Used by terrorists, drug dealers and money launderers, the shadowy online currency bitcoin may soon be drafted by the Pentagon as a way to shield U.S. military technology, communications and purchases.
Private analysts say that using blockchain, the technological backbone of bitcoin, could dramatically improve security across the U.S. military, preventing megahacks, tampering and cyberhijackings of vehicles, aircraft or satellites.
Particularly alarming to U.S. defense analysts are Chinese intelligence collection operations aimed at commercial transactions, which have been highlighted as a growing threat to U.S. national security with the American military personnel, national security decision-makers and critical infrastructure entities increasingly targeted.
"Our dependence on foreign supply chains is a reality that policymakers will have to contend with in an increasingly open global economy," wrote the authors of a recent research memo published by the Washington-based Foundation for Defense of Democracies.
To confront threats, the military has begun experimenting with blockchain, essentially a decentralized digital ledger system, or database, stored in multiple copies across a large group of users.
Investors have taken note of the U.S. military's interest in blockchain technology. Last year, the market for blockchain tech vendors accounted for $75 billion, analysts said. In 2019, it is projected to reach $108 billion.
The key to blockchain's security: Any changes made to the database are immediately sent to all users to create a secure, established record. With copies of the data in all users' hands -- even if some users are hacked -- the overall database remains safe.
This tamper-proof, decentralized feature has made blockchain increasingly popular beyond its original function supporting the bitcoin digital transactions. Many cutting-edge finance firms, for instance, have used blockchain to expedite processes and cut costs without compromising security.
In Estonia, home of the video phone pioneer Skype, officials have reported using blockchain to track national health records. In Russia, experiments are underway to integrate blockchain into the general payment economy.
The Pentagon and U.S. NATO allies have been moving discreetly but aggressively in recent months to develop military-related apps exploiting the capabilities of blockchain. NATO is considering the technology to improve efficiencies across such traditional processes as logistics, procurement and finance.
In the U.S., the Defense Advanced Research Projects Agency (DARPA) has long hosted some of the world's most innovative engineers. Decades ago, DARPA helped create the internet. Now its engineers are starting to experiment with blockchain to create a secure messaging service among departments that eventually will find its way to combat troops on the battlefield. A public request for proposals on how best to implement the service has been issued.
If "significant portions of the [Defense Department] back-office infrastructure can be decentralized," DARPA wrote, "'smart documents and contracts' can be instantly and securely sent and received, thereby reducing exposure to hackers and reducing needless delays in DoD back-office correspondence."
DARPA also has been trying to develop an unhackable code -- which blockchain could facilitate -- because the technology offers intelligence on hackers who try to break into secure databases.
The Foundation for Defense of Democracies memo, titled "Leveraging Blockchain Technology to Protect the National Security Industrial Base," was written by Michael Hsieh and Samantha Ravich. It details numerous scenarios in which outside forces attack or infiltrate America's national security industrial base.
The base includes the research and design of military weapons systems, subsystems and components, and the infrastructure that supports U.S. troops, the nuclear force and critical national industries.
"Securing the NSIB supply chain is a systems-engineering challenge of unprecedented dimensions," the authors wrote. "Essentially, the problem at hand is to police a corpus of commercial activity which, if only counting the Department of Defense, would comprise the 20th largest economy in the world."
The authors say blockchain holds great promise for a range of applications.
"While it is a new technology and entails extraordinary risks," they wrote, "it also bears extraordinary promise as a tool uniquely suited to such problems of singular scale and complexity."
As an example, the memo cites a case study of an audit from the investigator general overseeing the U.S. reconstruction effort in Afghanistan. The audit found that the construction of a justice center in Afghanistan's Parwan province had been infiltrated by a known bomb-making cell -- and that the bomb-makers had "actually gained two days of access to the construction site."
The memo suggests a blockchain-based contracting system could have blacklisted those individuals and prevented such an incident.