The soaring earnings and dramatic fall of Bitcoin late last to early this year has catapulted the very nascent technology of blockchain to the forefront of news media. It has been met with polarizing speculation from the public and various news outlets, but John Oliver’s Last Week Tonight — a comedy news show, articulated the topic quite well:
While the show touched lightly on Blockchain – the backbone technology of Bitcoin, a digital currency – as a technology, the show’s main example of blockchain was its use as a cryptocurrency. The reality is that blockchain technology has far reaching implications and is the key reason why companies across an array of industries are pouring into its research and development.
To dive a little deeper into blockchain, IBM’s Think Academy put together a three and a half minute video succinctly describing the technology’s main advantages:
- Transparent transactions
- Decentralized ledger
- Increased security
These three components, from a telecommunications/information technology standpoint, fundamentally harden the security of information systems in the following ways:
- Decentralized Ledger
As the IBM video points out, blockchain relies on a network of computers across the globe that contribute (or mine) “blocks” of information and attach it together in a sequential chain. Think of it kind of like the game of “snake” on an old-school Nokia phone (I really hope that doesn’t date me…) and the snake itself is comprised of the very same blocks of information linked together. Each block has an “index number”, which puts the blocks in order and when a new block is produced, it is added to the front of the chain. This is why the technology is called what it is – “block-chain” – or blockchain.What does this have to do with a ledger?
Along with an index number, each block has other pieces of information in it. It can have information that includes, for example, the timestamp, sales amount, and item of a transaction that took place when a block was created. Such a block becomes the equivalent to a digital receipt or invoice that, chained together, evolves into a digital ledger.
Why decentralize a ledger?
Each computer on the blockchain network keeps a local copy of the blockchain. As each block gets added to the chain, the same block gets added to every single chain across all computers in the blockchain network. With each computer on the blockchain network updated in real time, the blockchain network effectively becomes a super redundant chain of information that is nearly impossible to manipulate.
- Increased Security
Blockchain has a series of quality control mechanisms that keep it from becoming manipulated. One feature is that every block has a full history of every block that came before it. If, for example, transaction information were included in previous blocks, that history is also written in the latest block that’s added to the chain. If someone were to try to game the system by trying to produce a block that has different or conflicting historical data (or a different historical blockchain), that block is rejected as the majority of devices with matching blockchains would override that fallacious block. This feature, in conjunction with a handful of other security mechanisms and designs, makes the ledger, in a sense, immutable: “unchanging over time or unable to be changed.” This immutability ensures accuracy and trust of data that’s included in the blockchain.What makes this significant?
- Transparent Transactions
With an immutable and decentralized blockchain ledger, transactions, currency serial numbers, or any type of record the ledger contains can be considered trusted and accurate. Since anyone can confirm a blockchain history, the blockchain (if public, which most are) can be considered transparent. This transparency of the blockchain helps prevent censure, corruption, or fraud.
With these three features of blockchain, the IBM video concludes, “blockchain will do for business as the internet did for communication.” As catchy as the conclusion is, it falls considerably short on the potential of blockchain technology improving other industries and the public sector. A slew of use cases for blockchain technology have been proposed for the medical industry, census, and a whole slew of other sectors, but of interest is its potential for international relations and governance.
New Voting Systems
For the last decade and a half, attempts at introducing technology in the electoral process has been historically marred with skepticism and failure. With the magnum opus that is the Russia probe investigation, it is a tough sell to introduce new technology in the electoral process.
Blockchain’s capability as a decentralized ledger is not just limited to a sales or currency capacity. Ledgers can be kept for all kinds of things, including votes. For example, a block that is generated can include the unique index number of the block, the timestamp of its generation, the vote recording of a specific candidate, and an encrypted unique identifier of an eligible voter. With the immutability and decentralization of a blockchain voting ledger, the final result can be considered accurate and trusted with verification being able to occur in milliseconds.
A number of proposals and pilots have already been rolled out. In Sierra Leone, populous districts and cities have used a blockchain voting system to audit election results. The efficacy of blockchain’s use for transparent and fair elections is still pending study, but certainly the use case, application, and execution of a blockchain voting system is well under way.
International Agreements with Teeth
There is plenty of debate in the world of international relations on the efficacy of international agreements and/or sanctions, but one of its biggest criticisms is the lack of “teeth”. Whether it’s related to a climate accord or sanctions, there is a dearth in mechanisms that can actually impose the terms of an international agreement without the explicit and active participation of all governments in uniform agreement. However, an international banking (wire) mechanism that sits on a blockchain network might solve that problem.
Ethereum is a blockchain technology that is programmable. Unlike it’s cousin Bitcoin, Ethereum doesn’t keep a record of serial numbers, inventory information, or casual data. Ethereum’s blocks contain code known as “smart contracts” that execute a process if certain conditions are met. A bank wiring system on an Ethereum blockchain platform can provide the necessary components of a trusted international platform: decentralized, programmable to automate governance and enforcement, and transparent to prevent fraud at the digital layer.
For example, in the wake of the Russian ex-pat assassinations in London, the UK is flirting with a range of economic sanctions to leverage, but it is already agreed this is difficult to enforce. However, if Europe’s WMD agreements were to be codified into a hypothetical “Euro-zone blockchain banking network”, it could be possible that sanction conditions be programmed into the network and enforce its governance when requirements are met. In this case, the discovery of a nerve agent would automate the enforcement of economic sanctions on those determined to be involved in the assassination.
However, there should be no confusion that the blockchain is just a potential tool of enforcement. Its “teeth” are only as strong as what is coded into it. That is determined at the treaty or bill negotiation table.
Bridge the Digital Gap of the Developing World
Rural areas in the developing world are notoriously “underbanked” where there are too few or no banking facilities. This missing basic necessity effectively shuts out these communities from participating in the world economy. Underbanking exacerbates poverty by time lost due to travel for trade/transactions or the high cost of urban-to-rural middlemen.
Blockchain as a cryptocurrency, like Bitcoin, can provide direct-to-consumer interaction on the world stage. Mobile wallets – think of bank accounts attached to your smart phone – can provide a direct avenue of exchange to the most rural of communities with the use of a smart phone and a USB. Through cryptocurrency, rural communities can become more competitive in the world marketplace.
Cryptocurrencies have also been proven to be in high demand in developing countries with volatile market places and currency. Countries like Venezuela, Greece, and Turkey have all seen a dramatic rise in the demand of cryptocurrencies like Bitcoin. The reason for the demand is that it is used to mitigate risk if a currency is experiencing hyperinflation. While cryptocurrencies are also known for their volatile value, it can often be less volatile than the currency of a local country experiencing financial crisis and more readily available than more stable currencies — especially for those in the rural communities.
…Cool Your Jets…
There are numerous other possibilities that blockchain technology can help improve or revolutionize international relations, but it is important to remember that the technology is very, very new. It is safe to say that the technology is here to stay, but how to use it is a completely different matter. There are too few experts, proven use cases, and general products for the technology to be whole sale adopted just yet. It is also an open debate which version or maturation of the technology will become wildly adopted.
All that being said, the serious considerations being brought by industries and the public sectors alike should give the international relations/affairs enthusiasts to take serious notice.