IBM sees blockchain technology as an essential tool for business, government, and society, and as such, its development calls for government support, according to Jerry Cuomo, the company’s vice president of blockchain technologies. He believes the technology can transform commerce as well as interactions between individuals…
IBM sees blockchain technology as an essential tool for business, government, and society, and as such, its development calls for government support, according to Jerry Cuomo, the company’s vice president of blockchain technologies. He believes the technology can transform commerce as well as interactions between individuals and governments.
Cuomo presented his viewpoint, which he posted on an IBM blog, to the President’s Commission on Enhancing National Security at a hearing in New York City.
He noted financial technologies are increasingly digital, meaning that government and industry need to combine forces to make financial systems more efficient and secure.
Cuomo noted that 80 years ago, his company helped the U.S. government create the Social Security system which was the most complex financial system ever developed at the time.
However, for this to happen, the core blockchain technology has to develop further using an open source governance so that it can deploy on a bigger scale.
“We need to create a new social compact, where business, with input from government, architects the future of financial services,” he wrote. “We at IBM look forward to working with our partners in government, industry and academia to get this done.”
Government has a big role to play to improve competitiveness and national security. Cuomo called on the government to invest in research to accelerate progress. The National Institute of Standards and Technology can help to shape interoperability, security and privacy standards. Government agencies can serve as early blockchain application adopters.
The government can also certify participants’ identities in blockchain-based systems.
Blockchain technology gained prominence as the core technology underlying bitcoin, but unlike bitcoin, industries and government agencies are exploring blockchain in networks where participants are known to one another. Hence, the term, “permissioned blockchain.”
Each participant in a permissioned blockchain has an exact copy of the distributed ledger’s data. All participants of an interaction possess an up-to-date ledger reflecting the most recent transactions.
Cryptography and digital signatures prove identity and gate access to a shared ledger.
In supporting the development of a permissioned blockchain, IBM is a founding member of the HyperLedger Project, the Linux Foundation’s open source initiative. IBM is also helping to create the foundation of a business-ready architecture, focusing on auditability, privacy and confidentiality. The company has joined a consortium to develop industry-specific blockchain deployments.
IBM is already using the blockchain in its own operations.
Technology companies, government and industry can cooperate in four areas to improve blockchain technology and strengthen national security:
Proof of identity. The Social Security number, society’s mainstay for decades, is not certifiable and secure enough to support identity in the blockchain ecosystem. A new identity management system is needed.
India’s Unique Identification Authority has been issuing 12-digit identity numbers to its 1.2 billion residents. This system can provide guidance. In this system, an “Aadhaar” number links to demographic and biometric data that has use for tasks such as accessing government services and establishing a bank account.
Data provenance. For individuals and organizations to want to expose data through blockchain applications, the system has to automatically track all data changes for it to be fully trustworthy and auditable. The mechanism provides a fingerprint for the data, along with time stamps. Individuals, regulators and law enforcement officials can know that the data they see is timely and accurate.
Secure transaction processing. Details of a transaction should only be visible to the parties involved or granted permission. The system has to allow the entities monitoring the transactions to verify that contracts are getting fulfilled without revealing private information.
A multi-party computation is needed to provide this. Full homomorphic encryption is one of the most intriguing techniques in this area, making it possible to verify information without decrypting it. Decryption would leave the information vulnerable to tampering and theft. The technique remains several years from practical use, but it is coming.
Shared intelligence. Blockchain technology has the potential to address cybercrime and cyber terrorism. The technology is inherently more secure than other kinds of financial management systems and networks. It also can be used by multiple parties to share cyber-threat intelligence.
The fear of being exposed has made many financial service companies reluctant to share cyber attack information. With blockchain technology, they could share information secretly and in real time. By sharing such data, companies would be able to identify patterns and develop countermeasures.
The government should not try to control new financial systems. But it has an important role to play in assisting them to develop new systems.
Featured image from Shutterstock and LinkedIn.
Last modified: January 25, 2020 11:48 PM UTC