Older firms find new life with blockchain

Blockchain is getting big- ger at Big Blue.

Demand for the technol- ogy, best known for supporting bitcoin, is growing so much that it will be one of the largest users of capacity next year at about 60 data centers that International Busi- ness Machines Corp. rents out to other companies around

the globe. IBM was one of the first big companies to see blockchain’s promise, contributing code to an open- source effort and encourag- ing startups to try the tech- nology on its cloud for free.

That a 106-year-old com- pany like IBM is going all in on blockchain shows just how far the digital ledger has come since its early days underpinning bitcoin drug deals on the dark web. The market for blockchain-related prod- ucts and services will reach $7.7 billion in 2022, up from $242 million last year, accord- ing to researcher Markets & Markets.

That’s creating new oppor- tunities for some of the old warships of the technology world, companies like IBM and Microsoft that are making the transition to cloud services. And products that had gone out of vogue, such as databases sold by Oracle Corp., are becoming sexy again. “All of these things will get a new life because of block- chain,” said Jerry Cuomo, vice president of technology for IBM Blockchain. “Our sales team loves blockchain because a customer that is buying blockchain rarely walks out of the store with just blockchain. They walk out with multiple things in their cart.” Because multiple companies — such as all parties involved in a supply chain — can use the same blockchain, it’s spurring IBM to revise the way it compensates sales associates. In the past, sales reps got paid when their cli- ents bought IBM technologies directly. Now they will also receive a commission when clients encourage other companies to join them on a blockchain network and use Big Blue’s systems and services, Cuomo said.

The blockchain enables companies doing business with each other to record transactions securely. Its strength lies in its trustworthiness: It is difficult to reverse or change what’s been recorded. The blockchain can also hold many more documents and data than traditional database storage, allowing for more nuanced insights and analysis. It can also hold embedded contracts, such as a lease for a car, whose virtual key could be transferred to a bank in the event of a default.

“Blockchain is one of the bright sectors in technology,” said Roger Kay, president of Endpoint Technologies Associates Inc. “Since blockchain infrastructure is fairly beefy, there will be a large pool of revenue associated with sales of equipment, software and related services for blockchain installations.”

Big Blue has been one of key companies behind the Hyperledger consortium, a nonprofit open-source project that aims to create efficient standards for commercial use of blockchain technology.