Recently, technology giant IBM has been actively developing blockchain solutions and even joined the International Association for Trusted Blockchain Applications (INATBA) to promote DLT technologies within the European Union.
Since the beginning of the year, the company has used blockchain for documentation in the delivery of 28 tons of citrus from China to Singapore and has employed the technology to combat drought by preserving data on groundwater volumes. Six major banks have expressed interest in issuing stablecoins based on IBM’s platform. IBM has also not ruled out the possibility of issuing its own stablecoin.
Additionally, in January, IBM introduced the first quantum computer, Q System One, with a 20-qubit system, which can be used for both research and business applications.
In an exclusive interview with ForkLog magazine, Stanley Yong, CTO of IBM Blockchain for Finance, discussed the company’s blockchain initiatives and the potential threat quantum computers pose to modern encryption systems.
ForkLog: To start, why has IBM been focusing so much on blockchain and cryptocurrencies lately?
Stanley Yong: We are interested in working with clients ready to use blockchain networks in their operations. There are many applications for blockchain in the corporate sector: identification, supply chains, currency exchange, and more. In fact, IBM manages dozens of operational blockchain networks—more than any other operator of such networks.
ForkLog: Why do you see this direction as promising?
Stanley Yong: Because we believe the advantage of blockchain technology lies in the absolute transparency of assets—the ability to track the movement of products, luxury items, and verify identification authenticity at all stages of the chain, from source to destination. Significant changes have already impacted areas such as ticket sales, loyalty programs, food safety, identification systems, and more, where blockchain has found real application.
ForkLog: It is known that IBM is working on a stablecoin for banks. Why is this being done?
Stanley Yong: According to the Basel Committee on Banking Supervision, each bank must have capital corresponding to risk-weighted assets and some liquid assets in case of withdrawals from deposit accounts.
A bank may have stablecoins issued by another organization. The number of stablecoins will affect the bank’s asset structure, and it will need to apply a risk-weighted coefficient.
Stablecoins in their pure form, not tied to any existing currency, are accounted for as an “other” category of assets, and banks must make independent decisions regarding them. Such categorization needs to be approved at the regulatory level, as it affects the bank’s reserve funds, formed in case of asset value fluctuations.
ForkLog: Why do banks emphasize stablecoins based on national currencies?
Stanley Yong: Stablecoins directly tied to a national currency simplify the valuation of this asset category, as there is a specific reference for calculating value. If regulators agree, this advantage may become a factor that drives preference for this type of stablecoin, as it clarifies how to correctly determine capital size.
A bank can also issue stablecoins itself. In this case, they will be considered liabilities and resemble demand deposits, which bank clients can close at any time. If a bank decided to issue stablecoins not tied to a national currency but to something else, it would need to create reserves of corresponding assets in case of withdrawals. For example, stablecoins could be tied to silver. However, banks will still prefer national currency as a reference. The requirements for securing deposits in fiat currency are significantly less stringent.
ForkLog: Recently, IBM announced the expansion of the World Wire blockchain system. Why was the Stellar blockchain chosen for this cross-border money transfer service?
Stanley Yong: The Stellar protocol was chosen primarily because it supports consensus algorithms without proof of work, significantly reducing energy consumption, making it more environmentally friendly than protocols requiring proof of work.
Secondly, the Stellar protocol has a hierarchical validation system that provides substantial throughput—thousands of transactions per second—in contrast to Bitcoin or Ethereum protocols.
Thirdly, Stellar’s basic feature set includes the ability to use multiple signatures and complex relationship filters, such as trust lines, which are fundamental for financial applications.
ForkLog: In January, you introduced a quantum computer for commercial use. Is it true that quantum computers pose a threat to blockchain technology?
Stanley Yong: It would be more accurate to ask: “Is it true that quantum computers pose a threat to modern encryption systems?” And the answer depends on how much time you have.
A fully fault-tolerant universal quantum computer capable of breaking some types of encryption systems used today will be created only many years from now, but that doesn’t mean banks, governments, and enterprises shouldn’t prepare for its arrival. Let me explain why.
Malicious actors can already start collecting information to potentially crack the code in the future. Your organization is at risk if it handles information that needs to remain confidential for the next 20–30 years.
Moreover, you should consider this if your company is involved in, for example, the production of aircraft, satellites, power plants—products designed for 20–30 years of service. Updating encryption algorithms on a satellite orbiting Earth will be quite challenging.
ForkLog: Is there a solution to this problem?
Stanley Yong: Yes, we already have a solution—so-called lattice-based cryptography. It is believed that quantum computers cannot handle this encryption system. I say “believed” because in 20 years of study, no vulnerabilities have been found, but it is entirely possible that one day someone will come up with a new approach—and it will be successful.
That’s why IBM always recommends its clients not to postpone data evaluation and to adopt the most advanced technologies today. Additionally, I can say that the modular architecture of Hyperledger Fabric allows the use of multiple encryption algorithms and includes built-in processes for updating algorithms if necessary.
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