What is blockchain? First, imagine a spreadsheet that’s reproduced thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and its shared and continually reconciled database.
Now you have pretty good idea of how blockchain works –but also why blockchain constitutes a revolution on how information is shared and secured on the ‘net.
Since the blockchain database isn’t stored in any single location, it means its records are easily verifiable. No centralized version of this information exists for a hacker to corrupt—and since the data is hosted by millions of computers simultaneously, it’s accessible to anyone on the internet. But it’s also protected because after every transaction within the shared ledger; and once all the ledgers match for every computer in the network; the transaction is encrypted with the rest in what’s known as a block. The new block is then added to existing previous blocks to form a chain of blocks—hence blockchain.
Now, it’s true that blockchain gets a bad press because of its association with Bitcoin, which finds itself under financial and political siege. Cryptocurrencies like blockchain because it allows all parties to track, verify and agree upon transactions, even when the individual participants remain anonymous. But that’s just one of the uses of blockchain. Besides Blockchain itself a growing number of companies like Ethereum and Blockstack offer the same decentralized architecture to protect and authenticate all kinds of data. Microsoft, Walmart and JPMorgan are already starting to deploy their own private blockchain networks in which only partners, suppliers or customers allowed to participate while delivering thousands of transactions per second.
Experts predict blockchain-based technology will soon revolutionize the health care industry as well as the financial industry, by protecting patients’ and clients’ records through a constantly updated but decentralized accounting system. Blockchain is being touted as the solution to the Pentagon’s vast logistics challenges—and in December, President Trump signed a bill calling for the rest of the federal government to look into the potential benefits of blockchain.
In his new book, Life After Google, George Gilder goes even further. As blockchain technology proliferates and replaces older clumsier centralized systems for sharing and securing data, he predicts the result will be what he calls the Great Unbundling, as information and transactions on the Internet become reconnected without Google and other middlemen, “radically lowering transaction costs, turning [independent] firms into networks, distributing economic power, and enabling both wealth creation and a more prosperous future.”
Gilder may well be right. Before we get too excited, however, it’s important to note there’s a cloud looming on the blockchain horizon. It’s called quantum technology.
As we’ve noted in this space many times, tomorrow’s quantum computers will be more far powerful than today’s digital classical computers. Quantum technology will be poised to decrypt the complex algorithms that asymmetric encryption systems use to secure almost all electronic data, including blockchain.
Because in the end blockchain technology still uses the same cryptographic building blocks that are at risk to quantum computer assault. More specifically, blockchains rely on ECC – Elliptic Curve Cryptography – for authentication which can be broken by future quantum computers. So instead of the answer to all our cybersecurity vulnerabilities, blockchains could become just as vulnerable as web browsers, VPN’s, and other systems.
Fortunately, the problem—quantum technology–is also the solution. Banks, governments, and private cloud carriers are already employing quantum random-number generators (QRNG’s) that protect point-to-point communications as efficiently as a spy’s one-time pad.
Even more important is developing and deploying quantum-resistant algorithms that can bolster blockchain’s encryption defenses. Just as asymmetric encryption uses difficult math problems to stump classical computers, quantum-resistant algorithms will use still more difficult math problems to stump a quantum computer. Today the National Institute of Standards and Technology is looking to set the national standard for these next-generation algorithms. Many private companies are already developing those algorithms: and some are even taking up the challenge of making quantum-resistant blockchain technology.
U.K.-based Quantum Resistant Ledger, for example, is experimenting with ways to create a quantum resistant cryptocurrency, with the “understanding that popular existing cryptographic signature schemes (such as ECDSA [i.e. a variant of ECC]) in the cryptocurrency space are vulnerable to a sufficiently powerful quantum computer…” Another British company, Ubiquicoin, has announced its goal to “become the first blockchain resistant to quantum computing cyberattacks.”
Ultimately adding actual quantum keys to blockchain software, and all encrypted data, will provide the next layer of security against both classical computers and a quantum computers. But even quantum keys are not the silver bullet for ending all future cyber threats, any more than blockchain—and retrofitting a classically-based blockchain to make it quantum-resistant will take tremendous time and money. Governments and companies need to start realizing now, that no one wants a blockchain-based product that will be vulnerable to attack tomorrow, no matter how safe it may appear today.