Not long ago, two giants of their respective industries, IBM and Maersk joined hands to create the world’s first shipping blockchain platform, the TradeLens. The platform was designed to harness the power of blockchain, its efficiencies, speed, and security to aid the multi billion trade shipping industry and bring it forward to the digital age.

Yet, when the platform approached other major shipping companies, the idea was plainly rejected. This rejection is not a surprise to John Monarch, the CEO of ShipChain, who said;

“I can’t say I’m too surprised. Blockchains are more secure with more participants, and permissioned chains fail to accomplish this by having strict gatekeeping. In past articles, IBM and Maersk have acknowledged that they are struggling to board other carriers, which is to be expected. If I’m CMA CGM, or MSC, or Hapag Lloyd, why would I ever put my company and client data on a system both created and administered by my largest competitor?”

With decentralized technology at its use, TradeLens can and will save millions every year. Blockchain, the technology at its base, has been proven sound and flexible to be adopted by the shipping industry. So what went wrong?



The Breakdown of TradeLens

When IBM, the technology giant and the shipping magnate Maersk approached other companies, they were interested in the technology. However, a simple inquiry into the ownership of the platform resulted in them balking. The answer was simple: IBM and Maersk will hold the ownership to the platform. The resulting answer to joining the platform was a simple NO.

“It’s not rocket science to guess what all Maersk’s competitors said about joining this initiative,” was quoted by Lars Jensen, CEO of SeaIntelligence Consulting, a renowned shipping analysis firm.

This denial to be a part of something that would benefit stems from the fact that other shipping companies would not have any access to the control of the platform. In plain words, they would be at the mercy of IBM and Maersk. The TradeLens platform is essentially a closed or a private blockchain system and that is unacceptable to the other rivals. According to them, the two partners, namely IBM and Maersk itself, would have complete control and that would put them in a position to abuse their power.

But Isn’t Blockchain Ownerless?

When looked at first, blockchain does seem ownerless. There is no central authority controlling it and all development is done through a democratic consensus. Yet, that is for platforms or ecosystems that operate on a public or open blockchain. Closed or private blockchain systems are in control of their issuing and managing authority.

This is the case with TradeLens, where the joint venture of IBM and Maersk have complete control over the platform.

“In an attempt to offset this, IBM and Maersk ‘spun off’ TradeLens – but other carriers and shippers saw right through this effort. Gatekeepers risk alienating users, and to truly be adopted there needs to be a decentralized, public standard”, according to John Monarch, CEO of ShipChain, a blockchain logistics startup.

Public Blockchain

As the name suggests, blockchain systems that are open and for everyone to use are called public blockchains. They are decentralized, without a single authority controlling them. Each participant is a member and has a say and has a democratic voice. Any one connected to the blockchain can take part in the network and make transactions or add data.

The best example of a public blockchain would be the pioneer of the technology, Bitcoin itself. Anyone can access the network, transact, save data and even become a node or a miner on it with all the benefits associated.

Private Blockchain

A private blockchain is a closed ecosystem, created by a central authority (or a team, in case of TradeLens). The authority has absolute control over the system. They can decide who and which entity can join the network and define their powers within the system. The system is secure, but not open. Transactions are private and only authorised people can view it within the network.

The crux is that the authority, having complete control, can make changes to the code, edit data and even reverse transactions as it sees fit. All of this can be done without the need or input of participants.

The question arises: are private blockchains even decentralized? They are- and they are not- at the same time. Private blockchains use the same principles and technology as open and public ones. They have nodes and users. The data is spread, all the nodes and multiple copies exist. The data is secured through the same encryption and have the same private and public key safety. The only difference is that instead of having no single authority, there is one entity with all the say in all matters.

“Blockchain itself isn’t really the ‘killer app’ of this revolution, and as a result, Private and Permissioned blockchains are fundamentally flawed. The real change is decentralization and the resiliency that comes with it. That’s why public chains are much more of a breakthrough”, John Monarch also said.

Why Have a Private Blockchain?

Many people see this as an affront to the idea of decentralization itself. One authority is against the founding idea. Decentralization means no single authority. Yet, there are cases in which private blockchains are necessary. A company, for example, would like to gain benefits of the technology, but at the same time would not prefer all of its data being available to the public.

Private blockchain systems would allow it to do that. Yes, it would be the only central authority and means it would have control over the ecosystem. But that IS the idea. A closed ecosystem, powered by decentralized technology, in its control for its own purposes.

TradeLens has done just that, but what it overlooked was the fact that it tried to incorporate all of its competitors in a system that they would be locked in and have no rights. The demand is that IBM and Maersk need to make changes in TradeLens, offering equal partnership rights to its competitors for the platform to be successful.