Shyam Nagarajan, IBM Consulting Executive Partner, Blockchain, Web3.0, Metaverse and Sustainability, discusses the future of enterprise blockchain, CBDCs, and Web3 at the annual World Economic Forum in Davos, Switzerland.
Hardware and software giant IBM is an enterprise Blockchain pioneer, digitizing permission ledgers to track supply chains and patents and more. Sham Nagarajan is a consulting executive partner of Blockchain Web Three Metaverse and sustainability at IBM. And he joins me now. Welcome to the show. Thank you, Christine. Thank you for having me. All right. So we're getting the latest news is that Bank of America says CBDs are the future of money and payments. And I just wonder, do you agree with that? What's the significance of that? I do, I do, I think about 90 different central banks around the world are in some form engaged in pilot exploration advisory. All kinds of things are on CBC. So CDC has a potential to change the way how we interact with all transactional payment systems. So I do think it's the future. I also think stable clients which are very widely available now are really a stop gap until the cbds are available in the market. So we'll see a slow progression and transition towards that. That's interesting because there are those in the crypto community who are a little skeptical of cbcs concerned about how permission they are version versus permission less in public. Your thoughts on that because you are a leader in permission ledgers. Well, look, cbcs are central bank digital currencies. They are replacing the current digital, I mean currency system and in a way they are controlled. Now, what's the anonymous or the permission less aspect of it is the cash, right? That cash is anonymous and can be tracked. So I believe this is an excellent position where a combination of permission and the permission less is necessary, right? If you think about wholesale banking, whole central bank, digital currency has to be permission, especially when interacting between multiple financial stations. But when it gets to the retail side of it, that's where an individual is trading and using the digital currency as cash. While the level of visibility to a central banker doesn't need to be that visible. So there is a scale of permission to permission less that's be applied. And this is why I think a combination of a hybrid model but being a permission chain and a permission network and a permission list is critical for success of CBD C and wider adoption. Ok. Well, you guys are a leader, as I mentioned in permission ledgers, you've tracked supply chain management in the food industry as well as in the shipping industry. What's the latest that you guys are working on? What are you looking forward to in 2023? Well, look I and uh rest of my colleagues in this enterprise space believe that the market is already matured for Blockchain, enterprise Blockchain, right? They have there's been enormous adoption of permission Blockchain for enterprise use cases. Now, what's kind of has not worked out as well is the consortia? And we do believe that still has raised a wall and it's not working out as we had intended. It would be what I do see as a transition path or growth is supply chain and things like managing food supply chain, sustainability tracking it's perfect to use permission chains because that's what you need. When you're reporting to a public, either the markets or entities, you want to be able to again align with some level of permission lets or a public chain where you can come at your proofs into those. So and chain are here to stay a significant adoption by the enterprises in the market. No one is talking about it, but they are doing it. We can see that in the markets when you talk about public chains, are there any specific ones that come into mind? Well, there are a lot in the market. Everyone is moving towards the proof proof of stake as their core model. I do like her hash graft because they have a very interesting governance council model and IBM is part of that governance council. And then there are other public technologies including Casper technologies, which is a really interesting model and well constructed network So these are some of the public chains that we work with, you know, earlier IBM had a partnership with I believe it was and you were tracking the shipping supply management ultimately, though that partnership was ended. And that program trade lens was was end this year. What happened in that project that ultimately led it to close down look, I referred to this or inferred to this before consortia are a challenge. And trade lens was a consortium of the biggest shipping ocean carriers, right? And they all came together, created this global trade digitization as a technology platform. It was great in the that it formed the right level of adoption. The challenge was governance and again, continual adoption into a wider scale and the market was a challenge. So from a technology platform, I think it still is very viable and continues to scale and perform. But governance again becomes the key in managing parties with different ambitions all as part of the same entity. It's difficult and that's what happened. Could public blockchains improve upon that? Because it is hard to manage a permission ledger. Well, look, public blockchains are interesting where it's good when you're by yourself. It's not great when you want a consortium to work together and everyone coming on the same goals, it still doesn't meet those objectives. So I don't think public blockchains are frankly going to help in these kind of situations. There's a lot of work to be done, I suppose in the area. So what did, what was the lesson learned from the Mars partnership, you know, in terms of facing those challenges in the future? Well, look industry cons need. This is from my experience in the last six or seven years, the ones that have survived and continued to grow are where there is involvement of the regulators. So consortia what regulators permission and visibility actually gets better adoption and traction in the market. And that's what I would recommend if someone is considering that in a political industry, get the regulator engaged. So IBM has Watson biggest computer out there. What do you think about the rise of chat, GBT and the future of Generative A I that is here to stay chat, G BT is here to stay and IBM has been adapting and continuing to grow in that area as well. Part of the conversation here at Davos is sustainability? I wonder what sustainability efforts and does that come into the conversation in creating the Blockchain program at IBM? Well, look sustainability, the is in the forefront of all our initiatives, right? And it's not just us us as an organization, we've been very focused on it since 2030 years ago. So IBM as the organization itself is committed to sustainability, not just that our clients today are coming to us and says help us with applying technology to solve sustainability problems. So within that core, IBM has established a whole division just for sustainability. It's around software, it's around consulting, it's around, you know, sharing some of our own best practices to the market, what and how and coming to applying Blockchain as a technology. I think there's immense application of this right now. We are working with a number of entities around supply chain management, optimizing and tracking and tracing the sustainability aspects of supply chain, especially around responsible sourcing, scop three and scope two and scope one track and tracing. And, and on the other side is around carbon credits and tokenize these credits and making sure you match the buyer and the seller in these places. So there was an immense opportunity applying this technology there. And you guys were also working on NT patents. I wonder what's the latest on that and as well as metaverse opportunities. Well, we have a very specific strategy on metaverse but let me first talk about the NT patents tomorrow. The partner company that we are working with is I PV and they are launching, I think it's about 25 million different patents as NFTS. And it's been very interesting experience so far. It's also a combination of permission analyst and a public chain. And I do believe the future is going to be this way where NDA was applied before is not the way it's going to be continued to be adopted. It's going to be for enterprise use cases. I can see this for health care records I can see this for most people know NTS as you know, a and crypto puss, but it can be attached to real world assets. Absolutely. Absolutely. I see real estates coming on this same way. Carbon credit says nds, all of this is in the process. So it's good news from that side. And Meta coming back to me. Look, I do think it's a transition. It's, you have to give enterprises a path to slowly evolve into that model. It's not a revolution you're not going to establish. Oh I opened up a branch in metas and people are going to come there. It's just not going to work that way. So I do believe the transition is slowly towards from where we are into an augmented reality. So you can have more personalized experience with your existing devices, not a head mounted device and then eventually going into an immersive experience in the meadow walls. So IBM is focused on making sure that transition journey is understood by the enterprises and helping them through it. Sean fascinating development. Thank you so much for your time.