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U.S. Department of Defense Uncertain about Viability of Blockchains amid Soaring Hype

Reading Time: 4 minutes by on December 9, 2018 Blockchain, Commentary, News
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The U.S. Department of Defense is currently assessing the viability of blockchain technology for military-related applications, according to a recent report from C4ISRNET, a publication covering technological advancements in the defense sector. In a document published November 19, 2018, the Defense Advanced Research Projects Agency (DARPA) said that it was looking to understand the “Applications and Barriers” to distributed consensus protocols.

DARPA, a subdivision of the Department of Defense, has been instrumental in designing several military and non-military technologies over the past few decades. The modern internet, for example, was conceptualized as a DARPA project back in 1969. Named ARPANET, the project led to the development of key networking protocols, which continue to be used extensively today. The agency also contributed to other communication-related technologies such as speech recognition, touchscreens, and graphical user interfaces (GUI).

Now, the agency is interested in exploring blockchains as they have “dramatic implications for the security and resilience of critical data storage and computation tasks, including for the Department of Defense (DoD).”

Incentives without a Currency

As it stands, most distributed ledgers incentivize those securing the network with digital assets that have a tangible monetary value. Cryptocurrencies are a perfect example of this and have been the primary use case of blockchains for almost a decade. While enterprising developers and tech companies have developed applications that span various non-financial industries, including supply chains, entertainment, and insurance, most solutions come with their native currency.

DARPA, on the other hand, is looking for a way to encourage users to keep the network honest without monetizing the entire process through a currency or token. There are several logical reasons for DARPA’s aversion to monetary incentives, with the simplest one likely being human greed. Hacks and security breaches are extremely common in the cryptocurrency industry, with malicious actors exploiting any available vulnerability for self-gain.

In its Request for Information document, the agency reasoned, “Economic notions of security recognize that participants act with respect to notions of utility, and users who might otherwise act ‘maliciously’ nevertheless act within certain limited bounds intended to maximize their own utility (e.g., to derive the most currency through specific mining behaviors).”

Seeking Public Opinion

In other words, DARPA is looking for ways to create a blockchain protocol “without relying on any currency transfers, while also carefully analyzing the value of any service exchanged for incentivizing participation and/or certain behaviors within the cryptocurrency.”

Finally, the agency is looking to understand how centralization could affect a blockchain at various stages. This can range from code homogeneity, where wallets, miners, and other services share a similar codebase, to organizational centralization, where only a small group of individuals are capable of developing the protocol. Since decentralization is one of the key principles of blockchain technology, DARPA is looking to cover all possible attack vectors.

While DARPA is aware of the technology’s potential, the agency’s lack of understanding inhibits the immediate development of practical applications. “The concrete applications and security of these technologies for the DoD is unclear,” it concluded.

It is for this reason that DARPA is encouraging public input on the topic from all skilled sources, including individuals, businesses, academic institutions, and other government organizations. A workshop discussing these submissions is scheduled for February 2019.

Too Much Hype, Too Little Substance?

Notably, a recent research project showcased at the Monitoring, Evaluation, Research and Learning (MERL) Technology conference has hinted that DARPA may not be the only entity that is struggling to understand the complexities of blockchain technology. The researchers surveyed 43 startups working on distributed ledgers and could not find a single instance wherein project maintainers were willing to divulge technical details.

The authors in question were Christine Murphy, a researcher at Social Solutions International, and John Burg and Jean Paul Petraud, fellows at USAID. In a blog post titled, “Blockchain for International Development: Using a Learning Agenda to Address Knowledge Gaps,” they explained that the goal of the study was to assess the real-world implications of blockchain technology so far.

The researchers continued, “We documented 43 blockchain use-cases through internet searches, most of which were described with glowing claims like ‘operational costs [reduced] up to 90%,’ or with the assurance of “accurate and secure data capture and storage.” We found a proliferation of press releases, white papers, and persuasively written articles.” In each case, however, no evidence or documentation could be found backing these claims.

They ultimately concluded that the vast majority of the distributed ledger industry is shrouded in secrecy, with most firms simply not practicing the transparency they promoted. Many critics of the technology have long held similar viewpoints and are of the opinion that most applications are only alive because of marketing hype.

Hype Cycles

A Vice President at the global research firm Gartner, however, has taken a more moderate stance on the future of blockchain use cases. Speaking with Computerworld, Avivah Litan said that the researchers’ findings lacked balance and perseverance as they did not question the projects individually. She continued:

“Back in early 2018, we’d already said [99 percent] of enterprise projects are dead [ends]; [99 percent] don’t need the technology; they don’t get out of the lab. They’re a result of CEOs fear of missing out – the FOMO phenomenon. Having said all that, it’s a very valuable technology. People started trying to use it before it was ready for prime time. That’s true in the cryptocurrency world and in the enterprise blockchain world.”

Gartner uses a unique metric called the Gartner Hype Cycle to assess a technology’s current viability in the commercial space. More specifically, every new technology goes through five stages in its lifecycle with varying levels of expectations. According to Litan, blockchains have surpassed the “Peak of Inflated Expectations” where the masses expected the technology to magically improve efficiency overnight.

If anything, Litan believes that the entire blockchain ecosystem is going through a phase of disillusionment, where most impractical solutions are weeded out. The real, practical implementations of the technology have perhaps not been discovered yet.

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