a company the size of IBM to release major parts of its source code to the internet community on GitHub is a promising development. Clearly, Big Blue has recognized the potential and future of blockchain technology and wants to bring it to the next level. We'll keep you posted.

Source: IBM Corp.

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