Joel Neidig joined me on the Acquisition Talk podcast to discuss how blockchain technology can support the military across a wide range of use-cases including supply chain management, financial transactions, additive manufacturing, secure communications, digital engineering, and much more. He is the co-founder and CEO of SIMBA Chain, a startup that won an early DARPA grant back in 2016 exploring blockchain’s potential for secure communications. The dual-use company has branched out into the military services, providing customers with low-code tools to build a diverse set of applications on top of several blockchain protocols.
For those unfamiliar, blockchain is basically a shared ledger that makes an immutable record of transactions, verified through a peer-to-peer network. The network nodes check and validate transactions for consistency, making it incredibly difficult to attack. Of course, Bitcoin and the use-case for money is a popular application. But Joel explained how SIMBA Chain is working with Boeing and other companies to create a trusted supply chain.
Any digital or physical asset can be given a unique identifier on the blockchain, creating a trusted record of the transfer of goods throughout the supply chain, such as from a producer to a shipping terminal, then to a ship, delivery truck, storage at another supplier, integration onto a component or subsystem, and so on until an end-item is delivered to the customer. This not only protects the supply chain from cyber risks emanating from counterfeit or tampered hardware, but also problems due to non-conforming parts that may be the wrong version or spec.
Supply chain is just one blockchain application among many that could help revolutionize the way government does business and fights in war. While the US government is only putting a million dollars here and there into blockchain, China is putting billions of dollars into their own blockchain capabilities. China is forcing US suppliers like Starbucks and Wal-Mart onto their national blockchain, which will soon be the only way they are able to do business in China. The Pentagon cannot afford to slow-roll its adoption of blockchain because it will be a crucial factor in securing and automating workflows for additive manufacturing, artificial intelligence, financial transactions, and much more.
Podcast annotations
Here’s Joel on another blockchain use-case:
Additives been a big one because maybe you need to print something that’s not in stock but you want to you know the intellectual property is maybe owned by an OEM. So that’s been a big use case, and there’s a lot of people in blockchain that are trying to that crack that nut, but we have a platform called BASECAMP that we built as part of an Air Force project that allows for additive manufacturing to provide a secure hash so then all the parties can transact whether it be the the files that were designed or the end customer that’s going to use it and then all that’s transacted. The payment side isn’t there but you could essentially enable that if you wanted.
A hash is essentially transformed information that cannot be put right without a private key. This assures the security of the contents of the digital asset, in this case specs for 3D printing. Only the intended recipient can open the file. It can’t be duplicated and sent off to someone else. With a canonical version of an asset digitized on the blockchain, you’ll know you have the right version.
But it’s not just about security. I think of blockchain as an incredible system for reducing transactions costs. Every time a proprietary part is printed on the edge by the military, it can automate these small payments that would normally require a lot of bureaucracy to obligate and spend funds. It also provides radical insight into spending.
Eric: … we spend over a billion dollars a year trying to get the Department of Defense auditable and we still can’t seem to do it very well. A lot of it is these back and forth transactions between the military services. It seems like blockchain is just an obvious solution… you could have Congress appropriate a digital token, or a currency that’s pegged to a dollar, and then you could just see how that flows all the way through the obligations and potentially even into this supply chain.
Joel: I mean it sounds simple and I know it’s complex because people are involved [but] all you have to do is just tokenize every one of those dollars. You would not then have 35 trillion dollars of journal entries that are messed up at the Pentagon because then you would have every single token digitized… now a lot of people probably don’t want that right because it’s like oh that’s kind of like really visibility and revealing to the American people.
It would be exciting to see the government really lean into an emerging technology at scale rather than come late to the party like it did for cloud, AI, and others. And like many emerging technologies, blockchain is horizontal, touching many aspects of systems development and business. It is not the same investment as the Apollo program or Manhattan project. But digitizing appropriations onto the blockchain would be a huge signal to the agencies to open the flood-gates.
As for now, the government remains stuck with relatively small contracts for emerging tech like blockchain, while China clearly sees the potential:
There’s a lot of risk but we know we don’t want to be late to this game either. That’s what freaks me out. China. I’m telling you, they’re spending billions of dollars on this stuff. We’re like throwing a million bucks here or two million bucks there. Industry’s spending it. You have Ethereum and ConsenSys and some of these other guys, but it’s nothing compared to what the Chinese are building.
Indeed, China has invested more than $1 billion in over 500 blockchain projects in FY2019 for defense, manufacturing, and other uses. If China is putting weight behind blockchain, that should scare up some support in Washington DC like it did for artificial intelligence and hypersonic missiles. But blockchain doesn’t produce the same kinds of kinetic effects. Instead, it provides more abstract benefits in terms of secure communications, business insight, lower transaction costs, system resiliency, organizational design, digital engineering threads, and so on. Blockchain will impact all military programs in the decades to come.
Thanks Joel!
I’d like to thank Joel Neidig for joining me on the Acquisition Talk podcast. Be sure to check out SIMBA Chain’s website for a ton of information on blockchain, including this short guide for government. Here’s an excellent white paper for blockchain uses in the Department of Defense. Really, take time to read that white paper. Lots of great use cases and background. Here’s Joel speaking on the Azure podcast, on the Future of Money, Governance, and Law podcast, and Frontier podcast.
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