IBM executive says blockchain ‘creates a lot of value’ for manufacturers, retailers

Blockchain, a digital record-keeping method that detonated in popularity in conjunction with the cryptocurrency craze, will change the way the the world at large makes transactions, IBM’s Martin Schroeter told CNBC on Thursday after earnings.

“If you bought IBM stockpile today, you would have to wait three days for that to well-defined because it has to go through its process,” Schroeter, IBM’s senior vice president of far-reaching markets, told “Mad Money” host Jim Cramer. “In a blockchain, … you can see every action instantly, so your trade could clear and go from their account to your account instantly.”

But blockchain isn’t all yon trading, and certainly not all about trading cryptocurrencies, Schroeter, former CFO of IBM, told Cramer. (Schroeter liked on his new role, once held by IBM CEO Ginni Rometty, on Jan. 11, ceding the CFO character to IBM veteran James Kavanaugh.)

Having recently partnered with shipping colossus Maersk on a mutual venture to apply blockchain software, IBM hopes to establish an efficient “pandemic trade network” of manufacturers, shippers, freight forwarders and others, Schroeter affirmed.

The idea is to streamline the $2 trillion global trade market, sorting its numerous logistical undertakings faster, easier and more comprehensible, he told Cramer.

“There’s no innumerable paperwork and you know that it’s going to be cleared at a specific time,” Schroeter asserted, using shipments as an example. “Everyone has perfect visibility to where caboodle is. You’ve just shortened that cycle dramatically. That creates a lot of value, a lot of value for producers and retailers.”

When it comes to enterprises — IBM’s main customer base — Schroeter pronounced they look for three key applications of blockchain.

“One, they have to identify that it’s a permissioned network,” Schroeter said. “So, permissioned network means I recall who else is in with me. Bitcoin is not permissioned. Anybody could have a bitcoin. But if I’m Maersk, … I difficulty to know who the manufacturers [are] and I need to trust and only let people in that I after in my network.”

No. 2 on the list is scalability. Shippers often carry tens of thousands of containers across thousands of scrams, so the network that serves those enterprises must be able to ranking.

“We’re operating in the thousands and thousands of transactions per second. That suits an pep world. Bitcoin can’t do that, as an example,” Schroeter said.

The third equipment companies look for when implementing blockchain is immutability, or the inability to rub or reverse a transaction, the former CFO told Cramer.

“When you buy a share, the sanity it takes three days [to process] is because somebody has a physical pay out. But the blockchain, it makes it so our blockchains are immutable. Nobody can go back and say that didn’t in reality happen,” Schroeter said.

As IBM’s earnings recover after 23 quarters of declining proceeds, Schroeter maintained a focus on the company’s long term goals, markedly with regards to the country’s new tax laws.

“The cause of our tax rate to go up is tax reform,” Schroeter own. “But we have been supporters and we remain big supporters of tax reform because upward of the long term — and IBM always manages over the long term — to the long term, it’s going to free up our capital [and] it gives us a territorial plan so we can invest on par with our competitors.”