While on the one hand, blockchain and cryptocurrencies can be used for quick transfers of wealth and the creation of a new generation of powerful computing tools, they can also be used for money laundering and fraud.
This necessitates a deserved analysis of what these innovations can do for national security to stay ahead of the curve. Distributed ledger technology (DLT) has the potential to change financial services, healthcare, and logistics, all of which has implications for national defense.
One way that blockchain technology can help insulate the U.S. from potential threats is to verify the origin of articles provided to defense contractors. At the moment, defense systems are produced with globally sourced components.
The supply chain is opaque and therefore can be a danger to national interests. Malicious actors have the potential to install spyware into critical infrastructure or defense tech. Blockchain technology stands to reduce this threat by verifying the source of each subcontractor’s supply chain. The benefit of an immutable history behind each piece of crucial government hardware is immediate transparency.
Furthermore, a decentralized ledger can be used to verify the identity of government subcontractors and employees. Security clearance is a long and tedious process which takes place on paper and in person. This process is far from perfect and potentially exploitable by foreign actors.
Blockchain technology allows all personal information to be gathered, stored for appropriate use, and encrypted to protect it from potential threats. This allows for the creation of a defacto digital identification which provides access to information at the level of the individuals’ ID. Such a step also removes the need for a central server to store all sensitive information. Identity theft, fraud, and embezzlement could be significantly reduced with this kind of assurance.
The U.S. can also leverage blockchain technology to improve communication processes between government agencies. Instead of having a single archive for state, local, and international security forces, all information can be stored and shared collectively. This, along with a digital identification system has the potential to reduce leaks while increasing interagency teamwork.
Furthermore, if a threat is detected, it can be verified and dealt with immediately. Given that each block on the chain is identified with a unique hash, this would immediately recognize where a hacker tried to enter and exploit the system. This kind of specificity can also demonstrate precisely what the nature of the attack was giving authorities the ability to see which information was manipulated and for what purpose(s).
One of the difficulties with blockchain technology, as it exists now, is its most significant benefit. It is a new and largely unregulated field. While the U.S. can get in close to the ground floor, they are also operating in a space that has been pioneered globally rather than domestically.
The major players in the early days of the internet were based in the United States, that is not the case with cryptocurrencies and blockchain technologies. Entering the space means that the country is catching up to the rest of the world rather than dictating the rules of the road.
Another weakness in the current iteration of blockchain technology is the so-called “last mile problem.” Cryptocurrency and open ledger technology occurs in a digital space and bridging the gap between the real, and the digital world is the last mile that people in the space have to cross before the technology can be airtight and secure. The digital realm still relies on real-world hardware securing it, and this can be manipulated regardless of a software’s security
Ultimately, the current weaknesses with blockchain technology do not preclude the US from entering the space. Large-scale hacks have occurred in the past, and national actors need to develop a robust security profile in order to keep bad actors at bay.
While the United States was not instrumental in developing the foundational technology around blockchain, it stands to reason, that to maintain an appropriate security posture it must rise to the challenge of adoption or be left behind.