We’ve frequently been on the beat when it comes to blockchain and how it can be a resource for the emerging cyber crime space. The issue of cyber crime and how blockchain is a plausible solution for many of these types of crime is now on the radar on the of the Department of Homeland Security (DHS). The Science and Technology Directorate (S&T) arm of DHS announced last month that it is seeking innovative solutions from startups to enhance anti-forgery and counterfeiting capabilities for digital documentation through a new solicitation, “Preventing Forgery and Counterfeiting of Certificates and Licenses,” under S&T’s Silicon Valley Innovation Program (SVIP).
S&T seeks solutions that use blockchain and distributed ledger technology (DLT) to issue digital documentation to prevent fraud, counterfeiting, and forgery. DHS says it is open to startups and small businesses that have not had a government contract in the past 12 months totaling $1 million or more and that have less than 200 employees at the time of application.
“SVIP is a bridge between the early-stage startup community and the Homeland Security Enterprise,” S&T SVIP managing director Melissa Oh said in a prepared statement. “DHS has need of the innovations coming from this community to ensure we are at least a step ahead of national security threats. By releasing this solicitation, we are asking the innovation community to contribute to this work through the application of commercial solutions to homeland security use-cases.”
All of this brings up a question we’ve been wondering lately: what in the world is going on with blockchain? Media attention was bearish on blockchain for much of the latter half of 2018. Specifically, we’ve wondered how is blockchain going to achieve scale any time soon, and how is it going to avoid the massive energy expenditure that it currently needs for miners to find bitcoins. For that matter, will it ever achieve enterprise applications, or will it forever remain associated with bitcoin and cryptocurrencies above all?
Arielle Telesmatic is director of emerging technologies at the Scroll Network, a company that develops blockchain networks. In fact, Scroll’s Aster blockchain may be just the thing that DHS might find appealing.
“Many companies need to reduce the hurdle to adoption through a clear understanding of how the technology has significantly progressed since the inception of let’s say, the power-sucking congested bitcoin Ecosystem,” she writes. “I have a few thoughts on this topic right off the bat: Consensus Models are key. If you look into Proof of Work (POW) versus Proof of Stake (POS), you will get a lot of info that basically can be summarized as using staked tokens in a lock up period to protect and incentivize digital trust is more cost-effective than traditional mining dependencies.”
Telesmanic continued, “As many companies need to prove their capabilities to migrate to existing systems and optimize their systems to test in-simulated real production environments, they may not be able to do this until they are able to attain a large realistic test group of nodes to connect to a test-net integrated into a Decentralized application (DApp). If this is not attainable, then using a small pilot project and scaling up based on a good solution is what I recommend.”
“A project on a test net should be based on carefully defined requirements such as data storage needs, privacy needs and expected velocity. These requirements translate to something as crucial as the time it takes for nodes to sync up (share the same state of a blockchain network), whether nodes need to hold all blockchain data to confirm a transaction in the first place, and to stabilize bandwidth resources supplied by a group of nodes needed to perform a successful transaction. Sometimes response to the need to scale comes from updates from the core development team proactively.”
Telesmanic also pointed out that the need for transactions with different cryptocurrencies under one network has been made possible by Bitcoin Lightning Network, which is promising and directly responding to the fear of mass adoptions so that there is more cross-compatibility opportunities with different blockchain solutions.
She also noted from her technical perspective that heavy computation is pulled from traditional technology stacks and will not be executed through blockchain operations that need to scale. The work will be done “off-chain.”
“The problem is people just don’t understand the kind of tech that bitcoin runs on. Blockchain is not Bitcoin,” says economist and best-selling author, Jason Schenker. “Blockchain is a combustion engine. If you’re not a fan of tanks or kamikaze engines, fine, but don’t blame the combustion engine. So, the reason to be bearish on it right now is because of how it’s being used. There are bad applications.”
For instance, Schenker observes that blockchains are being used for money laundering, and they’re being used as de facto digital bearer bonds.
Ultimately, however, blockchain can work right now “to reduce transactional friction in the supply chain,” Schenker stated.
With limited blockchain, plus knowing your customers, and your trusted partners, it can be implemented right now. “The same tech that allows the anonymity is also the same engine that can be used to help the global economy. It’s a kind of accounting software that can be customized,” said Schenker. “If you have a closed network, it’s really great for record-keeping.”
He added, “If you have people that can write to it and access it then you have to have excellent cybersecurity. It doesn’t necessarily stop people from behaving badly. Just because you have a record doesn’t mean it’ll stop nefarious activity. However, you may have a better chance of finding it.”
Also, we simply don’t need blockchain in every aspect of our lives. You need blockchain when dealing with a high volume of transactions, which are relatively low in value, which lends itself very much toward cybersecurity applications.
As for the huge power grid issue, it really depends on how complicated the encryptions are, according to Schenker – which is what Telesmanic means when she discusses the heavy load of computation involved. “There are massive bloats on Bitcoin blockchain,” he says. “It’s growing at like 50-75 gigs a year. Bitcoin can only process about seven transactions per second.
Also, a blockchain “doesn’t have to go on forever,” Schenker said. If the reach is limited, as well as the parties involved, and a trusted group is logging into a network it may be all a company needs. “It’s maybe not a complete blockchain but it’s essentially the same thing, and the restrictions alone may help the energy issue. You also don’t need as much encryption on the back-end. You shift your cybersecurity stack toward access rather than writing. Maybe it’s more traditional means rather than the hash challenges.”
To a large extent, this sounds like exactly what DHS is looking for. It seeks applicants that consider use-cases related to identity documents for travel, identity of organizations and organizational delegates, tribal identity documents for travel, citizenship, immigration and employment authorization, cross-border oil import tracking, and origin of raw material imports.
“The broad Homeland Security mission includes the need to issue entitlements, licenses and certifications for a variety of purposes including travel, citizenship, employment eligibility, immigration status and supply chain security,” said S&T SVIP technical director Anil John. “Understanding the feasibility and utility of using blockchain and distributed ledger technology for the digital issuance of what are currently paper-based credentials is critical to preventing their loss, destruction, forgery and counterfeiting.”
Sounds like some smart contract tendering that should be readily achievable by a company with some sensible blockchain approaches. In the end, cybersecurity issues involve making things more transparent and documentable. Right now, there are still obstacles to achieving the necessary clarity, but all of this is solvable and achievable right now.