Cryptography and cybersecurity are embedded in the fabric of blockchain technology. One of the main breakthroughs of blockchain tech is the way information is secured, authenticated, accessed, and transferred. This is different from the currently used systems that keep data stored in one place. Blockchain allows data to be distributed across multiple nodes and encrypted with cryptography. Even though cryptocurrency exchanges are vulnerable to attack, there are virtually no instances where a major blockchain has been hacked. That’s one of the reasons the rise of decentralized exchanges is essential for the security of digital assets which will later facilitate mainstream adoption of this new class of digital assets.

For more about decentralized exchanges, I refer you to “Are Decentralized Exchanges Critical for the Future of Digital Assets?” , and “On Fungibility, Liquidity, and the Importance of Decentralized Exchanges”. The uses and importance of blockchain is far more critical than the transfer and exchange of digital money (cryptocurrencies).

One of the critical areas blockchain is expected to significantly enhance is cybersecurity. Take for example the recent Facebook attack where 50 million user accounts were impacted by a security breach. This of course in addition to the previous vulnerabilities in Facebook privacy practices that allowed the exploitation of private user data that was used for political gains. As famously seen in the Cambridge Analytica scandal (for more about Facebook’s latest troubles, refer to “Facebook’s Latest Scandal Reveals Some Worrying Security Shortfalls”)

The China Chip Breach

No matter how much companies spend on cybersecurity, as long they keep data in centralized servers, hacks will continue, and cybercriminals will still find ways to exploit vulnerabilities in the centralized systems. The recent and largest supply chain attack that was conducted by China against the U.S is another example. A very tiny chip was used to infiltrate American companies such as Amazon and Apple.

The tiny chip was allegedly planted by Chinese operatives on motherboards of many servers across multiple companies. It was later found by a third party security company in Canada which was hired by Amazon that the chip is not much bigger than a grain of rice. The chip was nested on Elemental’s servers which is a company was acquired by Amazon. Elemental uses Micro Computer Inc. motherboards (which is known as Supermicro) to construct their servers. The servers that were breached by this tiny chip can also be found in the Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships. Elemental is just one of a numerous number of Supermicro customers.

The investigation, led by the U.S intelligence community, later revealed that the chips allowed the attackers to create a “hardware” backdoor. Also, the chips seem to have got inserted by Chinese operative at factories run by subcontractors in China. This attack is special in the sense it exploited the hardware which is different from the software-only attacks the world is used to. This by far is considered to be the most significant supply chain attack known to have carried out against American companies.

The implanted microchip manipulates the commands sent by the operating instructions which routes the data as it moves through the motherboard, this essentially achieves the goal of forcing the server to communicate with adversary computer(s). Additionally, it can manipulate the CPU commands to avoid authentication using the password the server requires to grant access. Encryption keys that may be used on other servers but stored on the breached server can be stolen by transferring the keys to the anonymous computer with which the chip allowed the server to communicate.

Stealing secrets and proprietary information from U.S companies, and governments has long-lasting and devastating effects. Essentially causing what is called a frog leap in the advancements of adversary technology. Stealing intellectual property costs the U.S hundreds of billions of dollars every year. The hacks usually occur through social engineering techniques on a certain person of interest by exploiting their personal information using social media, phishing attempts, blackmail or bribes.

Cyber attackers usually use similar methods and techniques. It all boils down to breaching a single point of failure in a company or organization’s cybersecurity protocol. One that, in a sense, can be described as a centralized server which contains sensitive information. Blockchain is a single failure tolerant technology, and if it can be facilitated correctly to protect sensitive information, it could pose a significant challenge to cybercriminals. Blockchain essentially distributes the information on multiple decentralized servers. In addition, the information is encrypted using cryptography, which in turn, is difficult to break. If one server is attacked the nature of the information it has, which is a part of a chain of decentralized nodes, will remain unknown and useless to the attacker.

The Case for Blockchain Tech in Cybersecurity

Blockchain technology can also facilitate secure access authentication especially for individuals with access to sensitive data. Take a simple example of how a digital asset class such as Bitcoin is being accessed using an offline hardware wallet. The bitcoin ownership key (private key) is created and stored offline in isolation. Private keys get used to prove and authenticate the ownership of the decentralized asset in the blockchain.

A similar approach can be used to deploy a decentralized SSL certificate in the blockchain and use a similar private key authentication mechanism to allow access to certain information in this way the SSL certificate is not vulnerable to a single point of failure (i.e. centralized servers). The authentication to the SSL certificate is stored offline which is isolated from the internet.

We are approaching a world where the connectivity of the internet and the amount of data transferred is becoming far more complex and critical than ever before, from machine learning technologies to the internet of things, big data, and artificial intelligence. All of these technologies will facilitate the ease of breaching and stealing sensitive and classified information if centralized servers remain the dominant method to store data. This could cause significant damage to the economy, and perhaps endanger national security. It’s more important than ever for companies and governments to start facilitating the use of blockchain to enhance cybersecurity and defend companies intellectual property and government sensitive and classified information.