Industry watchers say it's a risky move, given the relative novelty of the technology and the hype surrounding it, but say IBM is well positioned to make it pay off.
For the uninitiated, the blockchain is essentially a shared digital ledger. Once entered, transactions cannot be changed, creating an immutable record. The technology is most associated with cryptocurrency, but several companies, including Microsoft (MSFT), JPMorgan Chase (JPM), and American Express (AXP), are exploring its use in other areas.
IBM (IBM) has 1,500 employees working on more than 500 blockchain projects in industries like shipping, banking, healthcare and food safety. It also has forged partnerships with the likes of Columbia University to develop still more uses for the tech.
It's a bold move, but not out of character for a company that is often among the first to embrace new technology, said Josh Olson, an analyst at Edward Jones. Although IBM is an early leader in the space -- it started rolling out commercial applications, like its work with Walmart to improve food tracking, two years ago -- he said that doesn't ensure long-term success.
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"Historically we've seen IBM invest in a technology early with some early promise, but then they've had difficulty commercializing good technologies or innovations at scale," Olson said.
Through its research, IBM identified three areas where blockchain could be valuable: Financial services, shipping and healthcare. So far, it is placing the greatest emphasis on the financial sector.
While IBM was open to using blockchain more broadly, it realized the technology wasn't a panacea. Blockchain is best used to turn paper-based tracking systems into digital ones, increase efficiency, an...