What is blockchain, and can IBM, Intel, and big banks use it to remake the internet? 

Linux was once thought of as the ugly duckling of OS world, an indulgence appealing only to system administrators, power-users, and shut-ins. Today, the Linux kernel underlies Google’s Android OS, the most widespread mobile platform in the world, and when the Linux Foundation announces a new open source initiative, the biggest companies in the world take notice.

The group has made its latest such announcement, that it will direct a powerful group of industry leaders in developing and supporting an open source standard for blockchain technology. Dubbed the Open Ledger Initiative (OLI), the just-revealed group already counts tech giants like IBM, Intel, Mitsubishi, and Cisco among its members, along with financial institutions like J.P. Morgan, Wells Fargo, and the London Stock Exchange.

If it takes off, IBM thinks blockchain technology could finally bring the internet economy into the 21st century, realizing the potential for decentralization that the internet has been teasing for so long. To explain why such a diverse group of investors and research partners is interested in making sure it does take off, we have to take a look at just what a blockchain actually is.

A blockchain is a carefully cryptographically protected, publicly hosted ledger, a record of events and agreed-upon variables. You can essentially think of it like a super-advanced, cloud-based spreadsheet, with the real defining feature being not what services it can perform, but in how much users can trust it to perform those services impartially. By far the most famous implementation of the blockchain is in the transaction and tracking procedures for so-called cryptocurrencies like bitcoin.

Prior to the blockchain, we needed a trusted human institution like a bank to act as intermediary, even for something simple like an electronic money transfer. With the blockchain in place to act as that authority, we can do things like circulate currency securely on our own, without the inevitability of fraud forcing us to pay a percentage of every transfer to a specialized third party like a bank. And when used to receive and enforce an agreed-upon set of rules, without the possibility of tampering or reneging, blockchain tech allows the creation of so-called “smart contracts.” These could let you buy a home directly from another person, safely and securely, or even plan and schedule a mortgage.

But why then would big banks be interesting in supporting blockchain development? Because the ability to maintain secure, computationally quick smart contracts could mean big bucks for the financial sector. Banks like making a few dollars here and there off of transaction fees, but if they can sacrifice that to greatly streamline their behind-the-scenes investment processes, they evidently will. The same public-note-taking technology that could allow a revolution in stock trading could also make it trivially easy for anyone to set up a secure online store. The blockchain not only speeds up and simplifies the abilities of large institutions, but it puts many of the most important such abilities in the hands of independents and small businesses.

IBM, reportedly a leader on the Open Ledger Initiative, announced its support with a gushing blog post on the potential of the blockchain to change the way we do things. It’s not just about making things easier and quicker online, or with fewer humans involved. A blockchain could be used to coordinate a complex group of corporate partners, all working together to provide the parts and services to assemble a new prototype aircraft. The ledger could be quick and reliable in making sure all inventory and schedules were kept in line, and its settings, or any changes to them, would be freely viewable to all involved. In IBM’s own words, when you’re using a blockchain, “trust and accountability are built into supply chains.”

Of course, the word “blockchain” only encompasses the “ledger” part of the Open Ledger Initiative. The “open” part is what has IBM so excited right now. Basically, if blockchain technology does come to underpin everything from complex hostile corporate takeovers to friend-group-bill-splitting, then we’d better be sure it’s reliable, and bug-free — really sure. It’s telling about the current state of technology development that the biggest, most monolithic figures in tech believe that the only way to be really sure of the integrity of the blockchain over time is to make sure that the biggest, most monolithic figures in tech don’t ever get exclusive control of it.

By keeping the blockchain open source, IBM, Intel, and others hope to leverage the same far-seeing power of the crowd that took Linux from the basement to the big time.

Source: ExtremeTech – What is blockchain, and can IBM, Intel, and big banks use it to remake the internet?

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