Bitcoin's technology has a surprising fan: IBM
Arvind Krishna, a senior vice president at IBM Research
The technology may lead to smoother transactions and less disputes, which could ultimately mean lower prices and faster delivery for consumers.
by Stephen Shankland
@stshank
Arvind Krishna, a senior vice president at IBM ResearchEnlarge Image
Arvind Krishna, a senior vice president at IBM Research
Stephen Shankland/CNET
Bitcoin has a bad rap as the preferred currency of drug dealers. But that isn't stopping IBM and some of the world's most conservative businesses from tapping into its technological underpinnings.
Specifically, Big Blue is interested in the blockchain -- the mechanism Bitcoin uses to publicly record transactions. Today's businesses each have their own records, slowing transactions and triggering problems figuring out who's right when there are disagreements. But the blockchain approach is more cooperative by providing a consistent record that members of a network can see.
"The blockchain is about distributed trust," said Arvind Krishna, a senior vice president at IBM Research's Almaden lab, speaking Thursday at a 30th anniversary event.
That may sound as exciting to you as the development of double-entry bookkeeping more than 1,300 years ago, but it could bring big rewards to businesses by eliminating confusion and financial shenanigans. You should care about those problems, since they ultimately get passed on to the consumers through higher prices or slower shipment of the goods we want to buy.
The blockchain uses what's called a shared ledger, a database spread across several linked computers so no single company has sole control. Encryption technologies govern data to make it clear who paid whom and why.
Blockchains are the foundation for a shared ledger, which stores financial transaction information on many computers within a network of cooperating companies.Enlarge Image
Blockchains are the foundation for a shared ledger, which stores financial transaction information on many computers within a network of cooperating companies.
IBM
IBM plans to start using blockchain in its own financing business starting in September, easing difficulties that crop up in purchases involving a dealer, a manufacturer and a customer. The company says disputes bog down 25,000 of the 2.5 million transactions between IBM's clients. Those disagreements could include which tax rate to pay or which products were actually ordered.
"We believe half the disputes can be resolved automatically," Krishna said.
IBM likes blockchain but isn't touching the Bitcoin project itself where the technology first arrived.
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