>> Announcer: Live from Las Vegas, it's theCUBE. Covering InterConnect 2017. Brought to you by, IBM. >> Hey, welcome back everyone. Live in Las Vegas, the Mandalay Bay. We're at the IBM Interconnect 2017. This is CUBE's exclusive coverage of three days of wall to wall. Day three winding down here at the event. Great show about cloud, data, and blockchain. Our next guest is Marie Wieck, who's the general manager of the Blockchain group within IBM, and Greg Wolfond, who's the chairman and CEO of SecureKey Technologies, announced a partnership with IBM. A lot of great success of blockchain. It's now a business unit in IBM. Marie, great to see you. Congratulations on the new role. >> Absolutely, we're really excited. We've seen so much momentum in blockchain that we really are investing heavily, created a new division, part of our Industry Platforms team, and we're off to the races. >> Exciting. >> So six weeks in the role now. >> Six weeks, I guess the business model is keeping running hard, (laughter) 'cause you guys have made great success. We had Ramesh, one of your workers in your division, on early, he came from the labs, or the research team, >> Marie: Right, research. >> and now he's in Solutions. The traction has been pretty amazing, so take us through, from a business standpoint, obviously you're now got the P&L applet running, you're going, engaging customers on use cases. Where'd this progress come from? Was it just, the internal coalesce of IBMers and customers coming together, give us why this is at its point today. >> I mean I think the most important point about blockchain, is that it really is a network effect. The whole idea of a shared distributed ledger, where everybody has visibility to the appropriate parts of data that they want, gives you some really interesting new business models, but you can't have a network effect, you can't have a community and an ecosystem if you don't have a common set of standards, and a way to drive interoperability. So just 15 months ago, we launched with 30 other people, the Hyperledger Project, in the Linux Foundation. It's been the fastest growing open source project since the Linux Foundation started, so really impressive momentum, and, you know if you think back just a year, at InterConnect last year in February, we had this little demo of trading marbles. This year, fast forward a year, we have a new division, we have 400 clients that we're working with on real production level use cases. We have eight networks in production. We've got now version one of the standard, which really brings a lot of the enterprise requirements, and we're seeing all kinds of new use cases. Supply chain, health care, government, financial services, all where we're really talking about being real now and trusted for business. >> And I would add that Ginni Rometty on stage, hammering home the focus, >> Exactly. >> like big time, at a Watsonesque level, >> Marie: Absolutely. >> so that must to mobilizing the IBMers new division. What's the buzz internally? (laughter) People want to come work for your division now, I mean what's happening? >> I do get an awful lot of emails from a lot of people who are very interested, but I always know when there's real momentum, when there are people who are doing it that we didn't tell to do it, you know, so we're starting with a pretty small team internally, my group itself Direct Line, is about 200 people. There's about 600 people in the extended team across the different functions across IBM, but when I do a search on our internal directory and search for blockchain, there's over a thousand people who have that name already in their title or in their description because they're working on it, and they see the power of it. >> Innovative people get intoxicated by blockchain, because they can just see the disruption elements. Greg, I want to ask you, because you're actually doing it, not only is it intoxicating to kind of grok what blockchain can be, this some real use cases right now, really jamming hard on blockchain with the ledger, can you just share quickly how that's playing out in context IBM and in the marketplace. >> Yeah, so SecureKey's a digital ID company. So we started in Canada years ago doing this login service for government. You show up, you want to see your taxes, your unemployment, your pension, any of 80 different departments, we made it easy for citizens to go there. You can redirect into a federated login with your TD login, or your Royal Bank login. We have millions of Canadians who use that, and we had hundreds of thousands a month, but it's really a login service, and it saved the federal government I think eight hundred million dollars to get that done, but we wanted to move to the next step, which is sharing identity, so digital identity and how do I share my attributes from TD Bank or Royal Bank or my data from Equifax or TransUnion in a trusted way with parties I want to, and not share it in other ways. And we couldn't do that without Hyperledger. So we can talk a little bit about why we went to it, but we have a network in Canada, we tested already phase one, we're launching later this year with Royal Bank, TD Bank, Bank of Montreal, Scotia. Where a citizen can show up at a Telco to create a new account. Is it okay to share my name and address and my credit score? Yes, done, account's open in seconds. FINTRAC changed the rules in Canada so you can open a bank account. Can I show up at a bank and share my attributes from the province and from a credit agency, and create my bank account in seconds. And we've all had this problem, right? I talk to my wife... >> I mean we live it everyday, I mean identity theft is I think front and center in mainstream life. Everyone has either someone close to them or themselves get the phone call, the credit score's dropping, or hey, someone's had my identity for a couple weeks, this is brutal, even the credit cards are gettin'... >> It's funny, when I started this business two of my friends had their identity taken over and someone put mortgages on their homes, and I said there had to be a better way to do it. With blockchain if we can take data from different sources, that the bank knows it's me and I can log in right now, that I possess this phone, that the province knows it's me and I can turn on the camera and check it's me, we can raise the ID validation score for everyone in the whole industry. For healthcare, to government, to banking, and we not only raise the ID validation we also raise the AuthScore, because I'm not just logging in with my bank, I must have this phone, with this SIM in it, and if it's canceled it's not me. And normally people would put that through brokers in the middle, but NIST in the U.S. said, we don't want brokers in the middle. They could peek, they could see your data. I have single points of failure. If this is identity for health here's how it goes down. I have honeypots of data. People are collecting all of my stuff in one place, it's encrypted, but the bad guy's going to get that, right? They could go after the person, and say I need the keys, I have a member of your family... >> I mean we're living in a world, in cloud, Marie knows, there's no perimeter anymore. >> Marie: Right right. The security experts that are state of the art right now, are saying, even saying theCUBE in day one here, data is the new perimeter. So there it is, right, this is fundamental, what you're saying, this is the new perimeter, the data, and you distribute it. >> So no broker right, means less of a threat matrix for people to hack. You don't need a trusted third party to arbitrate. >> You shouldn't have to get other credentials and things to go right, if I can login at my bank right now` and prove I've got the mobile device, can I release data from different sources? Ten percent of Americans move every year, if I show up at an apartment, can I share that I'm Greg and my bank says I'm me, that I have this device from my mobile company, can I share a background check to say that it's me? We're going to do that in about eight seconds, compared to the landlord having to go and pay a real estate agent one month's rent to vet you. And then when you do that, imagine the power now right? Would you like to sign up for internet? Share your data, yes, click. Would you like contents insurance, click. Totally taking friction out for consumers, but making sure that the parties who provide that data, whether it's my bank, whether it's my government, they can't track me. I don't want my government or my bank knowing if I go to mental health, or if I go to a cancer clinic. Really important that they don't know, right? >> Yeah, healthcare here, I don't know what it's like in Canada, but certainly in the United States you can't get information about yourself (laughter). >> And it's a perfect connection to blockchain, 'cause the whole notion of blockchain in our mind is about a trusted network, and how do you get trust if you don't know who the people are who are participating. So, we signed an agreement with the Food and Drug Administration in the United States, to focus on leveraging blockchain for exchange of information around patients, privately and securely for clinical drug trials. You know, it's just one example of now, you bring that trust element, that's built on a blockchain already, as a new interoperable component of these new supply chain networks. Whether it's around supply chain in global sourcing, whether it's the providence of food or diamonds, there's some really interesting aspects that you can now add on top. And we're now even connecting, you mentioned Cognitive, you know, now apply Watson on top of that. How do you increase the trust level in our new version one delivery of Hyperledger on the IBM cloud, we actually provide a trust score for the network, scale, a one to a hundred. What if Watson could actually look at your use case and hear the recommendations and suggestions for how to improve the trust level? Improving it means getting more members, so it's more distributed, and there's more sharing of information. But they're not going to want to share that information if there isn't a trust model. >> So give us a glimpse as to, sort of, your business. You got 200 people, but you've got thousands of people within IBM that you can tap, in addition to the huge portfolio of things like Cognitive. So you've got this startup (laughs), >> Marie: Right. >> inside of IBM. >> Marie: A startup in IBM. >> And you said it's inside the Industry Platform's team, so what is that, and what are you actually building out? >> So, we are building, we're taking, and contributing, we're investing really, in the Hyperledger project ourselves. We are one of now 122 members of the open source and open community project, and we're actually developing and contributing content there. >> Dave: Big committer there. >> Big committer, and we provide a support model for anybody who wants to use just Hyperledger, but we take Hyperledger back, and now we're delivering it as a secure platform on our high security network, that is production grade, you know enterprise strong, would be Ginni's word for that, right, and delivering that on our cloud, or letting you take a container and put it on your own enterprise if you really want your own private cloud. But we're also building industry solutions on top of that. So we announced a partnership with Maersk, for global shipping on global trade digitization to provide greater visibility. >> But on that deal, just to interrupt, that Ramesh was put in, that wasn't a solution specifically for them, that was an industry scope solution. >> Correct. So it's really a partnership. So in this case again, it's that network effect, it's that ecosystem, it's not Maersk, the customer, it's Maersk and IBM the partners, who are now bringing forward as the anchor tenants in this new network, the rest of our ecosystems, and we were interested 'cause we have a big supply chain business for all our hardware as well. >> And you're selling a SAS product, is that right? >> Correct. >> So it's a subscription based model? >> Correct. >> And then services on top of that? >> And services both to develop new blockchain applications, we've had a number of our clients here from the 20 thousand at InterConnect, that've come up with new ideas. We're going to help them build that, in a services kind of model, but many of these are going to be essentially SAS networks where either they're going to pay a membership fee or they're going to pay per transaction, a percentage of the price, or they're going to participate in the savings, because this is actually going to streamline the opportunity. In the case of SecureKey, the model we see customers willing to buy, the validation of an identity for an individual if they're participating in a critical transaction. A bank would certainly be willing to pay to increase the confidence that Greg is Greg, if he was applying for a mortgage online. >> And the consumption is through the IBM cloud, correct? >> Yeah, so there's a toolkit, we're big believers in open source. It's open at the ends, really easy using things like Bluemix to connect to the endpoints. And for us, it's just a magnificent coming together, because things like the high security network to turn banks on quickly, where they trust it, and they can put their data in a secure and trusted way, make this all go faster. >> Dave: But that's the only place in the world I can get this, correct? >> Marie: It is certainly the only place that you can get that level of security in a blockchain network. >> But from a competitive standpoint, somebody else has to build this out, and create as a competitive product as IBM has, and run it on somebody else's cloud, for them to compete, correct? >> That is correct. >> The strategy is not to spam the world's clouds, it's to say hey, we've got this solution, here's how you get it, here's how you consume it. >> And we really firmly believe that if this is an interoperable set of standards, there will be other networks, there will be other participants. We want them all to be interoperable. We want a global identity standard for interlocking networks, because that is actually the tide that raises all boats. So if they want to take Hyperledger and put it on their own private cloud or somebody else's cloud, we support that thoroughly. We think that the most enterprise grade cloud though, is with IBM. >> You just got thousands of people doing it, and you say, go for it. >> Exactly. >> Dave: Bring it on baby! >> First of all, you had me at blockchain beginning the interview. I love blockchain, and I think it's very intoxicating from a disruption standpoint. Any entrepreneur, any innovator... This is a bulldozer on existing business models, and of how people do things. So, I'm sure the organic growth that you guys see is proving it, internal IBM and external. How do people get involved? What's your plans on building the ecosystem now, because you got a tiger by the tail here as the GM of this division now. You got to run hard, you got to embrace people, you got to have events, what's your plan, and how do I get involved if I'm someone watching and we want to get involved? >> So, great simple ways to get involved, the developers, we want 'em to be involved directly through the cloud and through developerWorks. You get free access, you can get started quickly. In three clicks you can have a four peer Hyperledger network up and running on Bluemix, and you can start your own services and create. If you are a customer, what we're really suggesting is come and bring us your use case. Bring the participants in your network as well. Come into one of our IBM garages, and we'll work that out for you. And I think it's important that, we think blockchain has a huge potential or I wouldn't be in this new role, but we also think it's not for everything. It's not the panacea for every business problem. We want to make sure the people are using it in the right way for areas where it really makes the most impact, and then we'll help you implement that and develop it. And then we really see the whole ecosystem around our partners, you're going to onboard people into a blockchain network. You're going to have to integrate with your back ends. You're going to extend your mobile devices to provide these new services through apps. So our GSI community is really helping with the integration and the onboarding. Our ISVs are developing new services that run on those blockchain networks, and we just launched our new IBM Cloud for Financial Services, has a blockchain zone, for all those fintech startups to get access and reuse components, so that we can accelerate the effect. >> Alright, well, congratulations Marie, great to see you in the new role, congratulations, >> Marie: Thank you. >> We're super excited for you, and looking forward to getting the update soon at our new studio. We'll try to rope you into our new Palo Alto studio. Greg, great to hear your success. This is the nirvana, I mean, secure ID is like, the big, I mean easily, not like with some either token or engineered identity system, and this is a home run. >> It's privacy, and it's as we talked about before the broadcast. Facebook, would you trust Facebook to go see your medical records? Would you unlock your title using Facebook? You want things that are private, where people aren't tracking you and are more secure than that, so this is really... >> Don Tapscott called Facebook data fracker. (laughing) We provide all our data for Facebook, they've got billionaires on it. Thanks so much for spending the time. >> Thank you. >> Blockchain revolution here inside theCUBE, bringing you really trusted content here on theCUBE. Distribute it out around the world, I'm John Furrier, Dave Vellante, thanks for watching. More great coverage coming up here, stay with us.

>> Narrator: Live from Las Vegas, it's The Cube, covering IBM Think 2018. Brought to you by IBM. >> Hello everyone, welcome to the third day of live coverage here at IBM Think in Las Vegas. This is The Cube, our flagship program, we go out to the events, and extract a civil noise of the leader in live technology coverage. I'm John Furrier, with my co-host Dave Vellante. Our seventh, eighth year covering a bunch of IBM shows. With all now six of them rolled into one IBM Think, this is their big tent event, day three, keynotes just finished, it's blockchain day here at IBM, and as we said, on the opening, on Tuesday, this is like, the innovation sandwich. In the middle is the meat, is data, and then the bread is blockchain and AI. And really that is the architecture of IBM's future strategy, foundationally set up by cloud computing and a variety of other applications and whatnot, but really the future is about data, with blockchain and AI surrounding it. Today's blockchain day, your thoughts on the keynote? Keynote speeches? >> Mm-hm. >> IBM, blockchain, certainly we've seen a lot of advertising on TV. Your thoughts and reaction to the keynote. >> Yeah, and I like your innovation sandwich, I just want to add, that the substrate of all this is cloud. It's critical, if you're going to get network effects, you've got to have the cloud. Today, yeah, was blockchain day, we heard from Marie Wieck, who's the general manager of IBM blockchain. IBM has a tendency, as you know, John, to identify a hot trend, especially some in Open Source, they did this with Linux, they did this with Spark, and they kind of, elbow their way in, you know, maybe that's a pejorative, but they do that, and they say, "Here's some code, here's some resources." They spend money on it, and they give credibility to that Open Source effort. The Hyperledger project is the one they targeted here. It's the fastest growing project in the history of the Linux Foundation. IBM contributed lines of code, people, they've got 15 hundred blockchain experts on this, and they're going all in on blockchain. Which I think, John, is really positive for the blockchain, and even the crypto community, because it brings the credibility of a, you know, a Fortune 100 company to that world. They've announced the blockchain starter kit. All this stuff is available on the IBM cloud. They announced today PWC as an audit partner, which again, brings credibility to the table. Although, I think as you and I know, and we're going to have some guests on later today, there's some other tech emerging, that is going to maybe complement that. >> Yeah. >> And we heard from David Katz, who is the CEO of Plastic Bank, this is the company that's essentially creating currency out of plastic. Allowing disadvantaged people to turn collecting plastic into money. And, at the same time, help save the planet. >> I mean, this is a great example of blockchain as an enabling technology. New ways to do business. As you know, we've been hot on blockchain for the audience watching, you know, we've been covering big data, and AI, that's in our wheelhouse, do all those shows and events, cover that territory with our journalism, and TV and research. But blockchain is an adjacency to storage and infrastructure, and also decentralized applications. The fundamental thing that we're seeing, and we talked to Brian-- Brian Behlendorf, who's with the Hyperledger project, at the Open Source Summit, the Apache Foundation, which IBM is a big sponsor of, IBM needs to do well here. Because they're, again, innovations is essentially betting on blockchain. But it's not just the developers at Open Source, the business users are the ones that are going to create the value, and what I mean by that is, if you look at the blockchain world, and crypto currency and decentralized applications, that's essentially the three components to this market. The blockchain is the infrastructure, ledger, storage of data, et cetera, you know over simplified, but the cryptocurrency runs protocols and infrastructure that power that, and then the application's going to sit on top. We've reported and observed that the secret of success in this new world, is nailing the business logic, and the business model, efficiencies that take advantage of the underlying technology. And that the risk factors in making that success happen, is that business model, not the technology. Although the technology is super important, the technology can be switched out a reduced risk. So the real risk in blockchain and cryptocurrency, and decentralized applications is nailing the business model disruption. This is different than the old way of tech, which was the risk was technology selection. This is a big deal, IBM needs to up their game on that piece of it. I've heard a lot of tech, I've got some nice use cases, but on the outreach basis, they got to go to the business users, and say, "This is an opportunity to leverage the data, "leverage the software and AI with watts and other things." And then leverage the underlying technology, software defined storage, software systems that move to the blockchain, in a decentralized and distributed way. Distributed and decentralized is the future of infrastructure, this is the secret of success, this is where the winners are establishing the clear line of sight. >> Well, one of the things that you're hearing at this conference, Ginny set this up yesterday, was incumbent disrupters, and we were just, kind of, having fun at the open yesterday, but I think it's really smart for IBM. You know me, John, I'm a big fan of saying most of your business is going to come from your existing customers, and if you're chasing all this new business, and start ups, and developers, you're not going to be as productive as if you go to your core. And I think that you're seeing this. IBM back to the core, and they're bringing blockchain to that core as a way to disrupt existing business models, defend against disrupters. So you're absolutely right, companies need to look for inefficiencies where there's a third party taking a toll, and then attack it hard with blockchain. I actually think-- well no, so IBM is really talking business. How do we bring blockchain to the business? They're not really talking about what we talk about a lot, this crypto economy and this whole other mission driven initiative. >> Well, but I mean, if they want to talk business, they got to talk token economics. That's where the business model efficiencies will be rendered on the app side, and the money side. The killer wrap in blockchain and crypto is money. Okay, and marketplaces. IBM got to great marketplace, but it's not just about the developers, that's an organic one stakeholder. The stakeholders that matter is the business guys and the developers coming together. That is absolutely fundamental. If they don't understand that, that's going to be hard to be successful. You can't just throw money at developer programs and say, "Oh, when we win the developers, we win the day." Cloud was, kind of, that playbook, but this world is so fast, and accelerating in it's value creation, that the business users are fundamental in actually grokking what the capabilities are, and putting that into motion quickly, and the proof points is pilots converting to production. That's going to come from the business units. That's where the intellectual property is, is looking at the technology innovations that are possible on the business logic. Business logic is the new IP, this is where the action is, and I haven't heard IBM talk at all about token economics, they kind of talk about it, but that really is the business impact. >> Well, I mean, you sort of heard that today from Plastic Bank, although they didn't talk about a token, they didn't talk about coins, they did talk about monetizing plastic, but in using blockchain to do that, I assume there's tokens behind that, but maybe not. Maybe it's just Fiat currency. It's unclear to me, but I think you're right, the killer app is money. >> Look at it, this is simple. The equation in crypto, and not blockchain, is value creators create value, and they can capture the value. Capturing the value is where the money is, the creating the value is where the technology can happen. So you got to nail both of those as areas. And money is the killer app, so that's going to come from the business side, so the real benefit of decentralization is offering the value capture equation to look different and be different. That's token economics. That's where the action's going to be. So, it really is, it's not mutually exclusive, they're both things. >> Well I think that what you're hearing, so value comes from two places in the simplest form, increased revenue, cut costs. I'm hearing a lot from IBM of cut costs, now again, the Plastic Bank this morning was a really interesting example, I'm glad IBM uses it, but the vast majority of things you're hearing from IBM, like the IBM Maersk relationship, et cetera, are about cutting costs, taking out inefficiencies. >> Well, I mean, the bank thing is easy to look at in your mind, but it's any supply chain. The ICO market that's at a massive bubble right now, is because the supply chain of funding start ups and growth, used to come from private equity and venture capital, that is being disrupted because it certainly hyped up, but that's a supply chain. Any supply chain activities, set of activities, that make up a supply chain, can and will be disrupted by blockchain, crypto, and token economics. >> Yeah, so let's talk about that. Because again, you're not hearing a lot of that from IBM. But I think we have a perspective there. You know, the 1.0 was the wild west, a bunch of developers, blockchain developers, theory developers, doing stuff, building up protocols, making a lot of money. And disintermediating the VCs, right? The new form of raising capital. The VCs are now all in, right? We saw this in Bahamas, you saw this in Puerto Rico, at the two conferences, at four conferences that we covered. So explain that? >> Well, that's just one application, the VCs and these guys are inefficient in some way, but what's happening with crypto currency about access to capital. Now there's a lot of capital being thrown out there. That's mainly because of the hype and the bubble aspect of it, but the real disruption is access to capital, that value chain, value activities are being disrupted and being more efficient. That's a global phenomenon, and that's happening in financing of start ups. Anything with a supply chain, whether it's moving food from point A to point B, is what IBM also highlights as well, anything that's structural incumbent is at risk. And so, this is where, I mean IBM has a ton of supply chain business. They've been doing this for generations in the computer industry. They connect systems together, and create value with using technology. So this is not going to be-- this is a great opportunity for IBM. Again, if they can convert that business value into the blockchain with the value capture, the create capture model, they can run the table. >> But I want to come back to innovation equation. And part of that innovation equation is being able to raise capital. And last I checked, which was last month, about 6.5 billion had been raised in crypto investments. >> And 60% of the projects failed. >> For sure, okay. But failure-- Silicon Valley, fail fest, it's probably up to 10 billion now, much more is being raised through crypto in startups in blockchain than there is in VC. The VCs realized this, and they want a piece of the action, but we're seeing private equity, we're seeing hedge funds, we're seeing crypto billionaires. >> The path of least resistance for the entrepreneur is where the action is. They go right to the new money opportunity. Because they can raise more money. >> So, here's the question. You take Fiocoin, for example, smart guys, trying to go after S3 with peer to peer storage, they raised 250 million dollars in 30 minutes, okay? Is it too much too fast? >> Yes, I think so, but it's what the market's giving. I mean, Fiocoin doesn't even have a product. They're on a roadmap. That's essentially a series A financing. >> Dave: That's a series C. >> Well, no, in terms of the evolution of the startup, it's a seed financing as a series C or D or F financing. >> Yeah, 250 million. >> I mean, it's insane. >> David Scott told us that he needed 85 to start Three Par. I mean that's a storage company 10 years ago, 20 years ago. >> Yeah. >> What a change. At 250 million. >> Look, it's a bubble. But the reality is that it's a bubble that's not going to pop and destroy the sector, it's just a proof point that the efficiency of funding is going to be disrupted. It is being disrupted. >> No, we'll see if it's going to destroy this sector or not. This could, you know-- Warren Buffet says it's going to end badly, others are believers. >> I'm long on blockchain, obviously you know that. I'm pretty biased, but anywhere there's inefficiencies, there's an opportunity for entrepreneurs and business leaders to put new business logic in place to capture that value. That's where the action will be. That's the innovation. And if IBM's innovation sandwich could work, you got a blockchain AI, data in the middle, everyone's going to be full and hungry and eat up everyone's lunch. So, Dave, that's the blockchain day. I'm John Furrier, with Dave Vellante, day three wall to wall coverage here at IBM Think in Las Vegas. More live coverage after this short break. (futuristic music)