Blockchain: Disruptive Innovation for Defence Transformation

9 min read

man holding rifle wallpaper

The opportunities for Blockchain technology to transform defense capabilities.

Introduction

Blockchain is regarded by some technologists as the most important invention since the internet. On the other hand, many cynical observers think that Blockchain is a solution in search of a problem. However, its enthusiastic supporters think that it’s a technology capable of resolving many commercial issues such as transaction friction, data security and governance. Blockchain is a shared, distributed ledger that facilitates the process of recording transactions and tracking assets in a business network. Virtually any tangible asset such as houses or cars, or intangible such as patents and copyrights, can be tracked and traded on a blockchain network. Blockchain technology not only enables radically new business models, but also enhances legacy systems by reducing down-time, increasing security, and much more. The speed of adoption across many industries have been unparalleled, including within Central Banks, however there is still many aspects to be investigated before full adoption.

The opportunity for introduction within the Military environment is currently a topic of discussion amongst all major nations. Military operations are prone to centralised control due to reliance on ad hoc networks such as battlefield management systems. Most of such existing technologies are based on centralised control, ensuring data security and measured transparency, however centralised control is also prone to single point of failure. Consequently, the Distributed Ledger Technology (DLT) available on the blockchain can be beneficial to the Military. Firstly, its structure ensures availability and reduced cost. Secondly its resilience, security and immutability support data provenance and integrity and is a strong asset for military applications in both operational and support roles.

Blockchain Overview

Blockchain is a form of DLT that records and verifies all transactions using peer-to-peer networks to establish distributed consensus, eliminating single points of failure. The underlying technologies which are the foundation of blockchain are distributed computing and cryptography. Bitcoin, the first widespread implementation of a Blockchain DLT, was introduced in 2008 by a researcher under the pseudonym Satoshi Nakamoto. Blockchain is a sequence of blocks, which holds a complete list of transaction records like conventional public ledgers. Data is immutable and auditable as each transaction is linked and a copy of the ledger is held by each member of the network. This design means that the network is difficult to hack, requiring enormous quantities of computing power. This inherent security lends itself to some critical applications within defence:

* Supply Chains

* Identity Management

* Communications

* Cyber Defence

Byzantine Generals Problem

Centralised ledgers which are currently used in all organisations now are regarded as not perfect because record-keepers are not always trustworthy, act as gatekeepers and represent a Single Point of Failure (SPoF). In a distributed ledger system, however, the problem of trust, with no central control to enforce rules means that the participants may fail to reach consensus due to technical failures or misinformation. As the number of the participants in the system increases, the number of channels for communication (and opportunities for mistrust) increases exponentially.

Consensus Mechanism

Consensus mechanisms are used in blockchain to manage all the participating nodes that process transactions on the network. It makes sure that all the nodes on the network are synchronized with each other and agree on one consensus in which the transaction is legitimate and then added to the blockchain. Blockchain uses 12 different types of consensus algorithms with the main two being Proof of Work and Proof of Stake.

Fig. 1 Proof of Work vs Proof of Stake

Types of Blockchains

One of the major uniqueness of Blockchain is that it is adaptive, and can be integrated into every industry by adapting to the specific model the industry operates in.

· Public blockchain — This can be read by anyone in the world and is considered fully decentralised.

· Private (Permissioned) blockchain — This type differs from public blockchains in three notable ways: 1) Permission must be granted to participants to join the networks. 2) Transactions are private and are only available to permitted participants, 3) They are more centralised than public blockchains. Primarily useful for organisations that want to collaborate and share data but don’t want their sensitive business data visible on a public blockchain. This type of blockchain would seem best suited to be adopted in the defence sector, given the nature and sensitivity of the information generated and stored.

· Consortium blockchain or federated blockchain — These are sometimes considered a separate designation from private blockchains as the main difference is that consortium blockchains are governed by a group rather than a single entity.

· Hybrid blockchain — Hybrid blockchains are blockchains that are controlled by a single organization, but with a level of oversight performed by the public blockchain, which is required to perform certain transaction validations.

Digital Transformation for Operational Advantage

Military networks and intelligence systems are made up of a wide range of networked processes which stand to benefit from the immutable, decentralised ledger at blockchain technology’s core. Defence can leverage DLTs for multi-domain command and control, acceleration of procurement, management of mobile device assets, enhancement of supply chains, and additive manufacturing, including the manufacture of aircraft and other parts. Blockchain can bring trust and transparency to the construction and maintenance of physical assets by tracking the origination and entire supply chain of each part. DLTs also provide cybersecurity solutions for access monitoring, authenticity, and provenance of data, and can be used to increase the speed, automation, and coordination of any activity across the Department, including automation of the chain of command for authorising signatories for operational logistics and the onboarding and transfer of personnel. This will support the future operating model concept to build a more capable and resilient Defence Support Network that enables enhanced decision-making and effective delivery of defence support.

Fig 2. Future Operating Model

Access and Identity Management

The defence sector can spend weeks on processes, such as updating a contractor’s access to sites and IT, only to have to repeat the process when they need to work elsewhere. Blockchain can reduce these problems by working alongside existing directories and databases using Signature Chains to act as a personal blockchain for each user. This helps generate digital identities and ensures all documentation, access rights and vetting are recorded. This then eliminates the need for any repetition and management of access rights, making change requests almost instantaneous.

Cyber defence and data integrity

A recent enterprise security survey report shows that 52% of cyber security professionals do not have continuous visibility on their risk area, which is, therefore, one of the significant difficulties in treating threats. By improving data visibility, blockchain provides greater security for defence given the rapid digital transformation taking place creating huge amounts of data. Excessive data can create challenges in terms of proper capability for efficient processing. This can cause disruptions when attempting to deal with threats. In a blockchain, the data’s history is shown from generation to process, transformation and ending. Therefore, all participants can see who generated or who processed data. Such visibility creates opportunities to easily locate threats in the early stages and develop systems to eradicate them quickly.

Supply Chain Risk Management

Defence supply chains are complex, with the transport of equipment and personnel in difficult terrains across the globe. The lack of visibility and cyber resilience across the tiers in these supply chains is recognised as one of the biggest threats facing the sector today. For example, transportation of medical devices starts with the supplier(s) before transit through defence delivery organisations for transport to an overseas base, before the onward journey to the end user on operations. During this process, there are a series of critical points where the process could fail and where there are opportunities for manipulation. Blockchain applications not only address these issues, but they also offer a more secure record for supply chain management and enable greater audit-ability and real-time identification of responsibility.

Communications

Blockchain offers resilient communications in the event of a high-end conflict. Blockchain applications can be introduced in the event of an attack on the electromagnetic spectrum and secure critical communication systems such as satellites, undersea cables, or tactical data links.

Fig 3 Blockchain Communication Network

Applied to secure messaging systems, blockchain’s cryptographic encryption techniques would permit the implementation of a measure of automation that could reduce costs and improve both inter-agency and in-field communications. Blockchain provides verifiability through hashing which enables devices to coordinate behaviour in milliseconds. Using a blockchain database architecture, Naval onboard combat systems can be built around decentralised decision-making nodes, increasing control whilst improving survivability. An onboard blockchain-powered internet of things could keep functioning in a coordinated way even when the central computers go down.

Future Opportunities

During the STEM Awards 2019 Defence Technology Challenge, the winning idea proposed the use of blockchain to create hackproof communications between military systems on the battlefield. The idea was built on the proposition that wars will be won or lost by information, and military communication must be impenetrable and secure. However, a network is only as safe as its weakest link, therefore every military asset in the field is at risk if communications are compromised. Currently, several use cases are being investigated by the Defence Science and Technology Laboratory (DSTL) including logistics/supply chain, data provenance and record keeping, and notarization.

In the longer term, the ‘smart contract’ driven Blockchain/DLT applications were identified as a potential area of future utility such as semi-automated contracting and/or transparently bidding for work, procurement fund management, due diligence management, and financial tracking were identified as promising areas for defence to maintain awareness of. However, given that this is still classified as an emerging technology, the recommendation has been to adopt a ‘wait and see approach to compare cost versus benefits.

Fig 4 Blockchain Military use cases

The United States military is increasingly interested in blockchain applications. In the $700 billion 2019 annual defence budget, blockchain is mentioned by name. In terms of practical applications, the US Defence Advanced Research Projects Agency (DARPA) is working on weaponising blockchain. The U.S Navy has adopted a framework to leverage technology such as Artificial Intelligence, the Internet of Things, predictive analytics, and blockchain. The main area of concern for DARPA is data integrity systems, meaning ensuring that data are still in their original state, and seeing who has viewed these data. As such, DARPA has launched several projects related to blockchain to be used in several military domains such as secured hardware systems and quick military logistics including the creation of a secured communication network using blockchain.

Supply Chain Management processes, which are often hacked to alter or infect data within the process, are also another use case where blockchain may be useful. Consequently, DARPA is working on using blockchain to secure the US defence supply chains from cyber-attacks. The US Army’s Space and Terrestrial Communications Directorate is also turning to blockchain to monitor potential cybersecurity breaches in communications data.

Disruptive Innovation

Blockchain’s potential for disruption is clear and is an innovation which represents a viable catalyst for achieving the United Nations’ global sustainable development targets. As such, there are now numerous projects and initiatives seeking to utilise the technology for the benefit of for‐profit businesses, governments, and consumers with estimates that business value-added will exceed USD$176 billion by 2025 and USD$3.1 trillion by 2030. It is set to play a significant role in the ways that humanity tackles some of its most urgent sustainability challenges due to its ability to decentralise, store, and trace irrevocable transactions which could create unforeseen value across almost every industry.

Fig 5 Blockchain and Decentralisation

Blockchain has already made significant waves in the financial sector, and although use cases for the technology’s ability to support environmental, sustainability, and governance goals may still be in their nascent stages, organisations that have leveraged blockchain in their sustainability efforts have seen notable early success. Blockchain promises to overcome these critical aspects, representing ‘’a shift from trusting people to trusting math’’ since human interventions are no longer necessary. Already, through the evolution of different types of blockchain protocols such as Ethereum which makes smart contracts possible, a vast ecosystem of Decentralised Applications (DApps) is being created and disrupting industries such as Trade Finance, Law, Real Estate, Investment Banking, Central Banks, and others.

Fig 6. Real world use cases of Blockchain

The World Economic Forum has highlighted the potential for the technology to build resilient and transparent supply chains, to create stronger and more accountable public institutions and to spur responsible sourcing and sustainable consumption of goods and services. Blockchain-enabled projects refer to a sharing and solidarity economy built on digital identity to enable social inclusion, elections and political participation, identity management, individual rights, data privacy, co-creative and crowdfunding scientific and cultural activities.

Conclusion

Blockchain technology is currently at the same stage of adoption and usage as the internet was in the same cycle. The current state of innovation and entrepreneurship to address many of the initial problems is increasing the number of applications available to every industry currently utilising a centralised ledger. Blockchain by itself may not be a panacea to industry or global problems, however, the interaction with Artificial intelligence and Internet of Things devices has the potential to transform society. The opportunities far outweigh the perceived costs of introduction and a ‘wait and see approach may result in competitors gaining a competitive advantage. In an increasingly Volatile, Uncertain, Complex, Ambiguous and Digitally Disruptive (VUCAD) world, it may be preferable to fail fast and learn faster, particularly in matters of defence and security.

References

2022. Enterprise Blockchain for a Sustainable Future. 1st ed. [ eBook ] Amazon Web Services. Available at: <https://f.hubspotusercontent30.net/hubfs/8639589/Mini-book%20Enterprise%20Blockchain%20for%20a%20Sustainable%20Future%20-%20SettleMint%20%26%20AWS.pdf> [ Accessed 15 February 2022 ].

Aggarwal, S. and Kumar, N., 2021. Cryptographic consensus mechanisms. Advances in Computers, pp.211–226.

Martin, A., 2021. The Token Economy. SSRN Electronic Journal,

Babones, S., 2018. Smart ‘Blockchain Battleships’ Are Right Around the Corner. [ online ] The National Interest. Available at: <https://nationalinterest.org/feature/smart-battleships-are-right-around-the-corner-25872> [ Accessed 17 February 2022 ].

Bashir, I., 2018. Mastering Blockchain. 2nd ed. Birmingham: Packt Publishing.

Cornella, A., Zamengo, L., Delepierre, A. and Clementz, G., 2020. Blockchain in Defence: A breakthrough? 67th ed. [ eBook ] Finabel. Available at: <https://finabel.org/wp-content/uploads/2020/09/FFT-Blockchain.pdf> [ Accessed 17 February 2022 ].

Defence Science & Technology Laboratory, 2018. Adversary Futures WP3.2: Blockchains and DLT in UK Defence & Security. Portsmouth.

Hobbins, J. and Davies, M., 2019. Blockchain in Defence: What are the applications? [ online ] Defence IQ. Available at: <https://www.defenceiq.com/defence-technology/articles/blockchain-in-defence-what-are-the-applications> [ Accessed 17 February 2022 ].

Kewell, B., Adams, R. and Parry, G., 2017. Blockchain for good? Strategic Change, 26(5), pp.429–437.

Koletsi, M., 2019. Radical technologies: Blockchain as an organizational movement. Homo Virtualis, 2(1), p.25.

Lee, S. and Kim, S., 2022. Blockchain as a Cyber Defence: Opportunities, Applications, and Challenges. IEEE Access, 10, pp.2602–2618.

Liang, X., Shetty, S., Tosh, D., Kamhoua, C., Kwiat, K. and Njilla, L., 2017. ProvChain: A Blockchain-Based Data Provenance Architecture in Cloud Environment with Enhanced Privacy and Availability. 2017 17th IEEE/ACM International Symposium on Cluster, Cloud and Grid Computing (CCGRID),

Lilly, B. and Lilly, S., 2021. Weaponising Blockchain. The RUSI Journal, 166(3), pp.46–56.

Nofer, M., Gomber, P., Hinz, O. and Schiereck, D., 2017. Blockchain. Business & Information Systems Engineering, 59(3), pp.183–187.

Pozniak, H., 2019. The STEM Awards 2019 Defence Technology Challenge winner. The Telegraph, [ online ] Available at: <https://www.telegraph.co.uk/education/stem-awards/defence-technology/2019-category-winner/> [ Accessed 15 February 2022 ].

Sudhan, A. and Nene, M., 2017. Employability of blockchain technology in defence applications. 2017 International Conference on Intelligent Sustainable Systems (ICISS),

Value Technology Foundation, 2020. POTENTIAL USES OF BLOCKCHAIN BY THE U.S. DEPARTMENT OF DEFENSE. [ online ] Available at: <https://www.crowell.com/files/Potential-Uses-of-Blockchain-Technology-In-DoD.pdf> [ Accessed 17 February 2022 ].

Vitasek, K., Bayliss, J., Owen, L. and Srivastava, N., 2022. How Walmart Canada Uses Blockchain to Solve Supply-Chain Challenges. [ online ] Harvard Business Review. Available at: <https://hbr.org/2022/01/how-walmart-canada-uses-blockchain-to-solve-supply-chain-challenges> [ Accessed 17 February 2022 ].

Wegryzn, K. and Wang, E., 2021. Types of Blockchain: Public, Private, or Something in Between. [ online ] www.foley.com. Available at: <https://www.foley.com/en/insights/publications/2021/08/types-of-blockchain-public-private-between> [ Accessed 18 February 2022 ].

Zheng, Z., Xie, S., Dai, H., Chen, X. and Wang, H., 2017. An Overview of Blockchain Technology: Architecture, Consensus, and Future Trends. 2017 IEEE International Congress on Big Data (BigData Congress).

Kelroy James Kelroy James is a Supply Chain, Logistics & Operations Management professional with extensive expertise in successfully delivering organisational change, building quality working relationships with key customers and adept at working effectively to achieve goals both as a cross-functional team member and individual contributor. He is a Percy Hobart Innovation Fellow in the Royal Navy, DeFi Talent with Frankfurt School Blockchain Center, graduate of Aston University with a BSc (Hons) in Logistics and Operations Management, and recently completed a Micro Masters In Predictive Analytics using Python with the University of Edinburgh. With a keen interest in driving organisational improvements, he creates value for stakeholders by designing and implementing processes that integrate strategy, technology, and people.

Schedule a DDIChat with Kelroy James

app.ddichat.com/experts/kelroy-james

Leave a Reply

Your email address will not be published. Required fields are marked *