Microsoft goes Blockchain; with a new Plugin for Office 10, it is possible to store a hash of documents on the blockchains of Bitcoin and Ethereum Classic. With this, you can prove the authenticity of any document - without a notary or a lawyer. Did Microsoft just unleash the first non-monetary blockchain killer app?
E-mails and nearly all kinds of digital documents can be a problem for judges and courts. How do you know that a document has not been forged? How can you detect this - and how can you prove without a doubt that a digital document is authentic?
In real life, you just print out a document and stamp or sign the physical paper. A counterfeit of the document requires the destruction and forge of the stamp or the signature. In the digital realm, you usually use signatures or hashes, which proves cryptographically that an e-mail or a file has not been changed. The problem is, you need the hash in the first place to verify the document. And how do you know the hash has not been forged?
Here is where Microsoft’s new blockchain plugin for Office 10 steps in; with it, you can store the hash of any Office document on a blockchain.
To understand the small and fine, but important difference the plugin makes, you should know something about digital security by hashing files and documents. For example, if you download the Bitcoin software, it is recommended that you hash the file for yourself and compare the result with a public hash. “Hashing” means a cryptographic operation which is also named “one-way function” because it takes an input (a file, a document, a word) and transforms it into a deterministic output. You can repeat this operation as often as you want, and the output will always be the same. But it is not possible to go the other way round and transform the output into the input.
To use a little, extremely simplified example; take the date 08-13-2001. If you sum up the numbers individually, you have 15. This will always be the result. But it is nearly impossible to get August 13, 2001, from the number 15. In reality, hash algorithms are much more complicated and very elegant. But the problem, Microsoft solves, is the same; if you have a hash, you can detect if some information has not been changed. But how do you know if the hash itself has not been changed? Since everything in the whole worldwide web can be changed and edited and deleted, you will never know for sure, if a file or a document is unchanged, since you can never know, if a hash is authentic.
Except, you do it like Microsoft and use a blockchain.
Because Blockchains Cannot Lie
With the new plugin for Microsoft Office enables the user to stamp legally important documents, like protocols or contracts. The proof - the hash - is not stored in public databases, like those provided by governments or notaries, but in a public blockchain. The advantage is not just that you do not need to trust centralized entities like companies or governments - but also that everybody has access to the blockchain and thus to the proof that your document is unaltered.
To do so, Microsoft uses the publicly available API of blockchain startup Stampery. More precisely, the add-on for Outlook creates a hash of something like an e-mail, sends the hash to a Microsoft Azure server, and this server give the hash to the server of Stampery, where it is put in the blockchain of both Bitcoin and Ethereum Classic. The user meanwhile keeps a copy of the hash and likely receives an ID of the transactions.
With the new plugin, Office does not only stamp documents but also verifies the hash of other documents. For this, it probably reads the hash and the ID of the corresponding transaction. Bitcoin does make not only the user his own bank but also his own notary. Everybody can use the most important power of the blockchain for his business - that it is just not able to lie. What has been once in the blockchain, will be forever there.
But let us have a small look at the details.
OP_RETURN and SHA 256
The privacy of users is not reduced by the Stampery-plugin for Office. To understand why you need to remember that a hash is a one-way function. If done right, there is no way to reconstruct the document with the hash. Let us take a simple example and use hashgenerator.de to hash this block with the algorithm used by Stampery, SHA 256. The result is:
With the help of this hash, you can verify if this block has been changed. Stampery takes such a hash and stores it with the help of the command OP_RETURN on the Bitcoin blockchain. At least this is how it should be done, as the alternative bloats the blockchain. The disadvantage is that messages stored with OP_RETURN can be pruned from the public blockchain, which is why you have no guarantee that the hashes are here forever.
To increase security Stampery stores the hashes in a second blockchain; Ethereum Classic. Ethereum as itself is a good option for such applications, as the flexible smart contracts system makes it easy to add data to a transaction. But as Ethereum made an event on the blockchain invalid after the infamous DAO hack, the developers of Stampery decided to use the blockchain of Ethereum Classic. Ethereum Classic rejected to change the blockchain retrospectively and comes along with a strong commitment to blockchain immutability. Which is a good basis if you want to do something like Stampery does.
An open question is the fees. Since transactions both on Bitcoin as on Ethereum Classic cost miner fees, does the user have to pay or are they sponsored by Microsoft and Stampery? Unfortunately, the press release does not elaborate.
Does Office’s Plugin Help to Protect Bitcoin against Prohibition?
How can all this be assessed? Is this another one of these projects with which the dinosaurs of the old software industry want to prove that they are hip enough to do something “with Blockchain?” Or is this the big hit we are waiting for? Has Microsoft developed the first non-monetary blockchain killer app?
There are good reasons to answer this question with “yes.” After the blockchain made the user their own bank, with this simple plugin, it also makes the user their own notary. It could be an important step to modernize the legal system. What Germany tried with deMail, this plugin does simply - and it makes it independent of providers and on every system running with Windows 10. Which is big news.
But it is a tough bet that the blockchain of Bitcoin and Ethereum Classic have enough capacity to permanently store the hashes of all important emails in the world; this might be a challenge. But if it is successful, it could help to protect Bitcoin against prohibitions. The more important documents that are verified on the Bitcoin blockchain, the higher costs become to outlaw bitcoin, the cryptocurrency.