Editor’s note: IBM is rolling out very aggressively an entire ecosystem focusing on blockchain technology, but many questions remain unanswered about the emerging tech, says Technology Business Research Analyst Geoff Woollacott. This is the third of a three-part report. The previous two parts are linked with this post.

HAMPTON, N.H. – IBM allows customers to define what is right for them; choice in standards also requires choice in consumption models

One size does not fit all for blockchain ecosystem development nor does it fit for the monetization of the investments. IBM will help manage the increased transaction volume flowing through its trusted and secure cloud infrastructure, which was recently enriched by the suite of z14 mainframe enhancements. IBM’s monetization model follows three monetization paths rather than two.

1. A monthly plan or fixed fee that would appear to be a shared-risk model between IBM and the ecosystem for the service cost

2. Subscription plans for variable cost consumption models

3. Sponsor plans where one entity can become the hub and assume the entire cost for the network activity, then determine how to engage other participants, or the spokes; for early adopters, it could conceivably be free to entice participation and investment, including educating workforces to comply with the process.

TBR still views blockchain as having more questions than answers but expects rapid adoption nonetheless

We know Moore’s Law of economics has triggered rapid deployment of new technology-enabled solutions via cloud scale and easy connections of networks via open standards. Learning of POC tests that can be developed within hours no longer awes the customer. We also know blockchain delivers value to society as a whole, but it is not being monetized within discrete activities where savings, reduced risk and new business model advantages flow to the participants. From this perspective, TBR has several research avenues it continues exploring.

  • Who will reap societal savings, and how will those savings be factored into additional POC test developments?

In discussing food safety prototypes being developed in concert with Walmart, IBM outlined the costs savings the healthcare industry receives via better food inspection as approximately $3 billion. Where will that value flow? Will public policy shift cost savings to other healthcare initiatives? Will public policy analysts use these insights to pressure political leaders to take hard looks at public sector workflows to yield similar costs savings across other elements of the government infrastructure?

  • Will the promise of blockchain stumble out of the gates like ECM continues to do?

Enterprise content management (ECM) is only as sound as the meta data consistency of the human inputting. With blockchain there will various debates around procedures and processes, which will be impacted by how public policy shifts to address new forms of moral hazard. ECM only tried to curate and simplify information access to start to take some of the hollow calories out of, or save costs on, the administrative interactions of collaborative activities. Blockchain seeks to provide similar constructs albeit for high-value (commerce) transactions with a heavy overlay of governance, risk and compliance (GRC) implications. This kind of change management can be daunting just within a single enterprise, suggesting the challenges of building consensus for such change management across multiple enterprises will be a far greater undertaking. Advisory services at the front end of any of these considerations will be highly valuable, and IBM’s business orientation and technical savvy should serve it well in helping businesses wrangle with these challenges. TBR expects the challenges to blockchain to be more focused on these human activities than on technical bottlenecks.

  • Cryptocurrency increases risk exposure in ways not fully understood

New ways to conduct commerce that bypass existing trust institutions create new forms of moral hazard. We have seen wealth flourish and then disappear based on the volatile valuations of the cryptocurrencies themselves. We see splits in early consortiums and heated exchanges about technological process. We do not believe major enterprises will be willing to increase their risk exposure to conduct transactions in cryptocurrency. We believe a very thorough and thoughtful analysis of the disruptive influences cryptocurrency to bypass existing trust institutions — be they banks or governments — will be critical to our societal well-being. If we can see how there will be societal benefit created — for example, by reducing healthcare services by $3 billion through a trusted, secure way to track the flow of food from farm to table — we also have to remain cognizant of the speculative bubbles that always occur when society alters the way in which economic activity takes place.

We had the dotcom bubble at the turn of this century. At that time historians discussed the Tulip bubble in Holland that occurred in 1636 and 1637. While we will always embrace new innovations to improve existing ways of working in our society, we must also be very mindful of these moral hazards to mitigate the risks these innovations can unleash on society in concert with the benefits.

  • Blockchain speeds IoT adoption?

The Internet of Things (IoT) and blockchain, as a respective means of tracking and certifying the location, operational capacity or state of a particular item, would seem to be the ultimate marriage. However, IoT has its own set of difficulties in implementation, management and overall cost. The similar difficulties of implementing blockchain may stall or delay some customers’ overall IoT plans as they absorb the implications of technologies such as blockchain.

  • Does blockchain speed the data economy?

TBR views data no different than food when it comes to a need to certify the items and their respective origins and chains of custody. TBR believes that blockchain may help give rise to a data economy of sharing of first- and third-party data sets, given its ability to certify the origin of, assign permissions for and otherwise help protect and distribute or broker data sets. The time it takes for this economy to take hold, however, remains to be seen.