The United States Air Force has quietly been working on a Bitcoin payment gateway. Through an SBIR or Small Business Innovation Research grant to the Department of Defense, Utica New York based Critical Technologies Inc. has been working on a commercial product for the Air Force since applying for the grant back in 2012 (starting Fiscal Year 2013). Coincidentally, the Bitcoin Foundation began its grant proposal process in 2012 and also awarded its first grant in 2013.

SBIR further explains explains its grant program for small business conducting federal research and R&D on its website:

“{Grants are for} Federal Research/Research and Development that has the potential for commercialization. Through a competitive award process, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from commercialization. By including qualified small businesses in the nation’s research and development (R&D) arena, high-tech innovation is stimulated, and the United States gains entrepreneurial spirit as it meets its specific R&D needs.”

Critical Technologies was granted awards totaling $899,611 for Phase I [Mirror] (technical merit, feasibility, and commercial potential) and Phase II [Mirror] (commercial potential proposal) for “Remote Attestation and Distributed Trust in Networks (RADTiN).” Phase II began on August 5th, 2013 and will continue through August 4th, 2015 before the Air Force decides whether or not to pursue commercialization objectives of phase II. However, SBIR does not fund Phase III awards. Phase III could potentially involve a contract directly with the Air Force but that remains to be seen.

The proposal has a lot of jargon such as “$SWAP constraints” and acronyms such as IoTaP (Internet of Things and People), MANET (Mobile ad hoc network), DAA (Direct Anonymous Attestation) and DAM3ON (Distributed Attestation for Mobile, Multicast & Multiple Operator Networks) that left me a bit flummoxed.

However, it was not difficult to find the objective behind this project:

“The goal is secure and trusted transactions in a distributed Network Centric Operations environment.”

Network Centric Operations, also known as “Network-centric warfare” is a type of military war theory pioneered by the Department of Defense. The Air Force’s military networking gateway for network-centric warfare known as BACN or Battlefield Airborne Communications Node, recently finished 5,000 combat missions. “Essentially, the BACN system has the capability to enable a soldier on the ground to use a cell phone to text message jet fighter and bomber pilots operating in his area” explained John Keller in Military & Aerospace Electronics Magazine when the technology was first being deployed.

Image Credit: Bitcoin not Bombs

Getting back to the Air Force’s Bitcoin payment gateway, the award states that the project could enable a trusted gateway between bitcoin wallets and point of sales machines which would most likely include cash registers and vending machines:

“..the most unique commercialization opportunity is in the emerging digital currency/commerce marketplace. Using the team”s already existing reputation (as the enablers of the world”s first BitCoin/vending machine transaction) and relationships, the RADTiN/DAM3ON software will be demonstrated as a key enabling technology for the establishment of trust and the security of transactions between digital wallets and physical point-of-sale machines. The key to penetration in this emerging marketplace is to maximize automation (ease of operation), verified security of your smartphone and digital wallet, and trust in the sales machine, the protection of your data in motion (to the machine) and at rest (in the cloud). The ability to clearly attest to the security of your smartphone, your digital wallet, and your data before, during, and after the transaction will be of interest to the firms attempting to broaden this emerging economy. The demonstration of this technology will allow the team entry into these diverse marketplaces, and represent a unique potential commercialization opportunity for a DoD SBIR research effort.”

While Bitcoin is a trustless payment protocol, as layers are added to Bitcoin there is an increasing need for Bitcoin users to be able to trust the systems they are using. This technology appears to bridge this widening gap in trust.

No Stranger to Bitcoin

While I don’t think this means that combat troops will be beaming bitcoin to (and from) B52 bombers any time soon, there are some interesting connections between Bitcoin and the military industrial complex.

The Bitcoin Project at Bitcoin.org promotes that Bitcoin could potentially be used by the military by stating that “Bitcoin transactions are secured by military grade cryptography.” This is a reference to the SHA-256 hash algorithm. Moreover, the National Institute of Standards and Technology (NIST) issued a mandate which requires federal agencies to stop using SHA-1 certificates, effective January 1, 2014 (PDF). Department of Defense posted (PDF) its SHA-256 migration plans back in March 2011.

Further, the Critical Technologies grant states that:

“Warfighters need to be able to trust the systems on which their lives depend. Cases include an individual human trusting an individual computer, an individual computer trusting a server or network to which it is connecting, a server or network trusting an individual computer connecting to it, and (new here) one network trusting another with which it is inter-connecting.”

Stuart Card, PhD and Chief Scientist of Critical Technologies describes Critical in his LinkedIn profile:

“We develop and apply dual-use (military & commercial) technologies in the intersection of mobile wide area wireless, storage and sensor networking, ensuring high QoS, reliability and security of services despite resource constraints (think RAID, but across multiple communications, storage and sensor resource types). Lately we have begun work to bring the benefits of digital cash (e.g. Bitcoin) and true free markets to individuals and small organizations on the Internet.”

Mr. Card is no stranger to Bitcoin. On January 5th, 2012 Upstate Networks, Inc. (UNI) developer of BTCVend and DroidVend, released a proof of concept demonstration of the first-ever vending machine purchase using Bitcoins (with change returned in U.S. dollars).The video released on Youtube, shows Mr. Card purchasing a bag of popcorn using a QR code and a smartphone Bitcoin wallet.

The Military Industrial Complex

[youtuber youtube=’ http://www.youtube.com/watch?v=pDOcLros-w0′

While it is uncertain exactly how the Air Force would use a bitcoin payment gateway there is certainly a need for the military to have the ability to use any currency in the theater of war.

This Youtube video from Air Combat Command “Finance Unit Deploys to Iraq” explained how the Air Force Financial Management Detachment joined the Army by filling joint taskings. An article from Grand Forks Air Force Base from May 2011 further explains how the Air Force finance units were used to transfer currency in “Airman delivers cash, military pay services to Soldiers at austere locations.”

There is a really interesting U.S. Army Command and General Staff College Textbook, Text ST 63-1, Division and Corps Logistics (1997), supporting core logistics instruction in the Command and General Staff Officers Course which explains in the chapter “Sustaining Soldiers and their Systems” that “Currency is like another class of supply, a commodity required to execute the battle”:

“Finance units disburse currency (cash/money) to battlefield commanders. Currency is like another class of supply, a commodity required to execute the battle. This commodity can alleviate shortages and timing problems related to procuring various classes of supply and services within the AO. Because of this, finance units can be a significant force multiplier. Therefore, finance unit commanders must be prepared to meet the twin challenges of providing support and surviving on the battlefield.”

It also explains how the finance unit provides “banking and currency support”:

“…. Currency support includes supplying US currency, foreign currencies, US Treasury checks, foreign military scrip, military payment certificates, and in some operations, precious metals (gold, silver) to US forces and allies in the theater. Because of the US and allied forces’ operating requirements, limited banking support may be needed. Liaison with the HN banking industry is essential due to the dependence on foreign currency.”

As well as the responsibility to ”control currency in the battlefield”:

“Stringent controls are enforced on the amounts of US currency, military payment certificates, and foreign currencies available and used on the battlefield. This is necessary to reduce black market activities, to secure individual soldiers’ money, and to help control problems related to either US or HN currency inflation.”

US currency controls have in part been addressed by prepaid access cards (also known as stored value cards) called Eagle Cash Cards. Master Sgt. Debra Clayton, U.S. Central Command quoted Juan DeJesus, a Department of the Army Eagle Cash manager in Military.com article “Eagle Cash Helps Manage Money”:

“The Eagle Cash card is … helping the military save money because it is expensive to transport U.S. currency overseas and costs money to provide security for the currency while in flight.”

and further:

“Every time a servicemember spends U.S. dollars in the Middle East theater, it’s potentially helping fund terrorism because the U.S. dollar has stronger market value in this region.”

A Tangled Web We Weave

While some might be surprised to learn the government is investing in a “bitcoin startup” like Critical Technologies, the military has been involved with more controversial financial technology. Perhaps most memorable in recent times was the so called “terrorism futures market.” In 2001, DARPA began experimenting with “market-based concepts to intelligence.” This included DARPA’s FutureMAP (Future Markets Applied to Prediction) which used prediction markets to predict terrorist attacks. DARPA, otherwise known as Defense Advanced Research Projects Agency, commissions advanced research for the Department of Defense. Prediction markets should be familiar to those of you who follow bitcoin pundit Max Keiser who started one of the first, if not the first prediction market with HSX (Hollywood Stock Exchange) which he received patents for (including patents for virtual currencies).

The government’s use of currency in military operations was also exposed in Peter Joseph’s documentary Zeitgeist with the John Perkins “Confessions of an Economic Hitman” interview (extended video interview). If conspiracy theories are your thing, look no further than Reddit user nicolaosq’s controversial post in the r/conspiracy subreddit “Bitcoin was created by DARPA.”

Final Thoughts

While it is possible that the Air Force specifically wants a Bitcoin payment gateway with RADTiN, it is also possible what they are really after is a better way to feed Snickers bars (YouTube) to their servicemen. But in all seriousness, the grant and Critical Technologies seem to indicate that RADTiN is a dual use technology. That is to say, it is possible that its use as a Bitcoin payment gateway is incidental to its use with Network Centric Operations. While RADTiN can be used as a Bitcoin payment gateway, this within itself is not necessarily the reason why SBIR issued the grant.