Ibm's Crypto Investment Focus: What's Their Strategy?

IBM has been a key player in the blockchain space, with its blockchain solutions ranking number one in an enterprise survey by Juniper in 2017. The company has developed various blockchain-based products and services, including the Digital Health Pass, which allows individuals to present their health status, and the IBM Blockchain Platform, which improves security, usability, flexibility, and development speed. IBM has also been an early adopter of cryptocurrencies, launching a stablecoin backed by FDIC-insured banks. However, in recent years, the company has cut down its blockchain team significantly, shifting its focus to hybrid cloud technology. Despite this, IBM remains invested in blockchain technology and continues to explore its potential.

IBM's stablecoin, USD Anchor

IBM is working on a stablecoin called USD Anchor, which is a cryptocurrency that is pegged to the value of fiat currencies. In this case, USD Anchor will be backed one-to-one with the US dollar and held by Prime Trust, which will deposit the cash at FDIC-insured banks. IBM has partnered with Stellar, a blockchain that shares technology with Ripple, and Stronghold, a startup, to launch USD Anchor.

The aim of this stablecoin is to reduce the volatility associated with most cryptocurrencies and to provide faster and more secure payments than those offered by current cryptocurrencies. IBM's head of blockchain services, Jesse Lund, stated that the startup plans to:

> enable all sorts of digital transactional networks to settle their transactions with digital fiat currency on the same blockchain networks.

Lund also added that this could expand the use cases of digital currencies beyond just trading in cryptocurrency markets, saying:

> What we envision is a network that has multiple different asset classes living on it. You could have digital euros, digital dollars, digital pounds – and they are all really kind of running on the same networks.

USD Anchor will utilise the Stellar blockchain platform to verify transactions. Stellar is similar to Ripple in that it focuses on cross-border transfers, but it targets developing economies instead of forming alliances with banking institutions. Stronghold, on the other hand, acts as a bridge between fiat currencies and Stellar's network, as all money transactions in the Stellar network occur in the form of credit issued by anchors like Stronghold.

The introduction of USD Anchor as an anchor on the Stellar network is a significant step forward for cryptocurrencies. This is because, instead of competing with chartered financial institutions, they were able to include them in a productive and beneficial way. An asset like USD Anchor has the stability required for big-name players to make transactions on a blockchain platform.

IBM's blockchain initiatives

IBM has been at the forefront of blockchain technology, developing solutions and working with clients to meet their industry-specific needs. The company has made significant investments in blockchain-based products and initiatives, positioning itself as a key player in this emerging market. Here is an overview of some of IBM's notable blockchain initiatives:

We.Trade

IBM joined 12 banks, including UBS, Deutsche Bank, and HSBC, in backing the blockchain startup We.Trade. We.Trade is a blockchain trade network that connects buyers and sellers internationally, streamlining paper-based transaction tasks like letters of credit and cross-border trade financing. This investment highlights IBM's interest in using blockchain technology to improve supply chain efficiency and transparency.

USD Anchor

IBM partnered with Stellar and Stronghold to launch USD Anchor, a stablecoin backed by FDIC-insured banks. This initiative aims to create a network where digital fiat currencies, such as digital dollars and euros, can be used to settle transactions across multiple blockchains. IBM's partners in this venture bring unique capabilities, with Stellar enabling cross-border transfers within developing economies.

IBM Rapid Supplier Connect

In response to the COVID-19 pandemic, IBM introduced the Rapid Supplier Connect, a blockchain-based network designed to help government agencies and healthcare organizations identify new suppliers to address equipment and supply shortages. This initiative leveraged blockchain technology to enhance supply chain transparency and efficiency during a critical period.

Digital Health Pass

As societies began to reopen after lockdowns, IBM introduced the Digital Health Pass, a blockchain-based solution that enables individuals to securely present their health status when returning to physical locations like offices or flights. This initiative prioritized user privacy while providing organizations with a secure way to set health criteria for different activities.

Bank of Thailand Savings Bond

IBM collaborated with the Bank of Thailand to launch the world's first government savings bond on its blockchain and cloud technology. This platform reduced the bond issuance process from 15 days to just two, improving efficiency and reducing operational complexity and costs. The success of this initiative highlighted the potential for blockchain to redefine complex business processes.

These initiatives demonstrate IBM's commitment to exploring and implementing blockchain technology across various industries, including finance, healthcare, and supply chain management. By leveraging blockchain, IBM aims to enhance security, transparency, and efficiency in these sectors.

IBM's investment in We.Trade

IBM has invested in blockchain trade finance platform We.Trade, a joint-venture company owned by 12 banks, technology provider IBM, and global credit bureau and business information provider CRIF. The company was started in January 2017 under the name Digital Trade Chain and was renamed We.Trade in October 2017.

We.Trade has developed a digital trade platform based on the Linux Foundation's Hyperledger Fabric that runs on the IBM Blockchain Platform. The platform offers reliability, simplicity, and security to global trade transactions across trade finance and logistics. It aims to simplify international trade by providing a “one-stop shop” of real-time information on any trade visible to all parties and triggering automatic payments through smart contracts.

The We.Trade platform brings several benefits to companies considering international trade. It eliminates the risk associated with trading with unknown partners and provides a network where companies can search for appropriate trading partners, enter discussions, and decide to do business. Additionally, We.Trade's smart contracts guarantee that if one party in a transaction fulfills the necessary requirements, the payment process is executed automatically. This eliminates counterparty risk and ensures timely payment processing.

We.Trade plans to expand globally, and IBM's support and expertise will be crucial in this expansion. IBM can provide on-the-ground help as the network adds additional banks from Canada and Japan. Furthermore, there is an opportunity to integrate with other IBM-owned platforms, such as IBM Food Trust and TradeLens, to enhance We.Trade's capabilities further.

The strategic direction of IBM's investment in We.Trade is focused on driving growth and transparency across the trade ecosystem, enhancing the network effect of blockchain, and expanding access to trade finance and other services for companies of all sizes.

IBM's use of blockchain to combat COVID-19

IBM has been leveraging blockchain technology to combat COVID-19 and the subsequent supply chain shortages. The IBM Blockchain network is designed to help government agencies and healthcare organizations identify suppliers and address supply chain shortages. The initiative, IBM Rapid Supplier Connect, is part of IBM’s approach to tackling the shortage of equipment, devices, and supplies needed for coronavirus relief efforts. The network will ensure access to more trusted information, accelerate discovery, and improve resiliency and adaptation by complementing existing supply chain networks and their payment systems.

One of the applications of blockchain during the pandemic has been to combat supply shortages. Due to the lockdown, some suppliers were left without key goods, and buyers needed to expand their network of providers very quickly. However, integrating a new supplier into the network can take many weeks due to current laws and regulations. To shorten this process, IBM used the Trust Your Supplier blockchain-based identity platform built by Chainyard Supplier Management Inc. This platform allows suppliers to be visible to buyers that are part of the IBM network, reducing the validation and verification process from 30-40 days to just 5 days.

Another use case for blockchain during the pandemic is aggregating valid data to help authorities fight the pandemic. The IBM Blockchain team joined the MiPasa project, from enterprise-grade blockchain platform Hacera, in creating a verified data hub. This data hub can be used to map and contain the crisis, providing scientists and researchers with verified data sources that can be used with confidence.

Additionally, blockchain technology can be used to monitor the temperature of COVID-19 vaccines throughout the supply chain. This is crucial as vaccines must be kept cold, as much as 70 degrees below zero, to remain effective. IBM, Merck, Walmart, and KPMG have demonstrated using blockchain for end-to-end pharmaceutical product traceability. Furthermore, solutions like the IBM Digital Health Pass can be used by individuals to prove they've been vaccinated and can safely travel or return to work.

IBM's Digital Health Pass

The Digital Health Pass is designed to be a smart way to bring people back to physical locations during the COVID-19 pandemic. It can be used by cruise ships, airlines, hotels, travel authorities, stadiums, amusement parks, concert venues, universities, government buildings, and workplaces to establish the wellness status of individuals prior to their visit.

The pass is underpinned by a combination of encryption, QR codes, and blockchain technology, providing a secure, voluntary digital alternative to paper test results or vaccination cards. It is also designed with privacy in mind, allowing users to control what they share while keeping their data private and securely stored on their phones.

The pass has been integrated with Healthcare IT Leaders Healthy Returns, a comprehensive suite of enterprise COVID-19 services. This integration provides organizations with a streamlined process for implementing COVID-19 testing and vaccination requirements in their workplace or business.

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