Blockchain is a transformative technology for the two billion people in the world currently underserved by financial institutions. The technology has the potential to enhance privacy, security and freedom of conveyance of data. Blockchain is based on open, global infrastructure, decentralized public ledger of transactions that no one person or company owns or controls, ensures security of transfer of funds through public and private cryptology and third parties to verify that they shook, digitally, on an agreement. Blockchain is set to play a key role in many sectors in the future, including digital finance, Internet of things, artificial intelligence and 5G.
With a blockchain, many people can write entries into a record of information, and a community of users can control how the record of information is amended and updated. However, the most distinct and important feature of blockchain technology is the distributed database created by it. In the case of a blockchain, transactions are broadcast, and every node is creating their own updated version of events , with the most popular record becoming the de-facto official record in lieu of there being a master copy.
Blockchain, which is an extremely secure linked chain of digital information, has allowed private groups to create cryptocurrencies, with decentralised control among the users and no central authority to control its issuance. Facebook chief executive Mark Zuckerberg had to defend his plans to launch a digital coin called Libra to the US Congress in October, after it faced a torrent of criticism from all sides, including governments who see it as a threat to their monetary sovereignty. “I don’t think Libra will succeed,” Mr Huang Qifan, vice-director of the China Centre for International Economic Exchanges, an economic think-tank that advises Beijing, said last week in remarks widely reported by state media. The People’s Bank of China, though, has been a frontrunner in research into the technology and its use in creating a national digital currency.
Some countries including Venezuela, Iran, Russia, and China – are experimenting with cryptocurrency technology as they seek to render their economies immune to crippling US sanctions. According to the FDD – while they are exploring the development of their own state-backed crypto – China, Iran, and Venezuela also restricted access to the public cryptocurrencies that are currently available on the market. According to the FDD, Russia seeks to lessen the impact of US sanctions by focusing on blockchain technology and including it as a long-term national security and economic goal.
With the goal of facilitating trade and investment outside the grip of the United States, Russian financial institutions are running multiple blockchain pilots. The country’s Ministry of Finance is also planning to develop a regional crypto with other members of the Eurasian Economic Union (EAEU). As Iran has been hit hard by sanctions – bringing its crude oil export to a historic low – the country’s government is looking to create an alternative to SWIFT.
China has launched an ambitious effort to challenge the US dominance in blockchain technology, which it could use for everything from issuing digital money to streamlining a raft of government services to tracking Communist Party loyalty. The technology received a crucial endorsement from President Xi Jinping in Nov 2019, a signal that the government sees blockchain as an integral part of the country’s plan to become a high-tech superpower. Beijing is the latest in a handful of countries to have adopted a law strictly governing the encryption of data, particularly blockchain technology, which allows the storage and direct exchange of data without going through an intermediary.
In addition to its state-backed crypto development, the People’s Bank of China (PBOC) and Chinese authorities are researching blockchain’s use for credit, finance, and real estate projects, as well as a blockchain-powered securities trading platform
The People’s Daily, the mouthpiece of the ruling Communist Party, renewed its warning this week on the dangers of blockchain-based crypto asset speculation. “Blockchain is still in the early stages of development, and needs to be improved in terms of safety, standards, regulation and so on. The major direction is not wrong, but we must avoid a rush, and redundancy and have orderly competition,” said an editorial published in Nov 2019.
The same technology used for virtual currencies is now being researched by the Department of Defense to create tamper-proof military computer systems, including those systems used to control America’s nuclear weapons. The Department of Defense also looking to blockchain for development of a secure messaging system that would use the standard encryption and security features of current messaging apps such as WhatsApp, Signal, or Ricochet, but also use a decentralized Blockchain-like backbone structure that would be more resilient to surveillance and cyberattacks.
The U.S. Navy is concerned about vulnerability of its supply chain due to compromised parts and systems production for its warships. According to Richard Spencer, the U.S. Navy’s top civilian contractors have been reduced to relying on political adversaries like China and Russia for the production of these components. For example, China’s Belt to Road initiative creates debt structures in developing countries. However, this could lead to unhelpful levels of control over manufacturers in those nations.
US Navy is considering Blockchain for making its supplychain secure. Blockchain delegates access to information to the holders of private keys. A blockchain that protected the information and limited access only to private key holders would offer complete security for governmental data. Blockchain technology could also help to protect parts and limit any kind of tampering in the manufacturing and transportation processes. By stamping each individual component with its own key, each movement would be logged as an immutable transaction. The result would be complete data certainty over multiple venues.
Block chain’s distributed consensus model
Marc Andreessen, the doyen of Silicon Valley’s venture capitalists, listed the blockchain’s distributed consensus model as the most important invention since the Internet itself. “Today, every interaction you have online relies on a central trusted authority. No matter what you do online, you’re trusting someone to tell you the truth — whether it’s your bank giving you your statement balance, your email service provider telling you your message was delivered, or your antivirus software assuring you that everything’s A-OK,” writes Mike Gault, Founder and CEO, Guardtime.
In fact, there’s always the risk that a single provider of information could lie, or simply be wrong. That’s why Internet security is such a disaster today; we’re trusting sources that can be hacked, manipulated or compromised. And increasingly we’re trusting them with our most precious personal data and life events
The blockchain could change all of that. A blockchain is the structure of data that represents a financial ledger entry, or a record of a transaction. Each transaction is digitally signed to ensure its authenticity and that no one tampers with it, so the ledger itself and the existing transactions within it are assumed to be of high integrity. All these digital ledger entries are distributed among a deployment or infrastructure. These additional nodes and layers in the infrastructure serve the purpose of providing a consensus about the state of a transaction at any given second; they all have copies of the existing authenticated ledger distributed amongst them.
When a new transaction or an edit to an existing transaction comes in, generally a majority of the nodes within a blockchain implementation must execute some algorithms and essentially evaluate and verify the history of the individual blockchain block that is proposed, and come to a consensus that the history and signature is valid, then the new transaction is accepted into the ledger and a new block is added to the chain of transactions. If a majority of nodes do not concede to the addition or modification of the ledger entry, then it is denied and not added to the chain.
This distributed consensus model is what allows blockchain to run as a distributed ledger without the need for some central, unifying authority saying what transactions are valid and (perhaps more importantly) which ones are not. By enabling this distributed consensus, it can actually create a true record of events, past and present, in the digital world.
Crucially, it does this without compromising privacy. You can record the fact that the event happened, and even that it happened correctly, without exposing confidential details about the subject matter or the parties involved. This explains why bitcoin enables black-market transactions; despite the public nature of the ledger, the users themselves can remain completely anonymous. Blockchain can be configured to work in a number of ways that use different mechanisms to achieve consensus on transactions and, in particular, to define known participants in the chain and exclude everyone else.
Trust, a risk judgement between different parties is foundation for digital world and is enforced through identity (authentication) and proving permissions (authorization). In the case of blockchain technology, private key cryptography provides a powerful ownership tool that fulfills authentication requirements. Possession of a private key is ownership. Authorizing transactions is a result of the entire network applying the rules upon which it was designed (the blockchain protocol).
The largest example of blockchain in use, Bitcoin, employs an anonymous public ledger in which anyone can participate. For more private uses of blockchain among a smaller number of known actors, many organizations are deploying permissioned blockchains to control who participates in transaction activity.
Linux Foundation’s Hyperledger Project, is a collaborative effort started in December to develop an open, distributed ledger platform that will satisfy a variety of use cases across multiple industries. Hyperledger’s blockchain technology is independent of Bitcoin, and is supported by high-profile cross-industry players such as IBM, Intel, Accenture, as well as several banks and financial services firms. The country of Estonia, which secures much of its banking infrastructure with a blockchain, boasts the lowest rate of credit card fraud in the euro zone.
Blockchain for Homeland Security
The US Department of Homeland Security (DHS) is preparing to utilize Blockchain technology, in securing the transmission and storage of data collected by security cameras, sensors and internal databases. The DHS is aiming to prevent data manipulation and potential hacking attacks on thousands of devices operating in airports and on the US borders with Mexico and Canada. Currently, these devices rely on an outdated system based on centralized servers and databases, which are vulnerable to sophisticated malware-related attacks.
According to cointelegraph,com, depending on a traditional IT infrastructure is inefficient for a wide-reaching agency since it often leads large-scale operations hugely reliant on the storage and processing of information. Factom, a Blockchain startup, has secured a contract with the DHS to provide an infrastructure for departments such as the US Customs and Border Protection which is efficient, immutable and transparent.
“When law enforcement investigates suspected front companies involved in terror finance, one of the first places it looks is corporate registries. Every US state manages its own registry, as does every foreign country, and there is no reliable way to search across registry databases. The job gets more difficult when trying to crack the opaque offshore jurisdictions that illicit financiers favor.”
Enterprising startups are now experimenting with the blockchain technology that underpins virtual currencies like Bitcoin. Blockchain is an authenticated ledger that records digital transactions, but is increasingly used for validating all types of records. If a blockchain system were set up to hold corporate registry information internationally, it would help governments manage business data and identify firms and individuals engaged in illicit activity.
“Critics of Silicon Valley from the national-security community charge that technology is enabling terrorists to operate undetected. This same technological knowhow, however, could help the intelligence community thwart those plotting against us and our allies. Silicon Valley has become renowned for innovation, but it could one day become a byword for something even more important: keeping America and the world safe,” says Yaya J. Fanusie, a former CIA counterterrorism analyst
Countries race to use Blockchain for military
NATO Communications and Information Agency under its 2016 Innovation Challenge, has sent a request for proposal “Military applications of Blockchains,” which includes application of blockchain technology to military logistics, application of blockchain technology to procurement and finance and a catch-all described as “other applications of interest to the military.” The NATO request for proposal also includes an Internet of Things (IoT) section, which seems appropriate for IoT-related applications of blockchain technology.
The Naval Air Systems Command (NAVAIR), in a press release in Sep 2018, said that it is seeking ways to use blockchain technology to aid tracking aviation parts throughout its life-cycle. The navy is looking to change the way it tracks the lineage of parts. As of now, once the parts are delivered to its user, they are tracked manually with pen and paper on a Scheduled Removal Component Card and then entered into a database system. The Navy has been carrying its research to track the parts through blockchain technology. “Knowing the origin and history of flight-critical aircraft parts is a resource-consuming process that drives up the cost to operate military aircraft,” said NAVAIR.
The Advance Technologies Team from NAVAIR’s Fleet Readiness Center Southwest (FRCSW) has partnered with Indiana Technology and Manufacturing Companies (ITAMCO) through a development agreement to use its SIMBA chain. The agreement mentions that the navy will get permission to use ITAMCO’s cutting edge chain code, and innovative protocols that can immediately recall large data sets in a secure manner. The navy in return will help ITAMCO understand features of the navy and how the supply chain operates. As a result of this collaboration, the Navy’s new blockchain aviation parts tracking model is going to uphold a permissioned protocol.
This permissioned protocol will make good use of a consensus algorithm with a requirement for a lower computing power.
According to the press release, there are certain obstacles to overcome. A distributed supply chain is prone to attacks from the outside and therefore cybersecurity is a focus area for both the teams to focus on. “By bringing the experts together early in the development of possible architectures the authorities will better understand the risk and reward of a connected distributed system,” said the navy command
Russia is also evaluating Blockchain technology for its armed forces. According to Nasdaq, Russia’s military will launch a blockchain research lab focusing on utilizing blockchain technology for military applications. The military is hoping that blockchain technology could help protect their infrastructure from cyber attacks, as well as aid them in discovering traces of such activities within their system.
“If they manage to quickly introduce Russian cryptographic algorithms into the international standard of blockchain and ensure full security, then we will see application of this technology in private and state agencies, and in the future, possibly in the Russian Defense Ministry,” Voentelecom’s CEO and Head of the Information Telecommunication Technologies said.
Chinese Academy of Sciences (CAS) announced the creation of a new Blockchain lab initiative. The program focuses on integration of Big data, advanced mathematics and advanced technology.China seeks to create more blockchains for government and commercial sector use. The blockchain lab is made possible through a joint venture with blockchain startup Tai Cloud Corp. Tai Cloud is a Beijing-based firm. Additionally, the Tai Cloud Corporation now represents one of China’s largest blockchain-based firms. The company currently holds over 150 blockchain-related patents, and they operate with the blessing of the Chinese government.
Chinese President Xi Jinping publically endorsed blockchain at the annual Academic Conference in 2018, by calling it a “breakthrough” technology. “A new generation of technology represented by artificial intelligence, quantum information, mobile communications, internet of things and blockchain is accelerating breakthrough applications,” he said.
Navy’s weapon control systems
U.S. Navy, command-and-control systems like Aegis Combat System that links sensors and weapons systems has centralized architecture which makes it vulnerable to Jamming or cyber attacks. For the next generation combat systems US Navy is planning a blockchain database architecture around decentralized decision making nodes. By utilizing blockchains ability to verify that all nodes are working from the same set of data, the system can coordinate weapon control to neutralize threats. That will speed up fire control while (crucially) improving survivability.
Blockchain technology lays the foundation for the distributed database management and decisionmaking. The sequence of records maintained by blockchain is by link called a hash—a scrambled code that takes the entire contents of a block of data and converts it into a 256-bit reference number. Every time a new block of data is added to a blockchain database, it starts with a hash of the previous block. Since the previous block started with a hash of the block before that, and so on, the entire history of the database is distilled down to the current hash.
The verifiability built into blockchains through their hashes means that people—and more importantly, devices—can coordinate their behavior by exchanging just 256 bits of data. If you need millisecond decision-making, blockchain is for you. And that’s exactly what the Navy needs for its next generation combat systems.
Blockchain makes that possible because it provides a mechanism for multiple independent systems to instantly verify that they are working from the same “understanding” of the world. Independently operating artificial-intelligence processors loaded on different weapons systems can coordinate their actions because they can verify that they’re working from the same data. That’s the blockchain advantage, writes Salvatore Babones in National Interest.
Military’s requirement for secure unhackable messaging system based on BlockChain
There is a critical DoD need to develop a secure messaging and transaction platform accessible via web browser or standalone native application. DARPA’s goal is to have “a secure messaging system that can provide repudiation or deniability, perfect forward and backward secrecy, time to live/self-delete for messages, one time eyes only messages, a decentralized infrastructure to be resilient to cyber-attacks, and ease of use for individuals in less than ideal situations,” according to a notice looking for proposals, which was recently posted on a government platform that offers federal research funds to small businesses.
The messaging platform would act as the transport for a cryptographically sound record of all transactions whether they be MIPRs, contracts, troop movements or intelligence. Troops on the ground in denied communications environments would have a way to securely communicate back to HQ and DoD back office executives could rest assured that their logistics system is efficient, timely and safe from hackers.
The advantages of this decentralized structure is that it would be more resilient, and there would be no centralized server where a spy or hacker could gather metadata, according to Frederic Jacobs, an independent security researcher who in the past worked as a developer for the encryption messaging app Signal. However, such a structure would have higher latency and it’s harder to deploy at scale, he further added.