Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?
Frank Yiannas has spent years looking in vain for a better way to track lettuce, steaks and snack cakes from farm and factory to the shelves of Walmart, where he is the vice president for food safety.
When the company dealt with salmonella outbreaks, it often took weeks to trace where the bad ingredients came from.
Then, last year, IBM executives flew to Walmart’s headquarters in Arkansas to propose a solution: the blockchain.
As Mr. Yiannas studied their pitch, he said, “I became increasingly convinced that maybe we were onto the holy grail.” The blockchain — the buzzy, bewildering technology behind cryptocurrencies like Bitcoin — is starting to be applied to real-world problems like tracking pork chops, shipping containers and footwear with a speed and security not currently possible.
The IBM-Walmart partnership is one of the biggest practical tests to date.
At its heart, blockchain simply refers to a bookkeeping method that “chains” together entries so that they are very difficult to modify later.
It provides a way for large groups of unrelated companies to jointly keep a secure and reliable record of their transactions.
IBM is trying to position itself at the forefront of the heated competition for practical uses of this arcane idea.
Walmart is just one of 400 IBM clients testing it out, and IBM now has around 650 employees dedicated to the technology.
The most immediate business opportunities are in the financial world as a tool to track and trade stocks, bonds and other assets.
But in the next week, Maersk, the global shipping giant, is expected to announce it is using IBM’s version of the blockchain to track the avocados, flowers and machine parts it carries on its enormous cargo ships.
Last month, the government of Dubai said it was working with IBM to trace the goods flowing through its ports.
Yet success is far from assured.
Rival Microsoft said this past week that it was working with JPMorgan Chase and several other corporate giants on a system that competes against IBM’s, based on the virtual currency network known as Ethereum.
Many banks are concerned that IBM could push them into a version of the blockchain that would lock them into IBM’s software.
“We believe with 100 percent certainty that it’s going to matter,” Mark Russinovich, the head of Microsoft’s blockchain efforts, said of the technology.
“It’s a question of where’s its going to matter and how it’s going to matter.” It was Bitcoin that first caught the attention of IBM researchers, and everyone else.
Bitcoin, born in 2009, represented a novel idea in the financial world.
Unlike, say, dollars or yen, Bitcoins are virtual tokens, unaffiliated with any nation.
Anyone can open a wallet and receive Bitcoins — without providing any identifying information — and transactions are recorded on a universal ledger that is visible to everyone.
Drug dealers have embraced its relative anonymity.
And people who live in countries that strictly control their financial systems, like China and Venezuela, have used Bitcoin to store their money beyond the watchful eye of the government.
But while the public focused on stories like these, geeks became fascinated with Bitcoin’s underlying structure and the communal way in which it was updated.
That database was referred to as the blockchain because all the transactions were sorted into “blocks,” and each block was chained, using sophisticated math, to the ones before it, all the way back to the very first transaction — a structure that makes it tough for anyone to change the records after the fact.
In 2014, a handful of IBM employees began building their own version of Bitcoin, known as Blue Coin, which could be used to track financial transactions, totally independent of Bitcoin.
But it was a small, exploratory project with no real support inside IBM.
“I was prepared to tell them to shut it down, that cybercurrency is not our role to play,” said Arvind Krishna, director of research at IBM.
