Blockchain goes from suspect to potential solution

While investigators have until now seen blockchain and bitcoin as criminal havens, security agencies are starting to eye the former’s military and security potential

By Jeremy Wagstaff and Byron Kaye  /  Reuters

Thu, Dec 07, 2017 - Page 9

Police and security agencies have so far only taken an interest in blockchain — the distributed ledger technology behind cryptocurrencies like bitcoin — for tracking criminals hiding illegal money from banks.

However, that is changing as some civilian, police and military agencies see blockchain as a potential solution to problems they have wrestled with for years: how to secure data, but also be able to share it in a way that lets the owner keep control.

Australia, for example, has recently hired HoustonKemp, a Singapore-based consultancy, to build a blockchain-based system to record intelligence created by investigators and others, and improve the way important information is shared.

“They’ve been trying for years to come up with a cen-tralized platform, but people are reluctant to share information,” said Adrian Kemp, who runs the consultancy, which was awarded an A$1 million (US$757,500) grant by the Australian Criminal Intelligence Commission and the Australian Transaction Reports and Analysis Centre (AUSTRAC), Australia’s financial intelligence agency.

Blockchain’s appeal for data sharing is threefold.

Its ledger, or database, is not controlled by any single party and is spread across multiple computers, making it hard to break. Once entered, any information cannot be altered or tampered with. The owner of information can also easily tweak who has access to what, by using so-called smart contracts.

It is a sign of how far blockchain technology has come within a decade since the publication of a pseudonymous paper describing bitcoin and the blockchain ledger that would record transactions in it.

Bitcoin has since become

the preferred currency not only of libertarians and speculators, but also of criminal hackers. The bitcoin price is volatile,

and hit record peaks late last month.

Governments are already exploring ways to store some data, such as land records, contracts and assets, in blockchains, and the financial industry, too, has experimented with blockchain technologies to streamline transactions and back-office systems, though with limited success.

The closest most law enforcement agencies have come to using blockchain has been working with start-up firms to analyze it for evidence of criminal deals, but in the past year or so that attitude has begun to change.

The US Air Force (USAF) has funded research into how blockchain could ensure its data is not changed. In May, the US Defense Advanced Research Projects Agency awarded a grant to the company behind an encrypted chat program to make a secure messaging service based on blockchain technology.

Amendments to a recent US Senate defense bill require the government to report back on “the potential offensive and defensive cyber applications of blockchain technology and other distributed database technologies,” and how foreign governments, extremists and criminals might be using them.

The UK, too, is exploring several uses of blockchain technology, say consultants and companies working for several departments.

Cambridge Consultants, a UK-based consultancy, said it had worked with the Defence Science and Technology Laboratory, a UK Ministry of Defence agency, on using a blockchain to improve the trustworthiness of a network of sensors on, for example, security cameras.

The UK’s Ministry of Justice is looking at proving that evidence — video, e-mails or documents — has not been tampered with by registering it all on a blockchain, according to a blog post on its Web site.

Marcus Ralphs, a former soldier and now chief executive officer of ByzGen Ltd, which makes blockchains for the security sector, said he is working on projects with the UK defense ministry using blockchain to track the status and level of individuals’ security clearance.

Other work includes helping the UK Foreign and Commonwealth Office (FCO) improve the way work permits are issued and records stored.

These are early days.

Kemp says there is no guarantee his project will be deployed more widely, and some who have worked with AUSTRAC are skeptical, saying such projects have more to do with agencies turning to the private sector because they are running low on resources and ideas.

“The government is just looking to pass the buck on to private industry,” said Simon Smith, a cyber private investigator who has worked on cases involving AUSTRAC.

Many police forces and armies are not ready for the technological and mental leap necessary.

The Police Foundation, a UK think tank focusing on policing and crime, is pushing UK police to explore blockchain technology, but its director, Rick Muir, said: “We are still at the stage of ‘what is blockchain?’”

Major Neil Barnas, a US Air Force officer who last year wrote a thesis on the potential of blockchain in defense, said US military and security agencies are slowly waking up.

The problem is that military minds are more inclined toward centralized systems than the decentralized ones that blockchain’s distributed ledger embraces, he said.

That said, blockchain’s association with the criminal underworld has not dented its appeal to those who see its potential, Ralphs said.

“The negative narrative around it has not at all watered down or diluted the interest of the people we’ve been engaging with,” he said.