The price implosion of digital images of cartoon gorillas and the collapse of the cryptocurrency market led to head-scratching and finger-logging. The headlines generated by these crashes belie the importance of their technological infrastructure – blockchain. (Blockchain is different from the popular Bitcoin cryptocurrency: Blockchain is the broad, fundamental technology, while Bitcoin is a single application of the technology.) Blockchain is an amplifier and accelerator of technologies such as additive manufacturing, artificial intelligence, loyal wingman autonomous aircraft or aerospace architecture . Those who misunderstand blockchain risk falling behind competitors in today’s Internet and tomorrow’s information environment.
The U.S. government considers blockchain a “technology of tomorrow,” while competitors are aggressively pursuing efforts today to integrate blockchain, data, and the information environment. China is far ahead of the US in blockchain policy, innovation and implementation across society. To compete across all elements of national power, the United States requires a coherent, coordinated blockchain strategy and supporting policy. The Department of Defense should explore blockchain technology with the same seriousness as other new technology research to spark that discussion. Blockchain is not a weapons system per se – it is a critical enabling technology in the information environment. The challenge is not only to educate more people in the US government about blockchain technology, but also to master blockchain and its applications as a nation first. Misunderstanding blockchain undermines US competitive efforts across all instruments of national power and allows China to shape tomorrow’s information environment.
Blockchain, at its most basic level, is a unique way of storing data. It is a subset of proven distributed ledger technology and uses cryptography to maintain a chronological record of transactions. This data record or ledger is a digital database that is shared and synchronized (i.e. distributed) between multiple nodes in a computer network without a central arbitral authority. A traditional database typically structures data in tables. Data tables, even if shared across multiple nodes in the network, require a central software arbiter to validate changes and publish the updated dataset across the network. In this way, traditional databases can be visualized as “hub and spoke”.
In contrast, blockchain data is stored in blocks on an ever-growing chain. When new data is added to the existing data set, a new block is formed. This new data block cryptographically connects to the previous chain of data blocks via a digital signature or “hash value”. This cryptographic hash depends on both the new data and the previous chain of data blocks. New blocks of data are then broadcast to all nodes in the network for validation and addition to existing, distributed copies of the blockchain. From an overall network perspective, nodes, not a central arbiter, can validate and trust all new and previous data blocks simply because of the cryptographic hash values.
In particular, blockchain technology is not a new technology, but rather an innovative combination of existing technologies: asymmetric key encryption (e.g., HTTPS) for identity establishment, cryptographic hash values for data integrity, the Merkle tree cryptographic concept for linking data blocks, and peer- peer-to-peer networks (as used in file-sharing websites such as LimeWire) for distributed operations. Together, these allow blockchain to deliver efficient, secure, “trustless” transactions without intermediary authorities.
Generally, blockchain networks are categorized as public or private networks. In public blockchain networks, anyone can join or participate. This type of network is more transparent and tamper-proof due to its size, but it is more difficult to scale or change its governance. The popular Bitcoin or Ethereum networks, which enable the eponymous cryptocurrencies, are both examples of public blockchains.
Conversely, a private blockchain network is constructed so that one organization controls user access and level of participation. Although this type of network is less and less redundant, it generates efficiency in data transactions. At the intersection of public and private networks is a hybrid network known as a consortium blockchain, a semi-private network controlled by multiple organizations. Consortium blockchain networks are probably the best structures for new government or military applications. In fact, Deloitte estimates that 74 percent of new organizational blockchains are consortium blockchains. As the United States and its allies and partners rethink information advantages in a global environment, blockchain technology, supported by solid strategy and policy, should play a key role.
China considers blockchain technology as important as other new technologies for industrial and economic development. In October 2021, Xi Jinping addressed a Politburo survey on the digital economy: “Innovation on the Internet, big data, cloud computing, artificial intelligence, blockchain and other such technologies have accelerated [… and] are becoming a critical force in reorganizing global factor resources, reshaping global economic structures and changing global competitive structures.” China’s volume of blockchain-related patents highlights its efforts to dominate this technology: from 2015 to 2021, China filed nearly 33,000 patents, while the United States filed just over 10,000 patents. China isn’t just incubating blockchain technology — it’s accelerating its adoption to gain a lasting, first-mover advantage.
In December 2021, China’s Central Cyber Security and Informatization Commission issued its 14th Five-Year Plan, which highlighted blockchain’s importance across multiple fields, such as distributed identification, data exploitation, cloud networking, and domestic digital innovation. To date, China has demonstrated concentrated blockchain efforts in six areas: First, China developed the digital yuan, a blockchain-based central bank digital currency. After two years of experimentation, China showcased the digital yuan at the 2022 Winter Olympics as a more secure (and traceable) payment method. Second, blockchain enables Shanghai’s smart infrastructure. Since 2019, the smart city program has facilitated road network management, public health efforts, energy production and pollution reduction via blockchain networks. Third, Chinese police are integrating blockchain into the investigation. Blockchain’s traceability and immutability helps preserve electronic and physical evidence for criminal cases. Fourth, China is using blockchain platforms to broadcast verifiable public health information about COVID-19 to its citizens and reduce the possibility of misinformation. Fifth, the People’s Liberation Army is testing blockchain to manage personnel and payroll records, reduce corruption and “increase performance.” Finally, China is using blockchain technology to help monitor and control its population.
Most recently, Chinese authorities may have changed users’ COVID-19 statuses to false positives via a smartphone tracking app to prevent protests by forcing citizens into quarantine. This underlying blockchain technology helps police gather evidence against online dissidents and secures the Chinese social credit system. Still, China’s blockchain efforts are looking beyond domestic applications — China intends to build a global Chinese-controlled blockchain internet.
China’s Belt and Road Initiative Extends to Blockchain. Intending to influence the world’s blockchain ecosystem, China launched its Blockchain-based service network in April 2020. The network serves as a low-cost back-end infrastructure system for software developers to build blockchain applications. Similar to the popular Ethereum blockchain network, the Blockchain-based service network is intended to become the “blockchain internet” via a “cross-cloud, cross-portal, cross-framework, global infrastructure network” and serve as a platform for create new software applications. Indeed, the accompanying white paper emphasizes that “once the [Blockchain-based service network] is deployed globally, it will become the only global infrastructure network that is autonomously renewed by Chinese entities and for which network access is Chinese-controlled.” This network, combined with the huge number of blockchain patents, supports “China Standards 2035″, China’s long-term attempt to set international standards in favor of Chinese interests. Congressional testimony from the Center for a New American Security underscores this danger: “Blockchain developers [in democratic countries] should realize that if they help build the [Blockchain-based service network], they are constructing the Chinese Communist Party’s new Internet -ecosystem.” Absent leadership from the United States and its allies or partners, China is poised to achieve the critical mass required to shape tomorrow’s Internet according to the standards of the Chinese Communist Party. A Chinese version of tomorrow’s Internet is unlikely to support a free and open flow of information.
Lacking a solid understanding of blockchain, the US risks competing in an information environment dominated by China. There are serious consequences for misunderstanding blockchain and its role in the development of tomorrow’s Internet. Currently, the Internet is evolving from centralized data anchored by a handful of large, influential tech companies like Meta (formerly Facebook) and Google into what is known as Web 2.0. The next iteration, “web3,” features decentralized blockchain networks and disaggregated data. (To be clear, instances of web3 are in use today alongside Web 2.0 and Web 1.0, but are less widespread or obvious to end users.) Not surprisingly, uses of future technology are difficult to predict. For example, few predicted the asymmetric effects of influential social media or envisioned the easy spread of misinformation at the advent of Web 2.0. What misuses, opportunities or risks are not foreseen about web3? What are the unknown unknowns of a new blockchain internet and unknown information environment?
Blockchain is an enabling technology, not a panacea for competition in the information environment. For example, several nations (including the United States) are investigating blockchain technology to implement digital fiat currency or central bank digital currency, as China has already done with the digital yuan. On the positive side, creating a digital currency could streamline tax reporting or the delivery of targeted stimulus programs. On the other hand, if a non-U.S. central bank’s digital currency or cryptocurrency quickly gains widespread traction, could U.S. economic sanctions be caught unawares? North Korea’s 2018 theft of $250 million in cryptocurrency was an evasion of international economic sanctions. What does integrated deterrence look like with minimized economic sanctions? How is diplomatic or military power affected if America’s instrument of economic power is weakened?
However, blockchain technology extends beyond financial applications. It occupies a critical space in the information technology and data landscapes. Blockchain improves both cybersecurity and zero-trust architecture, a new model for designing networks. For example, the effects of a ransomware attack are blunted if data is distributed across multiple nodes in a blockchain. In addition, blockchain can effectively inventory software across an information technology enterprise—for example, an entire company or government department—so administrators can quickly patch targeted machines when needed. Additionally, as the US government shifts to a zero-trust architecture, blockchain has shown promise in creating data stacks resistant to manipulation, decentralizing public key infrastructure, and using intrusion detection systems. Blockchained data combined with artificial intelligence could even validate data such as GPS signals to counter adversaries’ spoofing attempts.
Without a joint US development effort, what are the consequences when national security information systems use Chinese or a public blockchain infrastructure? The burgeoning Chinese Blockchain-based service network is an obvious one blockchain infrastructure developers should avoid. However, commercially available public blockchains like the Ethereum network are more challenging to understand. Like the Blockchain-based service network, the Ethereum network is designed to allow developers to easily build applications on top of the software infrastructure. It is not likely that the Ethereum network was constructed maliciously. Less is also known about whether the network has significant cyber vulnerabilities for US government applications. Either way, the network is experimenting with new code to position itself for mass commercial use without regard for US national security standards. What happens if future public networks or commercially acquired applications compute on a public blockchain network like Ethereum because no clear alternative exists?
By far, the most significant implications of blockchain technology center around data. China sees data as critical to compete in finance, industry or even warfare. In 2013, Xi commented: “[B]ig data is the free resource of industrial society. Whoever has the data has the initiative.” As the Internet of Things expands and data availability grows, blockchain offers a new framework for collecting, disseminating and leveraging data. Instead of traditionally transmitting data back and forth between nodes for validation, reliable data could be broadcast to a network. This new network structure avoids the need for a central arbitrator and generates overall network efficiencies. As an illustration, new cars could communicate directly with each other to avoid accidents or reduce traffic jams. These cars could also share their standardized and trusted data with a broad data ecosystem via blockchain, industries such as food delivery, auto insurance, civil engineering and others. Blockchain is a new data infrastructure paradigm that enables other technologies such as artificial intelligence and machine learning and can support US efforts to seize the initiative in data competition.
So what happens when China leapfrogs the US in the big data and blockchain sectors?
There is yet to be a blockchain application that sparks immediate, widespread adoption of the technology or ushers in web3 at scale. China recognizes this fact, but continues to prioritize blockchain development and promulgate the Blockchain-based service network in the country’s quest to harness data and maintain first-mover advantage. As one expert puts it, web3 would “enable an internet of things where all digital things can communicate and transact with each other, enabling a new era of digital innovation and economic opportunity. But it would be an internet where China owns the underlying infrastructure .” Xi’s comments underscore this point: “The amount of controlled information has become an important indicator of a nation’s soft power and competitiveness.” Exploitation of information has significant implications for the current economic and military advantages of the United States. China is looking “50 to 100 years into the future” by developing technologies today that support a vision of Chinese data dominance in the information environment. Getting blockchain right first is a national imperative.
Blockchain and web3 development requires a whole-of-nation approach. Commercial industry, rather than a government agency, is most likely to provide a use case or application that achieves critical mass for widespread blockchain adoption. However, the competition with China requires a clear government policy to ensure freedom of movement in a web3 environment for the US and its allies and partners.
A critical first step in nullifying Chinese influence in web3 is to develop blockchain standards for commercial and public use. What protocol governs decentralized blockchain applications and what ethics govern smart contract execution? Should a standard blockchain ecosystem be available to government and industry developers as an alternative to China’s sponsored Blockchain-based service network or the public Ethereum networks? The Department of Defense’s sponsorship of TCP/IP as a standard protocol for data delivery in 1982 serves as an example of effective policy for new technology with international implications. And in the short term, the United States should blunt efforts to shape blockchain standards in favor of China in organizations that develop international technology standards. While there are still several questions about blockchain’s tactical applicability to the military services, broader strategic policy issues must be decided in this emerging technology landscape, especially since blockchain will be a technology that underpins future U.S. competitive efforts.
To examine these issues, US national security actors such as the Department of Defense, the National Institute of Science and Technology, or the National Security Agency could establish a cross-functional cross-agency team to explore the blockchain space and inform long-term blockchain policy. Additionally, this team should certainly include industry and academic experts. After a sprint, the team’s white paper or report should outline internal and external stakes and detail blockchain courses of action tied to national security priorities.
Finally, in the short term, DoD leaders should raise awareness among those evaluating and acquiring technology and communicate blockchain’s opportunities, risks, and vulnerabilities. Empowered by enhanced blockchain and data skills, DoD acquisition professionals, technologists, and service members can continue to innovate using both current and emerging technologies. But without a comprehensive understanding of blockchain technology, the United States risks struggling in an information environment shaped by competitors and on an Internet owned by the Chinese Communist Party. The United States should examine blockchain technology and craft strategic policy today to compete successfully in tomorrow’s information environment.
May. Mike Knapp is a United States Air Force pilot stationed in the Washington, D.C. area. These opinions are the author’s own and do not represent those of the Air Force or the Department of Defense.
Experts say now may be a good time to enter the crypto market while prices are low, but only after you’ve assessed your risk tolerance and prioritized other aspects of your finances, such as saving for an emergency, paying off high-interest debt, and invest in a traditional retirement account like a 401(k).
What are the three types of blockchain?
Three types of blockchain See the article : Stadium goers are looking for high-tech outings.
- Public blockchain. A public, or permissionless, blockchain network is one in which anyone can participate without restrictions. …
- Permissioned or private blockchain. …
- Federated or consortium blockchain.
What is level 3 blockchain? What is Bitcoin Layer 3? Layer 3 is often referred to as the application layer. It is a layer that hosts DApps and the protocols that enable apps. While some blockchains such as Ethereum or Solana (SOL) have a thriving variety of layer 3 apps, Bitcoin is not optimized to host such applications.
What are the types of blockchain?
There are primarily two types of blockchains; Private and public blockchain. However, there are also several variations, such as Consortium and Hybrid blockchains. Before we get into the different types of blockchains, let’s first learn what similarities they share.
How many different Blockchains are there?
Types. Currently, there are at least four types of blockchain networks – public blockchains, private blockchains, consortium blockchains, and hybrid blockchains. Read also : Netflix’s Top Movies and Shows: What’s Hot on July 12, 2022.
Can the government take over cryptocurrency?
Right now, cryptocurrencies fall under the jurisdiction of the SEC for investments, the CTFC for any crime involving interstate commerce, and the IRS, making it subject to either income or capital gains taxes. See the article : Data Science vs. Decision Science: What’s the Difference?.
Can the government take control of cryptocurrency? Governments can influence the price of crypto in several ways. First, they can regulate the price of digital assets through buying and selling actions through international marketplaces. Second, they may engage in creating strict regulations that may inevitably lead to an increase in costs.
Is the government getting into cryptocurrency?
WASHINGTON (AP) – President Joe Biden on Wednesday signed an executive order on government oversight of cryptocurrency, urging the Federal Reserve to investigate whether the central bank should step in and create its own digital currency.
What are the benefits of blockchain in public sector?
Blockchains can reduce the time, costs and risks of managing sensitive information by providing an immutable and transparent audit trail for regulatory compliance, contract management, identity management and citizen services. Every process suffers from friction.
How is blockchain used in the public sector? Using blockchain, governments can permanently store asset transactions such as land, property and vehicles on a public ledger. The Georgian government’s land registration department was, for example, pioneered a land registry tool to track land ownership and property transactions within the country’s borders.
What are the benefits of blockchain in government sector?
What are the benefits of Blockchain in government and the public sector? A blockchain-based digital government can protect data, streamline processes and reduce fraud, waste and abuse, while increasing trust and accountability.
Will blockchain transform the public sector?
Blockchain’s benefits – of security, efficiency and speed – are readily applicable to public sector organizations, and the technology’s potential helps explain why so many government leaders are actively exploring its uses in government. In fact, blockchain experiments in the public sector are accelerating globally.
Is blockchain used in government and public sector?
The technologies can be utilized in government and the public sector to streamline operations and increase transparency and accountability. Use cases range from self-sovereign digital identity to electronic health records and central banking.
Who lost the most on Bitcoin?
Jed McCaleb and Chris Larsen, two co-founders of the blockchain-based payment system Ripple, have lost $300 million and $1.1 billion, respectively.
How many bitcoin wallets are lost? A 2017 report by Chainalysis, a forensics firm, estimated that between 2.78 million and 3.79 million bitcoins have been lost. That’s out of a total of nearly 19 million circulating today, and a maximum supply of 21 million tokens when Bitcoin is fully mined.
How much money was lost in Bitcoin?
The most popular cryptocurrency has lost about 70% of its value since hitting an all-time high of around $69,000 in November. The entire crypto market is feeling similar pain. The total market capitalization of crypto assets has fallen to less than $1 trillion from the November 2021 peak of $3 trillion.
Who is the number 1 holder of Bitcoin?
The entity widely recognized as having the most Bitcoin is the cryptocurrency’s creator, Satoshi Nakamoto.
