DN - Defence Notes

Defence industry faces a blockchain revolution

1st November 2017 - 01:11 GMT | by Alice Budge in London

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A quiet revolution may be underway in the defence industry as some of the largest players are beginning to adopt blockchain technology.

Widely known for its potentially disruptive impact on the financial services sector, the technology is now being explored for its potential applications within the defence industry.

In February this year NATO contracted Guardtime, a blockchain service provider, to integrate the technology into its Locked Shield 17  cyber exercise and in April Lockheed Martin became the first large US defence contractor to adopt blockchain technology.

Currently being developed to improve efficiency and enhance the security of supply chains and networks, the digital ledger technology is increasingly being touted as the answer to challenges faced by ever more data-reliant and connected military establishments.

At its core the blockchain is a ledger that records all digital transactions on a distributed, decentralised network and has been widely adopted in the financial technology and manufacturing industries, among others.

While the scope and range of applications and the extent the technology will affect the defence industry remains unclear, what is evident is that blockchain will be at the heart of the future defence industry.

Mike Gault, CEO at Guardtime, explained to Shephard  that since the company began providing blockchain solutions to the Estonian government, it has received interest from defence companies worldwide for solutions that go well beyond cyber security.

‘For defence purposes there’s obviously the cyber security angle but blockchain is much bigger than that. We see it as an automated supply chain’, which includes the physical and information supply chain, he explained. 

The physical supply chain

Within physical supply chains blockchain could provide substantial efficiencies and cost savings through the automation of significant elements of bureaucracy and certification.

Adam Jason, head of business development at Coinsilium, explained to Shephard how blockchain can provide a solution to large scale military logistics challenges.

‘If you’ve got shipments going out to UK army bases across the world and you want to monitor which equipment is where you can use the blockchain by tagging the products and entering them to the database,’ he said.

This enables the instant monitoring and tracking of all products in the database around the world, as well as offering further efficiencies by enabling automated bookkeeping and budgeting to be carried out based on the values assigned to each product.

The information supply chain

‘The modern battlefield is all about the battle for knowledge,’ John Louth, senior research fellow and director for defence, industries and society at RUSI, told Shephard.

‘It is the battle for secure knowledge, the battle for applicable knowledge and the immediacy of that knowledge.’

In the modern battlespace, blockchain offers the ability to protect, verify, filter and control access to critical battlefield data, Louth explained.

‘There are reams and reams of data files and data sets transitioning around at any one time. Having technologies that are both secure and can have multiple incursions without having to be manually choreographed is extremely attractive.’

While the military is increasingly reliant on commercially provided satellite communications, integrating blockchain technology provides a means of instantly certifying information broadcast by satellite.

‘The ability to verify the integrity of satellite information all the way back to the satellite without having to trust the parties in between that are managing the information is a powerful value proposition for militaries,’ Gault explained.

‘It means you have certainty over the state of your network or supply chain for your information. Ultimately this is what blockchain means for military customers,’ he said. 

The regulation challenge 

Although there is little debate on whether or not the technology will be a fundamental part of all future contracts, the role governments will play in regulating and shaping the integration remains unclear.

‘Within the next five years you’ll see that any new infrastructure or new software development will automatically have blockchain integrated as a component to that,' Gault said.

However, Jason made clear that the industry is watching closely to see how governments will try to assert control over a technology that is inherently borderless and leaderless.

‘I think they’re going to have a bit of an existential crisis when they try to do it. It’s going to be interesting to see how it pans out,’ he said.

Regulating a decentralised, organic network which is often associated with anti-government movements and nefarious bitcoin activities is likely to be a significant challenge for governments.

Louth illustrated this, commenting that ‘any organism, real or virtual, that is adaptive is harder to control’.

‘The way we think of governance, of assurance, is probably going to have to change. Governments are slow moving beasts; they are unlikely to suddenly give up conventional notions of control.’

However, Guardtime has adopted its own proactive approach to address these concerns by actively engaging government regulators to have their blockchain solutions accredited. 

Gault claims this has placed the company further ahead of other blockchain service providers in the governmental and defence sectors. 

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