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Blockchain Goes To Work At Walmart, IBM, Amazon, JPMorgan, Cargill and 45 Other Enterprises

Michael del Castillo Forbes Staff

On the Jersey side of the Hudson River just across from Manhattan’s Financial District, there is a glass-and-steel office tower designed in a severe International Style aesthetic. “DTCC” is emblazoned across the top, but few outside of Wall Street realize that in this building, occupied by the Depository Trust & Clearing Corp., are records for most of the world’s securities, representing some $48 trillion in assets—from stocks and bonds to mutual funds and derivatives. In the 1970s, Wall Street created a DTCC predecessor to replace a system that had been powered by young men running around the cavernous alleys of lower Manhattan delivering stock certificates from brokerage house to brokerage house.

DTCC still has paper certificates in its vaults, but records ­related to the 90 million daily transactions it handles are kept electronically on its servers and backed up in various locations. Thousands of financial institutions and exchanges in 130 countries rely on DTCC for custody, clearing, settlement and other clerical ­services. 

In a few months DTCC will begin the largest live implementation of blockchain, the distributed database technology made popular by the bitcoin cryptocurrency. Records for about 50,000 accounts in DTCC’s Trade Information Warehouse, where information on $10 trillion worth of credit derivatives is stored, will move to a customized digital ledger called AxCore. 

According to Rob Palatnick, DTCC’s chief technology architect, the warehouse already keeps an electronic “golden record” of events such as maturity dates, payment calculations and other activities needed to clear and settle these securities daily. But each participant in a complicated credit derivatives transaction also keeps its own records, which must in turn be reconciled multiple times before the investment matures. By moving those records to the blockchain, visible to all participants in real time, most of those redundancies won’t be necessary.

“We’re not talking about eliminating humans and firms,” Pa­l­atnick says. “We’re talking about getting rid of layers of databases and translations between those databases.”

On the other side of the world, in Taipei, Taiwan, Foxconn, the electronics giant best known as a manufacturer of iPhones, launched a Shanghai startup called Chained Finance with a Chinese peer-to-peer lender. Chained will soon connect Foxconn and its many small suppliers (and their suppliers’ suppliers) on an Ethereum-based blockchain that will use its own token and smart contracts (read: automatically executed) to make payments and provide financing in near real time, eliminating a daisy chain of paperwork. 

“We view blockchain as the skeleton of our work,” says Jack Lee, the founder of Foxconn’s venture capital arm, which has invested $40 million in six blockchain startups. “Smart contracts that automatically execute transactions are the muscles, and tokens are the blood.”

Welcome to the brave new world of enterprise blockchain, where corporations are embracing the technology underlying cryptocurrencies like bitcoin and using it to speed up business processes, increase transparency and potentially save billions of dollars. At its core, blockchain is simply a distributed database, with an identical copy stored on many computers. That facilitates transactions (financial or otherwise) between individuals (or companies) that don’t know or trust each other. It’s virtually impossible to cheat, since every transaction is recorded in many ­places and the details of those transactions are visible to everyone. Companies are already using blockchain to track fresh-caught tuna from fishing hooks in the South Pacific to grocery shelves, to speed up insurance claims and to manage medical records. Total corporate and government spending on blockchain should hit $2.9 billion in 2019, an increase of 89% over the previous year, and reach $12.4 billion by 2022, according to the International Data Corp. When PwC surveyed 600 “blockchain-savvy” execs last year, 84% said their companies are involved with blockchain.

To chronicle the rise of so called “enterprise” blockchain,  Forbes has created its first annual Blockchain 50 list of big companies that are putting the technology to work in ­meaningful ways. While blockchain’s first application, cryptocurrency, is struggling to achieve mainstream adoption, these companies are committing manpower and capital to build the future on top of shared databases.

The version of a blockchain future these companies are building is, for the most part, far different from what the founders and early adopters of blockchain had envisioned. While many crypto­currency idealists fantasize about a global, public network of individuals connected directly and democratically, without middle­men, these companies—many of which are middlemen themselves like DTCC—are building private networks they will use to profit from centralized management. 

Not surprisingly, financial firms—from Allianz to Visa and JPMorgan Chase—dominate the list. But Blockchain 50 companies run the gamut of industries, including energy firm BP, retailer Walmart and media company Comcast. 

Because of the lingering bad taste left by bitcoin drug bazaars like Silk Road and the 2017 digital currency bubble, most companies emphasize the distinction between crypto and blockchain, shunning the former and embracing the latter. In some ways the members of the Blockchain 50 represent a bridge between the old and new worlds. Just as internal computer networks were adopted by companies long before the internet took off, these firms are starting by adopting distributed ledger technology at a small scale.

“The era of blockchain tourism has ended,” says Bridget van Kralingen, Senior Vice President for Platforms & Blockchain. “We’ve really seen blockchain move from being overshadowed by cryptocurrency to focus on real business problems and complex processes.”

In 2009, when Satoshi Nakamoto, bitcoin’s pseudonymous creator, activated his network, its blockchain was the underlying accounting system that let anyone with bitcoin transfer money without the need of a middleman. Transactions are processed in blocks—just a fancy word for a hunk of data—about every ten minutes, each containing a compressed version of the previous block, linking them together into a chain. Instead of relying on a bank or another middleman to keep track of when a bitcoin leaves one location and arrives at another, the thousands of computers on the bitcoin network do the work and in exchange for their efforts are paid in bitcoin. 

For most companies this presented a potential problem. While identities aren’t required to use the bitcoin blockchain, the transactions themselves are tied to addresses that are publicly available, meaning that with a bit of work many of these addresses can be tied to actual people or companies. Thus enterprises like Coca-Cola and JPMorgan Chase, accustomed to maintaining competitive advantages based on proprietary processes and control, were initially skeptical of cryptocurrency.

Businesses also need some control over their data. “The entire corporate world has been fashioned around who has responsibility over a particular part of the business flow,” says David Treat, the global head of Accenture’s Financial Services Blockchain practice. “There can be no gaps, because that is unacceptable for a multibillion-dollar company. You cannot have a gap, or you are subject to huge security breaches and social contract breaches.”

Perhaps no firm has had a greater influence on the growing corporate use of blockchain technology than Digital Asset Holdings, a New York-based startup that hired the former JPMorgan Chase banker Blythe Masters as its CEO in early 2015. Under Masters, Digital Asset began making acquisitions and almost immediately purchased a small company that was in the process of building an “invitation only,” or permissioned, blockchain. Then in late 2015 Digital Asset donated the code for its “open ledger” project to the Linux Foundation, which supports commercial open-source software projects, including the Linux operating system.

The project was called Hyperledger, and thanks in part to ­Masters’ connections, its backers read like a who’s who of finance and technology. Thirty companies are listed as founders, including ABN AMRO, Accenture, Cisco, CME Group, IBM, Intel, JPMor­gan Chase, NEC, State Street, VMware and Wells Fargo. Hyper­ledger immediately established itself as the gold standard for corporate blockchain projects.

What happened next might be considered the Big Bang moment of enterprise blockchain. In early 2016, IBM donated 44,000 lines of code to the project, which formed the core of a new blockchain with faster speeds and increased privacy. No fewer than half of the members of the Forbes Blockchain 50 are now using that blockchain, known as Hyperledger Fabric.

“We’ve been very focused on making sure that not only is the blockchain technology standard but that the documents and data are standard,” says Marie Wieck, IBM Blockchain’s general manager. “This standardization allows [the companies] to not spend their time comparing differences and validity in the documents.”

Shortly after the launch of Hyperledger, which is a nonprofit venture, a New York fintech called R3 raised $107 million from the likes of ING, Barclays and UBS to create a for-profit enterprise blockchain platform called Corda Enterprise.

As the commercial potential of co-opting blockchain technology became more apparent, many cryptocurrency startups began to rethink their models.

For example, San Francisco’s Ripple, originally called OpenCoin and conceived of as yet another alternative monetary system, expanded its focus in late 2015 from the cryptocurrency (called ripple and trading as XRP) to building software for large banks. A bitcoin startup called Counterparty spawned another company, Symbiont, in March 2015, which coded a proprietary blockchain that’s now being used by Vanguard for sharing stock index data. In February 2017, ConsenSys, a Brooklyn-based collection of crypto companies controlled by one of Ethereum’s founders, helped launch the Enterprise Ethereum Alliance. 

Just as corporate America co-opted counterculture vibes for its marketing and advertising (“Think Different,” “Don’t Be Evil”), its most forward-thinking businesses are fast incorporating a technology that was designed in large part to eliminate them.

In insurance, for example, MetLife’s mobile app Vitana bundles insurance with a test for gestational diabetes that uses a blockchain to record data and verify and pay claims. In recent testing in Singapore, where one in five expectant mothers develops gestational diabetes, a practitioner simply enters a positive test result into a patient’s electronic medical record and in a matter of seconds MetLife’s smart contract deposits an insurance payment into that patient’s bank account to cover the medical expenses associated with the condition. No paperwork or claim filing necessary.

Similarly, Germany’s Allianz, working with EY, tested moving certain captive insurance claims processes—often involving many emails, attachments and phone calls across multiple times zones—to a private blockchain. The time required to process a claim fell from weeks to hours.

The French bank BNP Paribas, which has lent money to commodities traders since the 19th century, is considering using a ledger platform called Voltron to process letters of credit for traders. Northern Trust has begun administering private equity funds using Hyperledger Fabric. Broadridge Financial has been running pilots testing multiple distributed ledgers for its dominant proxy voting and shareholder communications business.

“In real time, you know who owns the stock, who’s entitled to vote and how it’s tied to the universally-agreed-upon shareholder meeting agenda,” says Michael Tae, Broadridge’s head of strategy.

In the perpetually fraught food business, which regularly endures disasters ranging from E. coli outbreaks to a worker being cooked alive, companies like Nestlé and Bumble Bee Foods are turning to blockchain to secure their supply chains and reduce paperwork.

Golden State Foods, a big McDonald’s supplier that makes more than 400,000 hamburgers per hour, tracks the location and temperature of its patties with devices like radio-frequency ID tags and Hyperledger Fabric. The system can immediately alert GSF to conditions that might lead to spoilage. At the same time, it can optimize inventory levels by tracking how much meat is in a truck or in a restaurant’s freezer, in real time. 

At this year’s SXSW conference in Austin, Texas, Bumble Bee unveiled an SAP-built supply-chain blockchain offering complete transparency to its customers. Soon you will no longer have to take Bumble Bee’s word for it when its assures you that the 12-ounce package of yellowfin tuna you just bought was caught by individual fishermen in the South Pacific and not by a factory ship. The fishing crews, tuna processors and packers are now entering their own data in real time on Bumble Bee’s distributed ledger. By summer, Bumble Bee will be sharing that information with retailers and customers who take the time to check. 

From a public relations standpoint alone, Bumble Bee’s SAP blockchain is likely to bear dividends. In 2017 Greenpeace ranked Bumble Bee 17th out of 20 tuna brands for its sustainability practices, accusing it of “greenwashing” a host of bad behaviors with environmentally friendly marketing.

“Food safety and sustainably sourced product has become an overwhelmingly important topic in our industry,” says Tony Costa, the CIO at Bumble Bee. “Leveraging the latest technology enables us to open it up to more of a public perspective, if you will. So we get out of the business of managing data. We’re relying on a relationship.”

In the healthcare business, an estimated 20 cents of every ­dollar—some $700 billion a year—is wasted because of inefficiencies. Ciox, a little-known company based in Alpharetta, ­Georgia, that manages medical-records exchanges for 60% of the ­hospitals in the U.S., is considering developing a private blockchain that healthcare providers could use—for a fee paid to Ciox—to exchange data. Blockchain 50 enterprises like Ciox and the media giant Comcast, which is toying with using blockchain to micro-target television advertisements, plan to use the privacy features of blockchain to profit from their customers’ data while protecting their identities. 

Despite the surge in corporations working on blockchain projects, the technology is still new, and relatively few have generated significant revenues or savings. 

The one group that is getting rich from the current enterprise blockchain gold rush: consultants. Deloitte, PwC, KPMG, EY and Tata Consultancy Services are deploying small armies to preach the virtues of blockchain to the C-suite and charging huge fees to help companies implement the technology. (We excluded consultants from the Blockchain 50 because they played a key role in helping us ­create the list.) Deloitte, for example, has 1,400 full-time blockchain employees. India’s Tata has 1,000 staffers, 600 of them full-time, in its blockchain unit. Tech firms, including Oracle, SAP and Amazon, are also staking out their turf.

Part technology firm, part consultant, IBM may be the biggest and most successful enterprise blockchain company of all. Besides helping create Hyperledger Fabric, the company has 1,500 staffers—mostly engineers—devoted to the new technology and reports that its IBM Blockchain powers 500 client projects.

IBM Food Trust, for example, counts Walmart, Kroger, Nestlé and ­Carrefour, the French grocer, among its 50-plus members. IBM is also behind TrustChain, a consortium of companies in the supply chain for diamonds and ­jewelry, including Rio Tinto Diamonds, Asahi Refining and Helz­berg Diamonds. Health Utility Network, another Big Blue group, counts three of the five largest U.S. health insurers—Aetna, Cigna and Anthem—as members.

 â€œThe power of any blockchain network is in its participants and its members,” says IBM’s Wieck. It matters little ­whether those members are crypto-idealists or global corporations.

Source: https://www.forbes.com/sites/michaeldelcastillo/2019/04/16/blockchain-goes-to-work/#1116e4e52a40

SPONSOR: ThreeD Capital Inc. (IDK:CSE) Led by legendary financier, Sheldon Inwentash, ThreeD is a Canadian-based venture capital firm that only invests in best of breed small-cap companies which are both defensible and mass scalable. More than just lip service, Inwentash has financed many of Canada’s biggest small-cap exits. Click Here For More Information.

Blockchain Trends 2019

• Blockchain’s evolution over the past few years has been steady and solid.
• Even so, this groundbreaking technology still has a lot to offer and continues to hold much promise.

By Teodor Stefan, Modex’s Head of Content. Modex helps developers, teams and businesses of all sizes get started on blockchain, providing the full set of tools needed to learn, create, test, deploy and sell smart contracts and DApps.

Continuing from last year’s buzz and the entrance of regulators, blockchain is poised to evolve even further.   A key area is technology for enterprises that require trustless transactions and secure record keeping.
Enterprises can track transactions with greater confidence and security, and blockchain adoption – completely distinct from the cryptocurrency hype or doom – is steadily gaining in enterprise environments.  While some may lament the entry of regulators in 2018, clamping down on ICO projects, and putting in place strict frameworks for compliance, these are signs of a market maturing.

Here’s what we can expect to see in the rest 2019:

Blockchain as a service (BaaS)

While many startups and enterprises are working on their own blockchain solution, it is not always feasible to create, maintain and manage an individual blockchain solution. This is where Blockchain as a Service (BaaS) comes in. Blockchain as a Service (BaaS) is an offering that allows customers to leverage cloud-based solutions to build, host and use their own blockchain apps, smart contracts and functions on the blockchain.  A cloud-based service provider manages all the necessary tasks and activities to keep the infrastructure agile and operational.  We predict Baas will speed up the adoption of blockchain across businesses.

More Security Tokens

In 2018, the utility token market saw a slowdown, so the arrival of security tokens has been one of the hot topics last year. The market has long-waited for the grand entrance of institutional investors, but they have not yet significantly entered the scene. The success of security tokens is contingent on digital asset exchanges being up and running. Alongside crypto exchanges seeking regulatory clearance for security tokens, we also see traditional players like Nasdaq, London Stock Exchange and the Swiss Stock Exchange developing digital asset platforms, signs indicating that market infrastructure will be in place by the second half of this year. As processes stabilize and regulatory concerns are addressed, most likely we will see the launch of several STO projects towards the end of 2019, with major activity in early 2020.

TFT Guide to Security Token Offerings (STOs)

Moving from crypto to digital assets

With several indicators pointing towards the possibility of a global slowdown this year, investors are looking for alternative asset classes. With the developing market for security tokens, there are immense possibilities in the tokenisation of well-performing assets that previously lacked liquidity. Consider healthy Small-Medium Enterprises (SMEs) and Real Estate Assets, that tend to have robust returns, but lack wide market access. While they may not be able to afford public market listing, opening up to global markets of investors could provide an infusion of capital that could help scale their businesses. With over 90% of companies in operation globally listed as SMEs, the potential for growth is significant.

More digital asset services by financial institutions 

This trend started last year and, most likely, will continue in 2019. The user experience of managing your own assets is scary to a lot of people, and there is a strong desire from a business point of view to have custodial services for digital assets. While many businesses are looking for new blockchain use cases, some are embracing cryptocurrency market. Yes, this market has been hit hard last year, with major cryptocurrencies but despite that, people know that cryptocurrency is here to stay, even if they don’t use it themselves in the near future.

Interoperability between blockchains

As the market progresses, there are new blockchain networks showing up, which leads to new chains that offer different speeds, network processing, use-cases. Blockchain interoperability aims to improve information sharing across diverse networks. These cross-chain services improve blockchain interoperability and also make them more practical for day-to-day usage. For instance, with blockchain interoperability, you can send information from EOS to Ethereum blockchain. In 2019, we should see an improvement in the technology that enables blockchain interoperability.

UX Development and scalability

Scalability and performance hurdles affect both enterprise and public adoption. Promising solutions, like sidechains or innovative platforms, are expected to become more sophisticated and adapted this year. Moreover, many blockchain applications now have a mostly complex user interface, which is far from intuitive for the average, non-tech user. In 2019 we expect to see more user-friendly solutions, which are capable of mass adoption both in technology and design.

Convergence between blockchain and the Internet of Things

This topic is quickly picking up steam. IoT adoption is increasing the number of devices and sensors that gather data, and many parties are typically involved in a business transaction based on that data. Blockchain enables safe record-keeping through an immutable ledger, and permits decentralized operations and transactions while preserving trust between all players in the value chain. In 2019, look for the intersection of these two technologies to speed up implementation of both.

More favourable regulations around the world

European countries like Switzerland, Malta, Lithuania, and Lichtenstein will find competition around the world heating up as more and more states will push for additional favorable regulations around blockchain and crypto-ventures. Malaysia, for instance, is planning in Q1 to review its crypto and ICO (Initial Coin Offering) regulations. In addition, governments of various countries will start to explore what blockchain technology can do for them and look for possible use cases.

Stable Coins

Stable Coins could also see a boost in 2019. Cryptocurrencies are the side product of blockchain, but they are volatile. This gives rise and more market traction to Stable Coins. Unlike cryptocurrencies, Stable Coins have stable prices. It is not affected by the market condition and ensures that the stability is maintained all time. Most of the Stable Coins are fiat-backed, but there is still another type of Stable Coins that are backed by commodity, cryptocurrency or belong to the non-collateralized.

Read our coverage on stable coins here

Decentralization of apps, not just of the ledger

2019 should also see more decentralization of apps themselves. Too many applications using a blockchain ledger rely on a centralized application that represents a single point of failure and also a vulnerability that could allow tampering with the data before it gets written to the ledger. The same approach needs to be applied to the application’s logic, which must be decentralized with no single point of control. Each trading partner or member of the ecosystem runs their own app. Building such applications is no easy feat, but it is a required step to ensure wide blockchain adoption for business usage.

Hybrid blockchains

Without doubt, hybrid blockchains should be on your radar in 2019! The hybrid blockchain works by providing the best features and functionality of both public and private blockchain. Hybrid blockchains stand out by offering a customizable solution and also making proper use of what blockchain has to offer – characteristics such as transparency, integrity and security. To name several use-cases of hybrid blockchain: Internet of Things (IoT), banking, supply chain, enterprise services.

Federated blockchains

This year we can also expect to witness a rise in the use of federated blockchain as it gives private blockchain a more customizable outlook. Federated blockchains are similar to private blockchains, but with a simple twist: instead of one organization controlling it, many authorities can control the blockchain and pre-select nodes. The selected group of nodes then ensure that block is validated for processing transactions. Some of the use cases of federated blockchain include insurance claims, financial services, and supply chain management. IBM’s blockchain for food traceability is another good example of federated blockchain.

Source: https://thefintechtimes.com/blockchain-trends-2019/