Many know that the blockchain first rose to prominence as the technology behind the cryptocurrency Bitcoin. The 2008 Bitcoin whitepaper put forward a purely peer-to-peer electronic cash system that would allow online payments to be sent directly from one party to another without going through a financial institution. Since then, many different cryptocurrencies and various different blockchain protocols have emerged.
Despite the original intention behind its creation as a payment system, the blockchain, often described as a distributed ledger, is now being widely considered as a platform for distributed applications in different industries even beyond financial services.
The reason for this is that a blockchain is essentially a database shared across thousands of computers that is cryptographically secured. It is a natural evolutionary step from traditional centralized server networks to distributed computing. Every computer or device in a blockchain network receives an updated copy of the ledger, and any changes to the ledger are reflected in every copy in minutes or even seconds. Security is maintained cryptographically through keys, signatures and a consensus of validators.
Blockchain’s killer app
Although not all blockchain protocols are the same, the distributed cryptographic nature provides attractive strengths and characteristics that include hardened security, immutability, disintermediation, transparency, and powerful validation and authentication capabilities.
Indeed, blockchain capability as an authentication and validation engine is rapidly gaining attention as its “killer application” for both commercial and government sectors, mostly because of the prospects of creating secure digital identities for people. The process involves using the blockchain as another factor of security to create and verify the identity of users and enable management from the users’ side, providing them more control over their personal information and its accessibility.
Recently, Boloro Global Limited and BanQu jointly won the “Innovate for Refugees” award from MIT Enterprise Forum Pan Arab for a humanitarian payment system project allowing refugees to have a unique digital identity. In July, IBM and Crédit Mutuel Arkéa completed a pilot project to improve the bank’s ability to verify customer identity and enable compliance with Know Your Customer requirements. Microsoft revealed in May that it is working with blockchain tech firms Blockstack Labs and ConsenSys “on an open source, self-sovereign, blockchain-based identity system that allows people, products, apps, and services to interoperate across blockchains, cloud providers, and organizations.” Research firm Lets Talk Payments highlights 12 firms that are leveraging the blockchain to authenticate user identities, mostly for the purpose of payment or other financial transactions. But some of those companies, such as Guardtime, Blockverify, BlockAuth, Bitnation and Onename, have blockchain-based identification solutions that clearly go beyond FinTech.
It seems that even government agencies are interested in tapping blockchain technology for developing new solutions for identity management and privacy protections of citizens. The U.S. Department of Homeland Security in August awarded grants to four companies that will utilize distributed ledger technology for identity solutions. Among the grantees, Digital Bazaar is developing a linked data ledger format and architecture to demonstrate how to publish identity credentials. Respect Network is developing a decentralized registry and discovery service to integrate with the public blockchain. Narf Industries is working to achieve an identity management solution built on a permission-less blockchain that offers confidentiality with selective information disclosure, integrity, availability, non-DHS repudiation, provenance and pseudo-anonymity. Celerity Government Solutions is researching blockchain solutions to enable users to establish and maintain trusted identity transactions with public and private organizations.
The blockchain’s effectiveness at identity validation is not only being embraced for humans; creating identities on the blockchain for products and goods has already become a reality. There are a number of a startups developing solutions that seek to determine or ensure the provenance of products and goods. London-based self-described social enterprise Project Provenance seeks to use blockchain to enable “every physical product to come with a digital ‘passport’ that proves authenticity (Is this product what it claims to be?) and origin (Where does this product come from?), creating an auditable record of the journey behind all physical products.” San Francisco-based Chronicled is developing an open source platform that enables organisations or individuals to assign a secure digital identity to a physical object by embedding NFC or BLE chips and linking it to an Ethereum blockchain record. Bitse is a Shanghai-based blockchain-as-a-service (BaaS) company founded by former Alibaba, IBM, and Louis Vuitton employees, and is also combining NFC chips and the blockchain to fight counterfeiting. This month at Shanghai Fashion Week, Bitse partnered with fashion label Babyghost to test the tech startup’s Vechain platform.
Apparently, the same blockchain identity creation and authentication features might have made Isaac Asimov proud, as the blockchain is being used to create identities to all kinds of devices and machines. The ideas is that, from the factory floor, any device from a toaster to a flying drone will be given an identity “at birth”. The DHS presented an award to Austin-based Factom to advance security of Internet of Things (IoT) devices by creating a blockchain-based identity log that captures the device ID, its manufacturer, lists of available firmware updates, known security issues and granted authorities while adding the dimension of time for added security. Chronicled was also thinking about IoT devices when it launched its open registry on the Ethereum blockchain as NFC and BLE chips are important communication components of smartphones and other devices. The Californian firm recently demonstrated a drone prototype with a blockchain-registered BLE identity chip delivery pharmacy package to a homeowner
At Chain of Things, we see great potential for IoT systems in blockchain tech capabilities that include device identity protocols and reputation systems. With a device identity protocol, each device can have its own blockchain public key and sends encrypted challenge and response messages to other devices to ensure a device is in control of its identity. In addition, a device with an identity can develop a reputation or history that is tracked by a blockchain. This begins when a certification agency for devices audits the device and registers its identity on the blockchain from “birth”. As a blockchain is write forward and immutable, blockchain-born devices thus will have irreversible reputations and identities. We also examine the question of whether the environmental inputs that are unique to individual sensors, such as GPS, temperature, humidity, and more, be used in conjunction with IMEI & OEM firmware hashes to be additional factors for creating the ultimate in tamper-resistant unique device identification. Needless to say device reputation could also have interesting applications in machine-to-machine commerce and interaction. Overall, we strongly believe that device identity represents the foundation that will enable true device security and interoperability.