Could America’s Cyber Competitors Use Blockchain for Their Defense?

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As the world was ensconced in Bitcoin euphoria this past fall, the Chicago Mercantile Exchange made headlines as the first to offer bitcoin futures, and bitcoin’s value skyrocketed to nearly $20,000 in December before its value plummeted to well below half that value.  The gyrations of the cryptocurrency market that includes Bitcoin, Dash, Ripple, and a growing basket of other currencies has roiled global finance and governments.  In March, the G20 finance ministers wrapped up a special meeting in Buenos Aires to coordinate laws to prevent cryptocurrencies from being used for criminal and terrorist purposes.

Blockchain Efforts

Bitcoin and its supporting technology, blockchain, were first proposed in a ground-breaking proposal in 2008 under the pseudonym Satoshi Nakamoto.  Intended as both an asset and a currency, Bitcoin was envisioned to be a global and transformational way to conduct electronic payments cheaply, securely, and anonymously without the traditional interference from a third party, such as a government or financial institution. The proposal was followed a short time later by the release of the first open-source blockchain software in 2009.  Initially, Bitcoin gained traction among a small cadre of cyber enthusiasts but has grown exponentially in both popularity and use, primarily because of the anonymity and security it affords.  It is for these very reasons that blockchain has captured the attention of crime syndicates and the world’s militaries.  Estonia, a member of NATO, is moving forward with blockchain initiatives as has DARPA.  Even though the Department of Defense is sprinting to cloud-based networking, Section 1646 of the 2018 National Defense Authorization Act (NDAA) requires that blockchain be assessed for military employment.  Specifically, the Secretary of Defense and other federal agencies will be required to brief Congress “on the cyber applications of blockchain technology…[and] potential offensive and defensive cyber applications” by May of 2018. The NDAA language also requires an assessment of how adversaries and criminals are using blockchain and legal ways in which the U.S. government could integrate blockchain into dealing with these threats and protecting government networks and critical infrastructure.

Meanwhile, Russian news sources report that Voentelecom, a telecommunication company that provides communication and integration services to federal executive authorities and the Ministry of Defense, is assessing the applicability of blockchain for the Russian military.   It begs the question, what does one of America’s cyber competitors, China, think of blockchain?  In China, officials became unnerved by the loss of muchly needed currency to bitcoin exchanges, the widespread use of bitcoin for nefarious or illicit purposes, and unabated enthusiasm swirling around the cryptocurrencies.  After their official warnings of a bitcoin “bubble” reminiscent of the Dutch tulip mania were not heeded, an official crackdown began in the fall with “an orderly exit” for all citizens in the cryptocurrency business.  With the lockdown in the commercial sector, has Chinese interest in blockchain shifted to other industries or sectors, such as the military (People’s Liberation Army (PLA))?

Blockchain as China’s Newest Cyber Tool

One new and aspirational proposal published in a 2016 military journal posits that it should.  The short, 5-page proposal contends that China’s defense and security sectors should leverage blockchain to discretely distribute funds for intelligence operations, safeguard sensitive personnel management and weapons lifecycle information, and make logistics operations more resilient.  Except for the role in intelligence operations, blockchain is entertained in a uniquely defensive role to protect key data and information systems.  Of particular note, one of the three Chinese cyber expert writers is not only a leader in China’s artificial intelligence efforts but is also a colonel in the PLA and a director of a center within China’s National Defense University.  Regardless of the supposed benefits of the blockchain, the proposal’s authors do acknowledge that the “liberalism” behind blockchain may be the greatest impediment to broader use specifically because it is at odds with Chinese values of governance and control. 

Despite the dynamism of the proposal, there was little public enthusiasm or interest until June 2nd, 2017.  On that day a slimmed down summation of the proposal’s findings was widely circulated in multiple media outlets across China, such as Xinhua and other PLA-friendly sites.  Further, this past February, one Chinese website opined that blockchain could even be used in media operations to verify both content and contributors in shaping public opinion.  In this way, blockchain would be used to secure sources of public opinion, ostensibly to the detriment of any adversarial counter-information operations.  More broadly speaking, public opinion warfare is one of three pillars key of China’s Three Warfare strategy (the other two being legal warfare and psychological warfare). 

While it appears that these ideas remain speculative, blockchain employment by the PLA would be a marked departure from its altruistic bitcoin roots.  Yet, blockchain would appear to follow broader Chinese security goals as part of their “informatization” drive. 

Wilson VornDick is a Commander in the Navy Reserve and served at the China Maritime Studies Institute at the U.S. Naval War College and various positions at the Pentagon. These are his personal views and are not associated with a U.S. government or U.S. Navy policy. Follow CDR VornDick on twitter VornDick

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