Today a disruptive technology called blockchain is slowly changing the world we operate in. A wave of adoption of blockchain will soon reach the departments of Defense and Homeland Security, and the effects will have a greater impact on operations than the internet did in the 20th century.
In 1962, the Defense Advanced Research Projects Agency (DARPA) formed an information-processing techniques office that invested in and researched innovative technologies. That office’s first director, J. C. R. Licklider, envisioned a future where humans regularly interacted with machines. Mr. Licklider’s perspective on computers more than 50 years ago noted that these machines “were not just superfast calculating machines, but joyful machines: tools that will serve as new media of expression, inspirations to creativity, and gateways to a vast world of online information.”1
Federal agencies today have an opportunity to similarly support development of blockchain that inevitably will lead to advanced operational process improvements. In the near future, the Navy, Coast Guard, and Merchant Marine will use logistical systems built on blockchain technology.
Blockchain, Bitcoin, and Consensus Building
At its core, blockchain is a distributed digital ledger that is very difficult to alter. It is composed of a compilation of records (transactions) that are grouped together to form a historical chain of validated information. What differentiates blockchain from other ledger systems is how the information is stored. As New York Times technology writer Nathaniel Popper describes it, “Blockchain allows information to be stored and exchanged by a network of computers without any central authority.”2
A common example of such a central authority is a bank. If one person wants to send money electronically to another, a bank acts as a third-party intermediary. The bank validates the transaction to ensure availability of appropriate funds. It holds account information and documents transactions on ledgers typically stored on their own servers.
It uses each individual’s information to verify that neither party has spent that money, preventing what is known as double spending. Unlike with physical cash, interactions take place through the use of tools such as computers, phones, or automated teller machines (ATMs).
Blockchain disrupts this centralized process. Instead of a single entity (the bank) holding the power and information to validate a transaction, transactions are recorded by means of “chains” of data. The chains are processed and recorded by multiple parties who may have no association with the transaction.
Transaction validity is verified when the community’s network forms a “consensus.” One way for the computers to do this is called “proof of work.” Computers connected to a network can run the proof-of-work consensus protocol. (This can be anything from a small, local network to the entire internet.) This protocol runs in the background to solve the encrypted algorithms that contribute to network validity. Transactions are broadcasted to all users at once, collected by network participants, cryptographically worked on by processing units, broadcasted again, and finally accepted and added to the blockchain only if all transactions are valid.3 Bitcoin, a cryptocurrency, is the best-known example that uses the proof-of-work protocol.
The process occurs continually, with the longest chain of transactions being accepted by the network as the most valid. Bitcoin nodes participating in this constant validation scheme are known as “miners.” By solving encrypted problems, miners confirm transactions in a block as legitimate and are paid transaction fees (often in Bitcoin) for their work. This incentivized process of digital mining and the continual review of the most accurate transaction make blockchain transactions hardened against hackers. Individuals or organizations looking to undermine the system would need to revalidate and surpass the honest participants and perform an amount of work that may be unjustified by the possible benefits of supporting the system. (Sufficient computer processing power and electricity are expensive.)
All over the world entrepreneurs and organizations are discovering the new applications and benefits of blockchain’s distributed ledger system, and federal agencies are slowly following suit. A comprehensive list of federal blockchain programs currently being research by the federal government is monitored by the General Services Administration.4
Applications
Potential applications of blockchain across the military are wide ranging. One of the most promising would be to incorporate blockchain into radio-frequency identification (RFID) tags for supply-chain management. Blockchain has the potential to reduce or eliminate obsolete paper trails, ensure complete transparency over a network of users, and eliminate the potential for fraud, manipulation, and counterfeiting through consensus-verified digitized transactions.
A specific maritime application would affect the Coast Guard’s port state control mission. The Coast Guard has authority for oversight of foreign commercial vessels entering the United States. It trains and qualifies vessel inspectors to conduct port state control inspections, which are guided by International Maritime Organization maritime standards. Foreign vessels entering the United States typically include large ships transporting cars, containerships carrying thousands of metals containers, and various bulk and tank vessels carrying unpackaged cargo. A port state control inspector boards these vessels to verify paperwork and documents that attest to the vessel’s safety standards. In addition, the inspector checks items such as foreign crewmember licenses and endorsements to ensure the crew is qualified and trained appropriately.
By placing these documents on a blockchain-based distributed ledger, inspectors can quickly scan and verify documents by means of an RFID chip. Each time the chip is scanned, its information gets matched to and permanently stored on a blockchain ledger. This will substantiate these documents as the vessel moves from port to port and more network users validate that the vessel and its crew are in compliance with international regulations.
Verifying aids to navigation is another potential use. The waterways in and around the United States are filled with buoys and beacons of different sizes, shapes, colors, lights, and sounding signals (similar in concept to signs and traffic lights on roads). Maritime professionals use them to direct their vessels safely into ports and through congested waterways. They are especially useful in limited visibility conditions.
The aids are sometimes damaged or shifted by catastrophic weather events. This could be hazardous to a vessel that unknowingly follows an aid that has not been corrected. If a vessel could verify the actual locations of buoys for the network, that information could be instantaneously updated for all mariners securely by means of blockchain. This type of transaction between the vessel and the buoy could increase efficiency in opening ports after major events such as hurricanes and help reduce the time aids are out of service.
Blockchain Is Coming
The departments of Homeland Security and Defense have a once-in-a-lifetime opportunity to adopt and advance a disruptive technology that will have sweeping effects on maritime operations. The system it can create is sometimes called “trustless” because it backs up information across the network of users, ensuring redundancies, reducing vulnerabilities, and integrating the “trust” into the data, not third parties.
With information known to all network participants, blockchain provides unmatched transparency. As commercial organizations start to develop specific applications for distributed ledgers, federal organizations will begin to see the technology arrive. The blockchain revolution is coming, and—like the internet in the 20th century—blockchain will soon infiltrate and change the maritime industry forever.
1. Defense Advanced Research Projects Agency (DARPA), “Information Processing Techniques Office.”
2. Nathaniel Popper, “Tech Thinks It Has a Fix for the Problems It Created: Blockchain,” New York Times, 1 April 2018.
3. Satoshi Nakatomo, “Bitcoin: A Peer-to Peer Electronic Cash System,” bitcoing.org.
4. Blockchain Programs, General Services Administration.
Lieutenant Ramos has worked as a marine inspector at Coast Guard Sectors New York and San Francisco. Following his marine industry training, he was assigned as the inspections division chief at Marine Safety Unit Chicago and is now serving as the waterways management division chief.