Lowering TCO With the IBM Blockchain Platform

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Production Blockchain Application Components

The IBM Blockchain Platform is not only the most comprehensive platform for building production-grade blockchain applications—it also provides the lowest total cost of ownership (TCO) in the industry. In this article, we’ll help you understand the requirements of a production-grade blockchain application such as a supply chain, and we’ll compare other alternatives to the IBM Blockchain Platform in terms of completeness and TCO.

The IBM Blockchain Platform is an IBM-hosted solution for developing blockchain applications. The solution is hosted on LinuxONE servers that provide several security benefits such as pervasive encryption and secure service containers along with excellent performance. The platform provides all the essential features for deploying, governing and operating a production blockchain network. IBM charges for the IBM Blockchain Platform based on the number of blockchain peer nodes ($1,000 a month for each peer deployed).

Solving Problems With Blockchain

Let’s begin by understanding which problems can be solved with blockchain. In this article we’ll focus on problems in the supply chain area, but blockchain technology can solve problems in many other areas including finance, healthcare, insurance and several other industries. Understanding problems and blockchain solutions helps us understand what to expect from a blockchain platform and also understand why IBM is the only comprehensive provider of such a platform. The following problems—along with several others—can be solved with blockchain:

1. Shifting Paradigm From Message-Based to State-Based

Organizations send messages back and forth to accomplish various tasks, with each organization maintaining its state of the task locally. These organizations maintain ledgers containing only their own transactions—currency, property or intellectual property, for example. Each ledger reflects the information held by a single party.

With blockchain, the ledger is shared and distributed across multiple parties, allowing information to be updated every time a transaction occurs. This reflects both the physical and financial flow of goods. On blockchain, messages represent the shared state of the task, with each message moving the task to the next state in its lifecycle. A blockchain shifts the paradigm from information held by a single owner to a shared lifetime history of an asset or transaction. Instead of message-based communications, the new paradigm is state-based.

2. Brand Protection and Risk Prevention

Blockchain can help trace the provenance of goods. This feature is useful in helping companies detect counterfeits and conflicts, thus protecting their brand reputation. Avoiding counterfeits helps to ensure that customers get the brand quality and experience they expect.

Consider electronics supply chains that are several tiers deep. Suppliers and original equipment manufacturers (OEMs) can be far removed from finished goods. On blockchain, however, data can identify and follow components wherever they go. Proof of ownership, location in near real time and even the condition under which goods are transported can be captured, shared and stored to become a trusted audit trail. Tracing component provenance on blockchain is already preventing the transfer and sale of conflict diamonds. Blockchain technology can also help to assure that no one tampers with or changes minerals coming from compliant, non-conflict mines as they move through production, from smelters to component manufacturers and product assemblers.

3. Production Tracking

Again, let’s consider supply chains in the electronics industry. Today, OEMs spend an enormous amount of time determining how many products providers have completed while tracking those goods as they’re shipped to an OEM’s warehouse, or directly to customers. Products registered on blockchain can be tracked from the provider’s production line to each possible destination. Blockchain can help OEMs understand precisely where their products are. This insight is especially important in cases where the OEM may never actually come into contact with the product. Applying blockchain coupled with analytics and cognitive capabilities, electronic companies can extend visibility end-to-end, creating new opportunities for dynamic optimization.

Platform Requirements for Blockchain Solutions

Implementing the blockchain solutions illustrated earlier in this article entails several platform requirements, including:

1. Security

The IBM Blockchain Platform is built on LinuxONE. Blockchain applications assume that no single node on a blockchain network is compromised. For enterprise deployments, the security of each blockchain node ultimately comes down to the hardware it runs on, including the network, its storage and the server. LinuxONE provides a secure, commercially available platform for Linux and blockchain. Some of the key features of blockchain on LinuxONE that make it a highly secure platform include:

  • Pervasive encryption, which ensures that all code and data encrypted at all times
  • Code that runs in a secure service container (SSC), which provides trusted boot protection, isolates tenants from one another, secures data encryption keys and protects from insider attacks
  • A secure Docker wrapped in a lightweight isolation layer
  • The highest level FIPS rated hardware security module
  • A trust system layer for Consensus protocols

2. Scalability

Blockchain applications imply that blockchain networks need to be highly scalable while providing the ability to dynamically add and remove thousands of peers on the blockchain network. This requires a platform that can scale both horizontally and vertically. The IBM Blockchain Platform built on LinuxONE offers the following scaling features:

  • Scale-up capabilities that allow addition of memory and processors for growth of applications with virtually limitless scale
  • Increased capacity that can be implemented without disruption and activated by microcode through Capacity on Demand (CoD)
  • Virtualization capabilities with PR/SM, z/VM and KVM that allow implementation of thousands of guests
  • Unlimited flexibility through Docker peers, Linux Guest and SSC partition sharing hardware resources
  • HiperSocket communication between LPARs

3. Continuous Availability

Blockchain applications and solutions can be successful only if the peer nodes and the hardware used to implement them are highly available. The IBM Blockchain Platform benefits from the following LinuxONE availability features:

  • Prevention of errors through built-in redundancy for all critical system components along with extensive testing and failure analysis
  • Exhaustive error detection and correction capabilities that isolate problems
  • Non-disruptive installation, upgrades and maintenance of hardware and firmware avoiding outages
  • Automated failover capabilities that speed recovery and minimize system impact

4. Governance

To operate a blockchain network with hundreds of peer nodes being accessed by thousands of participants one needs to have effective governance. The IBM Blockchain Platform supports open governance based on fabric governed by the enterprise-focused Hyperledger Project. IBM has contributed more than 40,000 lines of code to this project. The project is also supported by more than 25 organizations, ensuring a significant level of transparency among the participants.

IBM LinuxONE also provides governance tools that make it simple to set up a blockchain network, assign roles and visibility, and provide consent to the proper individuals or parties. It can help network members set rules, manage membership and enforce network compliance once the network is up and running.

5. Developer Support

Blockchain success depends on the ability to create compelling applications that solve problems. The IBM Blockchain Platform provides a comprehensive set of tools to support developers in building production grade blockchain applications. This toolset includes:

  • Smart contract development
    – Supports common programming languages such as GoLang and Java
    – Hyperledger Fabric Client SDK, which provides an easy-to-use API to interact with fabric
  • App development support
    – Accessible support for smart contract development
    – Hyperledger Composer, which provides a suite of high-level application abstractions for business networks
  • Model-driven app development
    – Development that’s driven to digitally model business networks
    – Hyperledger Composer, which allows non-programmers to easily create applications

For a direct feature comparison of the IBM Blockchain Platform compared to other public cloud offerings, see Figure 1.

TCO of a Production Blockchain Platform

A blockchain platform’s TCO is comprised of both the infrastructure costs and the cost of implementing the components needed for running the chain code. Production blockchain networks span multiple countries and can be comprised of tens to hundreds of peer nodes. We created a TCO comparison of an implementation of 100 peer nodes on the IBM Blockchain Platform as opposed to a cloud competitor. For a breakdown of monthly cost details of the infrastructure components of a typical public cloud, see Figure 2.

In order to calculate the cost of implementation we used data obtained from IBM’s experience implementing blockchain projects with several customers. The components can be broken down into the UI, cluster systems management and other components (including Pub/Sub and DB along with the integration code so that everything works well together). Assuming a fully loaded software engineer cost (meaning the cost of the employee for the organization includes employee salary, insurance, space costs, benefits, etc.) of $200 thousand per year, we get $6.4 million for the implementation of the equivalent capability on public clouds.

A five year TCO comparison of the IBM Blockchain Platform as opposed to a typical public cloud is shown in Figure 3. Our calculations showed that implementing similar infrastructure functionality on a public cloud for a specific blockchain application costs at least 49 percent more than implementing on the IBM Blockchain Platform.

A Comprehensive Platform

The IBM Blockchain Platform is the only comprehensive platform in the industry that provides support for developing production blockchain applications. Other cloud providers make the claim that they support blockchain when in reality all they offer are either the Hyperledger Fabric or Ethereum templates.

Srirama Krishnakumar is a senior IT business management consultant for the IBM IT Economics Team.

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