May 11 • 17M

Dispatches from DC: How Blockchain can Revolutionize America’s Military, Why the FBI is one of the world’s largest Bitcoin holders and WTF is this Metaverse thing?

Hollie McKay
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“Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.”

—Leon Luow, Nobel Peace Prize nominee

Winding down a somewhat different path than the war and human rights conflict, I have been probing various aspects of this new, strange and emerging notion of Blockchain technology and the role it is – and can potentially – have in the way we fight wars, deal with a crisis on a global scale, interact as human beings and the future of its regulation and shift away from the centralized government system.

Whether we like the idea or not, Blockchain and its counterpart cryptocurrency are here to stay – and there is much we should all understand.

HOW BLOCKCHAIN CAN REVOLUTIONIZE AMERICA’S MILITARY AND NATIONAL SECURITY

No industry is more important than that of the U.S. military and national security apparatus in terms of staying ahead of the curve, and blockchain technology has the power to keep America at the forefront – if both public and private institutions are willing to embrace it.

Blockchain, the technology behind cryptocurrency, is projected to soon surpass the internet in terms of importance and potency. In layman’s terms, blockchain is a collaborative, distributed, meddle-resistant database that every individual or entity on the network can share, but no single individual or entity can dominate.

Thus, blockchain enables a radical transformation in how data is managed and protected, while allowing it to function in a highly challenging, complex climate. It is impossible to alter, tamper with, or erase once the information has been entered on the encrypted chain. 

First and foremost, blockchain can make the movement of equipment and information much more effective and practical for military masterminds. The software can trace an item from its place of origin through distribution, wholesale, retailer and eventual deployment, ensuring nothing is lost or damaged no matter how many hands it has passed through.

Because of this, perhaps the most glaring leverage of blockchain is the ability to enable unprecedented trust. 

Researchers are subsequently testing the effectiveness of tracking and tracing asset genesis and flow using a “data provenance” technique that would verify data even when connectivity is limited. The information can range from GPS locations to messages, and could potentially expedite emergency help to a specific location, whether a medic or backup force is needed in the middle of a crisis.

If a location or other vital piece of data needs to be changed, the data on the blockchain could rapidly reflect this – giving warfighters and commanders a verifiable, analytic way to confirm the information disseminated. It is virtually impossible for any adversary to alter the information.

Further, the military and intelligence community’s ability to triumph in an increasingly hostile environment hinges on its ability to safeguard cyber-enabled systems, preventing outside intrusions as well as manipulation by malicious parties. Current models of defense will likely become obsolete in twenty years, or even two years from now.

With blockchain technology, data is safeguarded by continuously searching for vulnerabilities and instantly detecting any modifications. The application is not only capable of preventing cyberattacks by fortifying crucial weapons systems, but it can also reject automated swarm schemes. It can also certify orders and handle or harden logistics and supply chains.

This is particularly beneficial to government contractors, as more competence results in significant savings and a stronger bond between the public and private sectors. While weapons platforms and systems have become increasingly sophisticated, supply chains have not kept up, as exemplified by the drastic computer chip shortages of recent months.

Instead of relying on traditional methods, blockchain technology could consolidate the process from raw materials to finished products to retired resources by incorporating everything from reliable device tracking and untampered security to ease of access to trusted information, and the registration and verification of financial exchanges, employee certifications, repairs, and maintenance procedures.

A single minute component of an ordered system, from circuit boards and software components to serial numbers and integrators, could be cataloged on the blockchain, allowing for permanent records to be sent between owners and the easy detection of even the smallest change to the supply. Ultimately, this results in substantial advantages in terms of time, expense, and performance.

A hacker attempting to alter data without authorization is immediately visible to all participants on the chain, making it more secure than traditional data-keeping. Additionally, each person on the sequence knows how the product and part will be shipped, tracked, distributed, and maintained. As it stands, the U.S. government and its private partners aren’t making full use of their goods, which is costing them serious money and putting unnecessary strain on the military and security infrastructure.

As per an assessment by multinational professional services firm Price Waterhouse Coopers (PwC), blockchain could increase industry revenue by up to 4% annually, or US$40bn, while cutting maintenance, repair and overhaul costs by about 5%, or US$3.5bn.

“The technology holds just as much promise in applications for defense manufacturing and operations,” the 2020 analysis continues. “In fact, the complexity of U.S. defense contracting and operations, and the massive size of defense budgets, suggests that the financial gains could be even greater — not to mention the potential increase in national security it can bring.”

Using blockchains, users can also implement smart contracts – pre-existing conditions that automate a particular process. As an example, companies could automate accounts payable using blockchain-enabled smart contracts. When a company orders a product, everyone on the chain is informed at each step: when the order is placed, shipped, delivered, and accepted. The blockchain could then issue a payment, which would again be communicated to all relevant parties at each stage of the encrypted transaction.

“Everyone has access to the same permissioned information, and they can trust that the information is current and correct. In that way, the technology can address a range of manufacturing pain points, including by helping manufacturers detect counterfeits, increasing visibility throughout the supplier network (all tiers) and proactively identifying parts shortages to reduce manufacturing problems, inefficiencies and unnecessary costs,” the report continues. “Blockchain can even track the name and certification level of the technician performing a specific repair.”

Besides enhancing data confidence and availability, blockchain can also improve data management. In the U.S., different agencies can use the technology to make sure it is attainable across the various components of government. Blockchain technology could also make it easier and more attractive for agencies to share information readily.

There are also many uses for blockchain in the battlefield. The troops can expect encrypted, tamper-proof connectivity with air and drone strike controllers thousands of miles away, avoiding any potential repercussions of compromised systems. Blockchain’s decentralized nature also makes information and assets less vulnerable to centralized breaches or fraudulent orders. Those downrange are thus assured that the items they receive meet the necessary standards and have not been manipulated or spied on.

However, if the U.S. government continues to turn something of a blind eye to emerging technology, our security interests will be jeopardized.

Most Bitcoin mining is currently being done in countries hostile to the United States, with considerable attention being paid to military efficacy. According to CNBC, most mining occurs in China, followed by Russia, Kazakhstan, Malaysia, then Iran.

CLICK TO READ MORE ABOUT BLOCKCHAIN AND NATIONAL SECURITY

WHY THE U.S GOVERNMENT IS THE WORLD’S BIGGEST BITCOIN HOLDER

At first glance it may seem counterintuitive that the federal government and unregulated, encrypted currencies are likely to be close partners. However, the Fed is considered one of the world’s biggest, if not the biggest holders of the original cryptocurrency, Bitcoin.

Here’s why.

First reported in 2013, the FBI controlled more than 144,000 bitcoins, valued at $100 million. Another FBI-linked address revealed another 30,000 bitcoins, bringing the total to around $120 million.

This was largely due to the FBI shutting down the illicit Silk Road online drug market in the early spring of that year, and the subsequent seizure of the digital currency owned by its operator Ross Ulbricht, a 30-year-old Texas man.

Nevertheless, it wasn’t until late 2020 that the FBI’s seizure was revealed to be larger than previously estimated. An anonymous entity drained a digital wallet to the tune of $1 billion in bitcoin, later revealed to have been the U.S. government.

A press release from the Department of Justice claimed to have recovered upwards of 70,000 coins with the aid of a hacker termed “Individual X” as part of a civil forfeiture case aimed at the Silk Road marketplace. The court documents indicate that Ulbricht, who is currently serving more than a double life sentence over narcotics conspiracy charges, threatened “Individual X” to return the crypto, but the hacker refused.

This individual later cooperated with the FBI and turned over the bitcoins, leaving their digital wallet with over a billion dollars in bitcoin.

But this is not the first time the FBI has been able to bolster its bitcoin balance.

An additional $2.3 million in cryptocurrency was seized by U.S. authorities last year, believed to be connected to a string of ransomware attacks perpetrated by a Russian national in St. Petersburg. In recently released court documents, it was revealed that the individual charged in the case, Aleksandr Sikerin, was formerly connected to a notorious ransomware group called REvil that has caused tens of gmillions of dollars in damages to American companies.

U.S. law enforcement announced that it had captured over $6 million from another suspected Russian national and REvil worker a week before Sikerin’s wallet was captured. However, it was not specified if it was crypto that was confiscated.

And that is just the tip of the iceberg.

What has the U.S. government done with its confiscated digital currency that has continually made it one of the crypto chiefdoms?

CLICK TO READ MORE ABOUT THE USG AND CRYPTO

WHAT EXACTLY IS THE METAVERSE?

Behold the “metaverse” – a label that seems to be everywhere, but almost everyone struggles to define.

Facebook famously changed its parent company name to Meta last October. Less than three months later, computing giant Microsoft forked out $68.7 billion to acquire game developer Activision Blizzard. From Apple to Google to the big wigs on Wall Street, other significant names are all dabbling with the technology and investment future.

So, what exactly is this metaverse thing?

Experts dub it the next giant leap in computing – like how computers went from these flat, slow mainframes to personal devices, then into your handheld device and now… metaverse. Think of an immersive, 3D variant of both computing and the world wide web rather than a specific style or type of technology. It’s the next wave following the text-based communications we first had way back when the internet became a thing – namely, email and pretty vanilla messaging systems like AOL and MSN chat. Over time, more and more media became mainstream, such as pictures, uploaded videos, and eventually on to live streams. Now we need the next generation of communication. (Did you think tech would pause when the revolutionary smartphone came out?)

The metaverse is poised to become the place in your pocket that parallels your physical existence: a hyper-realistic virtual space where your avatar does cool stuff and is likely recorded on a blockchain so you cannot be wiped or canceled. Imagine an aesthetically abundant infinite arena where you can play sports, games, shop, go clubbing and travel the world with other people alongside you, should you so desire it. You choose. You drive and define your avatar life.

Much of this emerging, interconnected metaverse already has its roots in the virtual reality gaming arena, where users have donned headsets and motion-sensing controllers for years, connecting with avatars far and wide. Players clock victories and subsequently build up computerized currencies that enable lavish items for their online self (yup, kids now know how to identify a Louis Vuitton purse).

And now, with the advent of 5G, faster internet speeds and a growing number of users worldwide, it’s easier to imagine a fully-fledged, lifelike existence we can tap into at any time and place, forging fast friendships and experiencing a shade of life at another level.

Still a work in progress, the metaverse has interactive capabilities far beyond a video game. Conceptualize being able to host a dinner party with guests across the world, locking eyes with your best friend on the other side of the country to dance at a music festival, even getting married without all the enormous expenses of booze and dresses you won’t ever wear again, attend important business meetings without leaving your bed, and go shopping down Rodeo Drive without having to trek through Beverly Hills and L.A traffic. Fashion companies like NET-A-PORTER are already creating retail spaces inside Nintendo gaming platforms. Other big chains are preparing to sell products to wardrobe-savvy avatar workers ahead of your important presentations. The metaverse will also transform the way crimes are solved – picture a top forensic expert who can pop on a headset and comb up through a scene instantly, searching for clues and interviewing critical witnesses.

For many, it seems like a wayward and almost silly sci-fi concept – but what your avatar says, does and projects in the virtual space is ultimately poised to become an extension of you and will become something of a brand extension for individuals, e-commerce, companies, and conglomerates.

However, the advent of the new also introduces a gray area in crime and digital privacy. It will eventually likely spawn a fresh bevy of laws and regulations. For example, Facebook came under criticism earlier this year after a user filed a complaint that she was “virtually gang-raped in the metaverse.”

Moreover, this space brings with it a virtual economy with its own currencies independent of the standardized government regulators. The metaverse is ultimately set to expand the digital economy and, in due course, the world economy, particularly the blockchain technology that makes cryptocurrencies and NFTs viable.

CLICK TO READ MORE  

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