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Blockchain as the catalyst for income and sustainability

By Debbie Kestin-Schildkraut posted Sun October 25, 2020 11:41 PM


Around the world, hundreds of tons of plastic enter the oceans each day. What if you could divert that waste and help some of the world’s poorest communities at the same time? IBM Business Partner Cognition Foundry won the 2020 IBM Beacon Blockchain Trailblazer Award by tackling that problem, simultaneously helping our oceans and transforming lives while creating entirely new business models.

Cognition Foundry CEO Ron Argent was already well-acquainted with IBM. He had served the company as a mainframe specialist for 31 years. When he retired, he missed working with the technology and realized he could put it to work for the greater good. He started Cognition Foundry to help startups make the world a better place.

One of those companies was Plastic Bank, a for-profit social enterprise with a global vision to recover millions of pounds of ocean-bound plastic while also helping the most vulnerable communities around the world.

Inventing Social Plastic

The company envisioned a system to lift people out of poverty while diverting ocean-bound plastic. Plastic Bank created an ecosystem in which people living in countries lacking recycling infrastructure can collect plastic safely from streets, beaches, waterways and neighbors. They bring the salvaged plastic to easily accessible community collection branches. In return, they earn credits that they can use to locally purchase essential products and services ranging from medicines to cooking oil, and wifi service to education (which is not free in all countries). Some branch locations in some countries are able to offer trading in their earned credits for these items on-site, while in other locations it is possible at local retailers.

Consumer-packaged goods (CPG) companies that need plastic for their own products participate in this initiative by buying these materials. Plastic collected by individuals gets returned to the plastics supply chain for reuse in other products. Plastic Bank calls this currency model Social Plastic.

To make all of this work, Plastic Bank had to overcome several challenges. It needed a new kind of payment mechanism that would securely and accurately track all of the transactions for the individuals collecting the plastic, who voluntarily chose to work.

Traditional systems wouldn’t work. Many of these recycling entrepreneurs lack personal documentation of any kind and therefore can’t establish access to bank accounts, which makes it difficult to participate in the local economy.

Plastic Bank also needed a solution that was cost-efficient enough to handle all the transactions. Cash was not a viable option, as many of the locations these workers live in are unsafe. Selling plastic in exchange for cash potentially puts them in danger.

The whole system also needed to be highly scalable. Plastic Bank wanted to address the vast problem of waste plastic around the world, meaning that the system had to cope with tens of thousands of contributors.

At the back end, Plastic Bank needed to provide full visibility of the supply chain and confidentiality for its CPG partners, to verify the process and offer the ability to digitally trace the provenance of the recovered plastic entering their supply chain for quality and social responsibility reasons. At the same time, Plastic Bank needed to protect their customers’ data from each other while maintaining a single application for all.

This was a daunting challenge, yet innovators can find a way to make the seemingly impossible a viable and sustainable solution. For Cognition Foundry, bespoke technology based on blockchain was the answer.

Blockchain as the catalyst for change

Originally designed to facilitate cryptocurrency, blockchain technology has “evolved to support new uses,” explains Cognition Foundry President and COO Bill Stark. Today’s blockchain tools do more than solve the double-spend problem of digital currency. In addition to creating an immutable record of all transactions, they can be designed to automatically execute business logic using “smart contacts.” Participants can agree on pre-determined terms and the system enforces those agreements instantaneously, accelerating value creation.

IBM contributed significantly to the Linux Foundation’s open-source Hyperledger blockchain project. It made perfect sense for the bespoke technology needed to run Plastic Bank. “The Hyperledger Fabric blockchain running in IBM’s Cloud gives stakeholders the right level of visibility and the confidence that what they’re looking at is accurate,” Stark says. IBM Blockchain was the perfect solution to give Plastic Bank’s CPG stakeholders trust through transparency.

Cognition Foundry’s Hyperledger-based blockchain system includes a stablecoin, which is a digital token with a value linked to a fiat currency. That makes it more reliable than cryptocurrency because it doesn’t fluctuate in response to speculation.

When collectors return plastic to Plastic Bank’s collection branches, their digital earnings are deposited based on a stablecoin into their online account. Using donated smartphones and tablets passed on from consumers in developed economies, collectors are able to see their earnings, pay for necessities, keep track of their balance of available funds and establish a verifiable, positive reputation known as a “trust score.”

The power of the hybrid cloud

The system runs in a hybrid cloud infrastructure, leveraging Cognition Foundry’s own LinuxONE systems in a UK data center and the IBM Cloud. This delivers three key benefits: scalability, resiliency and trusted performance.

“We knew that when the time came to expand our computing power, we could move our client’s workload seamlessly between our private cloud and IBM’s Cloud,” says Stark. “That scalability factor was a big driver in the infrastructure and architecture decisions that were made.”

The cloud, in conjunction with the Hyperledger-based blockchain’s decentralized model, also increased the resilience by removing a single point of failure.

“Being able to put the necessary parts of our solution into the IBM Cloud was a really convenient and advantageous way to ensure a smooth user experience in the field,” Stark continues. “Collectors use mobile devices in countries where the connection might not be great and often not that powerful, so we need to minimize all the latency we could.”

IBM’s hybrid cloud boosted performance by bringing the time-critical parts of the system closer to the users at the edge.

“When someone uses the Social Plastic digital currency to put food on the table and feed their family, the app has to work or their family goes hungry. Failure can have serious consequences. The people doing this important work—call them Ocean Guardians, Recycling Entrepreneurs or Civil Servants—deserve an experience they can count on,” he explains. “So, the high availability of our blockchain app was extremely important.”

Changing lives, one discarded item at a time

The results have been inspiring. In Indonesia, families at the bottom of the financial pyramid must often borrow money at extremely high-interest rates to pay for routine medical procedures such as childbirth, putting the family further into debt. Working together, Cognition Foundry and Plastic Bank are breaking that vicious cycle and lifting the poor out of extreme poverty.

“I met a baby whose birth was paid for by Social Plastic,” recalls Stark. “The funds that her family saved up from collecting plastic paid for the child’s medical care at birth.”

The service became globally available in 2018, and Cognition Foundry hasn’t taken its foot off the accelerator yet. It has combined agile development methodology with the flexibility and reliability of IBM’s systems to release enhancements to the application every two weeks without any downtime.

IBM was a key partner in helping to sell a ground-breaking technology that was still new to many people, explains Stark. “IBM talking about the fact that its blockchain is secure and scalable validates our claims,” he says. “It’s very powerful to have one of the most recognizable brands in the world echoing the same statements you’re making in the market.”

Now that Plastic Bank is convinced of blockchain’s effectiveness, so are its partners. It is helping thousands of people around the world to improve their lives every day and helping save the planet’s oceans at the same time. This kind of ground-breaking, impactful use of IBM technology makes Cognitive Foundry the kind of business IBM is proud to have as a Business Partner.

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