… the Advancing Blockchain Act directs the Federal Trade Commission and the Commerce Secretary to collaboratively investigate the decentralized, distributed ledger technology over the next two years, and subsequently provide a range of recommendations to Congress to help boost American implementations.
“Blockchain technology can be used for cryptocurrency, but it also has many other potential applications,” Guthrie said in a statement. “The Advancing Blockchain Act will allow us to explore these uses to improve our technology.”
That was from “Advancing Blockchain Act Calls for Federally-Led Deep-Dive Into the Nascent Tech.” And no, the Pentagon’s adoption of blockchain does not mean using Bitcoin for money transactions.
I’d like to do full report on what blockchain can do for defense, but that’s a major effort. For now, I’ll sketch a couple ideas for now in order of the “lowness” of the hanging fruit:
- Secure Communications. Secure communications can be transmitted that cannot be hacked without the personal key, which also keeps an immutable ledger of which individuals have access to what. Here’s a little bit on DARPA’s efforts on blockchain.
- Internet of Things (IOT). Related to the first, blockchain is based on cryptography, and can help secure transactions of information across the internet of things like envisioned by Advanced Battle Management System.
- Financial Transactions and Supply Chain. The DoD could have it’s own “stablecoin” pegged to the US dollar. The government could pay contractors in its own stablecoin, and contractors could subcontract with one another using the same tokens. While ten or twenty minute wait times may seem problematic in the commercial world, that’s virtually instantaneous in government. Having all of this on a global ledger would provide the DoD instant insight into its supply chain, and could help verify the sourcing of hardware. One of the big parts of cybersecurity is not knowing where the hardware came from.
- Decentralized Autonomous Organizations (DAO). This is one of the harder concepts to wrap your head around. Blockchains have a “protocol” like Bitcoin, Ethereum, Tezos, and others. These all have varying levels of flexibility in their ability to do “smart contracts,” allowing developers to come in and build applications. ERC-20 is a technical standard for many applications on Ethereum. Basically, any existing internet application can be done through these smart contracts. Tezos has built in mechanisms for upgrading the protocol itself. At any rate, the whole thing can replace corporations (maybe in the more distant future). Individuals can see the open standards for developing applications on protocols and contribute microservices or otherwise. Others can use these microservices to build out more complicated applications, and so on. Each time these services are used, a transaction takes place that may move a small amount of funds to the developers. So only useful products that get used by others in the ecosystem are profitable, while poor quality products are ignored, aligning incentives and outcomes. In this way, the whole ecosystem of technologies moves forward at the fastest pace and without central direction, but always with rivalry, competition, and real-world feedback. For more, I recommend looking into Chris Dixon’s work (e.g., here).
While artificial intelligence gets a lot of hype in the defense world, blockchain has to potential to revolutionize economic systems and incentives. If the Pentagon wants to make sure it’s innovating across its entire portfolio at a faster pace than its adversaries, perhaps the only thing it can do that’s more immediate and important than blockchain is reforming the program budget.
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