 on the ground, presented by theCUBE. Here's your host, Jeff Frick. Hi, Jeff Frick here with theCUBE. We are on the ground at the Mission Bay Conference Center in downtown San Francisco at the Blockchain Conference. Blockchain is getting a lot of buzz right now. It's really kind of separating itself from Bitcoin where it was historically kind of the underpinnings of Bitcoin for a lot of new applications and it's good buzz here. We want to come up, kind of get a feel for what's going on and IBM is in the house. So that tells you something good is going on. So John Wolpert, Global Blockchain Offering Director from IBM, welcome. Thank you, thanks for having me. Absolutely, so when we started this show you're actually kicking off your keynote and I know it's such a dynamic situation. You were so taken by the prior keynote, you jumped in. So share some of the thoughts that came up about what is different about Blockchain and what we're doing now in the future versus kind of not a long history, a couple of years of the Bitcoin phenomenon. Well, would we be here without Bitcoin or Ethereum or all these existing fabrics that are out there? No way, super important stuff. It's like a Napster, would we have iTunes without Napster? Would we have Netflix without BitTorrent? No, sometimes something on the fringe gets those of us who are doing mainstream things thinking about a new pattern. And I think if that is the only thing that happens that's hugely important, right? But obviously there's more to it than that. And so we're excited to be part of it. And it feels a lot to me like the days of Java when Java wasn't an IBM thing, but we saw how important it was and we got behind it, we really got behind it. But thousands of people were working on Java at the height of it. And I was one of those guys. So it feels like those days, we're saying, hey, somebody came up with something, things don't have to be all about what we're doing inside the company. So most of the time we're looking at outside the company. And we saw this and said we have to get behind it. Well, IBM's doing a ton of stuff, obviously. We're talking a little bit before about the weather.com purchase or the weather data. Like I just recently finished the Ustream acquisition who we know that's our streaming partner will be at Spark Summit East. I know IBM's got a ton of traction behind Spark. So obviously taking a lot of, putting a lot of bets down some of these new evolving data sets as well as technologies. Yeah, open data, open source, open innovation, open nest. That's really the world we're living in. It's the world that we were discovering in the 90s. And look, IBM, we're like the original open source company, we were there at the beginning of it. We've been there helping the internet. Whenever the internet wants to evolve, we've been there helping in an open way. Not in a proprietary way, in an open way. Java, Linux, XML, blockchain. So you touched on a theme in your keynote that I did catch for you to leave about open innovation compared to open source. How do you compare and contrast those? You said that there are various different concepts. So in the early days, I was running this thing called AlphaWorks back in the 90s, which was for big companies, you have to learn open nests before you learn open source. And so before you have Linux, you have to be able to actually contemplate the idea of working openly from the very beginning with people that don't work for your company. And AlphaWorks was a way for us to do that. We opened up, we actually opened our source code for our research projects. Research, IBM, $6 billion in research a year. We opened up much of that code for anybody to use, anybody to try. And what we got for that was so much more valuable than the code. It was, hey, if you just changed this, we would use it for this. And we didn't even think of that. So it was a powerful, one of the best things I ever worked on was AlphaWorks and IBM. It was a very long run organization which now just pervades the culture. So open nests before open source. Okay, and if you extend that to open innovation, there's a guy, Henry Chesborough from Berkeley who wrote the book, Open Innovation. And in that book, we talk about how there are more smart people outside your company than there are inside your company. Even a company the size of us. And we've learned that lesson. So we said, with blockchain, do we have even a fraction of the people that the required people, does anybody have enough of the smart people required to figure this out and take it to the next level? And we said, no, it's not certainly not us, certainly not anybody else. So we all need to work together and not just by open sourcing our code base, right? That's what typically we talk about with open sources. I have a thing, I'm gonna open source it so people will be more comfortable buying it. People will be more comfortable because they can see the code, right? That's fine, there's nothing wrong with that. But there's another level of this that I think the original open source guys, Eric Raymond and all those cats in the 90s, were thinking about, which is working together to conceive of what you deliver. Right, right, well obviously the pace of innovation with all those people contributing makes open source an amazing kind of innovation as well. Yes, and actually with Bitcoin or with blockchain itself, it's such a highly networked technology that if any one organization came up with it on their own, it would not succeed in the way that if we can all say we all had a piece of the baby, we all were part of it. But it's kind of an interesting contrast though because the whole basis, the BGT is that we don't trust each other in terms of the execution of the transactions leveraging this technology, which seems like the antithesis of really this open source community that's driving the innovation on the technology piece. Just kind of an interesting story. But specifically, for IBM, for blockchain, what do you see kind of obviously, I know you guys are just getting into it, you want to be there, you want to be part of it, but what are some of the things that you guys see in the midterm, short term, that you're excited about and why IBM's making this investment in blockchain? Well again, we think it's exciting because it is, it's an evolution of the internet, right, that we started with an internet that pointed to things, right, you have a bunch of computers pointing to other computers and that was cool. Now we have a maturity of the internet that says, okay, I'm ready, hey internet, I'm here, I'm ready to evolve into something where I can handle the level of security trust or trustlessness, trust that is required to move things of value between legally separate entities. So the idea of trading valuable things over the internet at distance is, and Bitcoin is a perfect original example of that, I have a dollar bill, I give it to you, it's an amazing technology, I don't have it anymore, you have it, unless we counterfeit it, you can't duplicate it, right? Do that with ones and zeros at distance over the internet, that's really hard, right, so Bitcoin solved that problem. Extending that idea to all kinds of internet fabric level problems is what we're doing now. Right, but then now you add this whole regulatory environment, Securities and Exchange Commission, so where Bitcoin kind of played a lot was, we can do it, there's no third party, therefore there's really no accountability outside of the system itself. Fortune 500 is a different story, the global enterprise is a different story. How does regulation and kind of the existing infrastructure for regulation and compliance fit with kind of this new model of a really machine trusted non-intermediary transaction? How's that going to play out? So I'm going to not answer your question, but I'm going to use it to answer a similar question. Okay. So you've been on there before. So you're talking about regulation, and I don't have a good answer on that, we don't have a view on cryptocurrency as opposed to any other kind of digital currency, that's for others to worry about. What we do have a view on is the notion of a world where the rules that we write about things like regulation, taxes, Dodd-Frank. If Dodd-Frank, I think everybody that's in the field today that I've spoken to in finance believes that if we had a blockchain fabric in the internet when Dodd-Frank happened, right, and after 2008, we would have solved the problem, we would have dealt with it on the blockchain. We would have written the rules into immutable code on the blockchain, and we would have been transacting and reporting in a singleton, in a single ledger or a unified way where it would have been very easy for the regulator to audit and know that compliance was happening without putting an army of compliance people into every single bank. Yeah, that's a whole other story about people and people gaming the system versus the compliance versus the technology, and there's a whole lot of funny business going on there. That's right, the blockchain technology is a more elegant pattern to solve that kind of problem. Right, and so from the outside looking in, as we look at IBM specifically and kind of the blockchain movement generally, what should we be looking for over the next three months, six months, nine months, when we come back a year from now to this show as indicators of adoption success, movement to make blockchain more kind of, I don't know, mainstream, that might be too big of a term, but more of a mainstream type of technology in enterprise solutions delivery and really within the IBM portfolio. Well, this is the year I think that blockchain starts becoming real for business and when the Linux Foundation project starts to deliver its code out to the world and we can start all putting pull requests and writing code to it and being part of the community that's helping evolve that, I think at that point we were going to see a massive acceleration because of the extensibility of the way they're building that technology and how we're all working on it together. I think we're going to see it an acceleration when that code drops later this year. So that's, you say nine months to 12 months from now, we're going to be talking about that piece, that fabric that we're going to start writing into the internet. And what application space or solution space, vertical space do you see as the next great opportunity after fintech? I mean, fintech's obviously where there's a lot of action comes directly off the Bitcoin. What's the next one do you think where you're going to see early adopters just drop dead, dumb value proposition within other verticals? Well, clearly we all talk about IoT. We talk about trade, trade finance, trade settlement. All of these things are, of course that's still finance but I like to think of it as you and I are trading cookies and donuts and I have a rule that says if you give me four donuts within 15 days I'll give you four cookies but after that it's only three cookies, right? That's a business rule. That's an agreement, a contract between you and me. How many of those are there out in the world for every kind of thing? And if I can make that agreement permanent, illegible, written in Sharpie on the internet, right? In a way the blockchain is the internet's Sharpie. It's a permanent marker for the internet. And I can say neither of us can change that rule until we both decide. And we can be assured of that. Once I have that, I can do every kind of thing like that as long as I can do it with confidentiality, with privacy, with security, and with identity. And these are the things that we're working on in the Linux Foundation Hyperledger project. Right, awesome. Well, John, thanks for stopping by. John Wolpert from IBM. Hopefully we'll see you in Vegas in a couple of weeks. I'm Jeff Frick with theCUBE. We are here at the Blockchain Conference. Thanks for watching.