In this article, IBM is beginning to develop technology in online banking based off of the methods that Bitcoin, the online “money” corporation, uses for its online system. This system is called blockchain and is essentially works as Bitcoin’s online ledger of every purchase/transaction ever made using their technology.
IBM plans to use this same kind of technology to create an open-source banking system that will be recorded and shared publicly as well as safely. The main use of this technology would be for online contracts between businesses and let them share information on one network. Another goal of this technology, which IBM is working on, is to decrease fraud and spam in bank transactions. The hope is that this will connect international business and banks seamlessly and create a network of private contracts and transactions.
In international business, the main concern between companies is if their laws and protections of contracts are similar. No company would want to work with a company residing in a different country where contract law is different. Also, it would be easier for these international countries to speak about these contracts if they could look at the same page, on the same site. With IBM creating this type of technology and banking/contract system would be crucial in helping these interconnected companies. They would be able to create online, digital contracts that would be easy to view and outline. This technology would help business-to-business transactions improve because of the ease of use.
In the supply chain management, this would create an easy flow from suppliers to companies. In the article they use the example that a Chinese supplier could have a contract that once a product reached the US company, the company would pay the supplier.1 This could all be done on the Internet, which would cut costs and avoid supplier/company miscommunication.
Also, big name banks, such as Goldman Sachs and Barclays, are thinking about using this technology as well, sharing that it would be “making fraud more difficult.” A use for this would be to record the stocks and shares that pass through each bank and log them into a ledger with easy access. This would “cut the cost of reporting transactions and working out who bought what and when,”2
As for use in the regular world and for average consumers, IBM vice president of research said, “I want to extend banking to the 3.2 billion people who are going to come into the middle class over the next 15 years,’ he said. ‘So I need a much lower cost of keeping a ledger. Blockchain offers some intriguing possibilities there.”1 This technology could not only effect business-to-business transactions but also regular banking that average citizens could use in the future.