IBM's Biggest-Ever Blockchain Trade Finance Trial Could Go Global
Now that IBM has begun work on its largest blockchain project ever, what happens next could have global implications.
Two government agencies funded IBM's latest blockchain implementation, the largest ever in terms of parties involved and arguably one of the more impressive in the sophistication of the offering.
With support from both Dubai Customs and Dubai Trade, IBM has so far courted a telecommunications service provider, a letter of credit issuing bank, a responding bank, a freight company and an airline in a trial centered on what major financial firms believe is one of the tech's most promising use cases.
Once the all-inclusive supply chain and trade finance proof-of-concept is completed, it will be integrated with Watson's AI, making it one of IBM's most pervasive blockchain projects to date.
But while all this is exciting, it's what happens once the various players begin to implement the results of the test in other countries around the world that will truly set the project apart.
According to James Wallis, IBM's vice president for blockchain markets and engagements, the real value derived from such a large-scale project is developing the ability to communicate across different nations and multiple industries to achieve a common goal.
Wallis, who helped coordinate the massive, multi-party collaboration, told CoinDesk:
Unveiled yesterday, the proof-of-concept is being designed to track the shipment of fruit from India via a cargo ship to Dubai. Once in Dubai, the fruit will be turned into juice and exported to Spain via airplane, as just one example.
To move the required transactions for the simple-sounding shipment to a blockchain, the Dubai government also "sponsored" the participation of UAE-based telecommunications service Du to track data via Internet of Things-enabled devices.
Emirates NBD Bank will then issue letters of credit, Spanish bank, Santander will receive the letters, freight company Aramex will ship the fruit overseas and an unnamed airline carrier will transport the juice.
The POC is expected to be powered by self-executing code, or smart contracts, on the open-source Hyperledger platform, with data reported via Du's Internet of Things devices being validated by IBM’s Watson artificial intelligence.
The combined trade-finance and supply-chain proof-of concept is not a "legal construct" according to Wallis, but rather a group of companies that have agreed to work together under the sponsorship of the Dubai government.
While IBM is not making public the timeline on which the objectives are expected to be deliverable, the Dubai government last October declared it would have all government documents moved to a blockchain by 2020.
"That means some serious progress needs to be made this year," Wallis said.
Countdown to blockchain
But the sense of urgency felt by Wallis isn't unique in the blockchain industry.
Industries as diverse as finance, automobile, supply chain and health insurance built hundreds of proofs-of-concept last year to demonstrate value to both investors and clients alike.
Evidence of the increasing sophistication of the endeavors can be seen in, Hijro, formerly called Fluent, raising $1.65m to help integrate blockchain into companies’ existing infrastructure, and Microsoft, which last month launched its Project Manifest global initiative to help connect supply chains.
In total, as many as 400 blockchain proofs-of-concept had been built around the world in 2016, according to an executive speaking at the launch of consulting firm Deloitte’s blockchain lab in New York City earlier this month. Days later, an executive at the firm called 2017 a "make or break year" for the industry.
But not everyone agreed.
Wallis positions the multi-nation, cross-industry proof-of-concept as part of a new caliber of blockchain experiments that will help jump-start the process of integrating distributed ledgers globally.
Last week, IBM published a report based on surveys of 200 government executives finding that nine out of 10 respondents believed their governments were likely to fund blockchain projects in a wide range of industries by the end of 2018.
According to Wallis the main goal of the Dubai proof-of-concept is to "figure out" how international customs agencies can better communicate with trade organizations to build their existing services into a shared, distributed ledger.
Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Hijro.
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