Tag: blockchain

Turtles – and chains of trust

There’s a story about turtles that I want to tell.

One of the things that confuses Brits is that many Americans[1] don’t know the difference between tortoises and turtles[2], whereas we (who have no species of either type which are native to our shores) seem to no have no problem differentiating them[3].  This is the week when Americans[1] like to bash us Brits over the little revolution they had a couple of centuries ago, so I don’t feel too bad about giving them a little hassle about this.

As it happens, there’s a story about turtles that I want to tell. It’s important to security folks, to the extent that you may hear a security person just say “turtles” to a colleague in criticism of a particular scheme, which will just elicit a nod of agreement: they don’t like it. There are multiple versions of this story[4]: here’s the one I tell:

A learned gentleman[5] is giving a public lecture.  He has talked about the main tenets of modern science, such as the atomic model, evolution and cosmology.  At the end of the lecture, an elderly lady comes up to him.

“Young man,” she says.

“Yes,” says he.

“That was a very interesting lecture,” she continues.

“I’m glad you enjoyed it,” he replies.

“You are, however, completely wrong.”

“Really?” he says, somewhat taken aback.

“Yes.  All that rubbish about the Earth hovering in space, circling the sun.  Everybody knows that the Earth sits on the back of a turtle.”

The lecturer, spotting a hole in her logic, replies, “But madam, what does the turtle sit on?”

The elderly lady looks at him with a look of disdain.  “What a ridiculous question!  It’s turtles all the way down, of course!”

The problem with the elderly lady’s assertion, of course, is one of infinite regression: there has to be something at the bottom. The reason that this is interesting to security folks is that they know that systems need to have a “bottom turtle” at some point.  If you are to trust a system, it needs to sit on something: this is typically called the “TCB”, or Trusted Compute Base, and, in most cases, needs to be rooted in hardware.  Even saying “rooted in hardware” is not enough: exactly what hardware you trust, and where, depends on a number of factors, including what you know about your hardware supply chain; what you feel about motherboards; what your security posture is; how realistic it is that State Actors might try to attack you; how deeply you want to delve into the hardware stack; and, ultimately, just how paranoid you are.

Principles for chains of trust

When you are building a system which you need to have some trust in, you will typically talk about the chain of trust, from the bottom up.  This idea of a chain of trust is very important, and very pervasive, within security.  It allows for some important principles:

  • there has to be a root of trust somewhere (the “bottom turtle”);
  • the chain is only as strong as its weakest link (and attackers will find it);
  • be explicit about each of the links in the chain;
  • realise that some of the links in the chain may change (e.g. if software is updated);
  • be aware that once you have lost trust in a chain, you need to rebuild it from at least the layer below the one in which you have lost trust;
  • simple chains (with no “joins” with other chains of trust) are much, much simpler to validate and monitor than more complex ones.

Software/hardware systems are not the only place in which you will encounter chains of trust: in fact, you come across them every time you make a TLS[6] connection to a web site (you know: that green padlock icon in the address bar).  In this case, there’s a chain (sometimes short, sometimes long) of certificates from a “root CA” (a trusted party that your browser knows about) down to the organisation (or department or sub-organisation) running the web site to which you’re connecting.  Assuming that each link in the chain trusts the next link to be who they say they are, the chain of signatures (turned into a certificate) can be checked, to give an indication, at least, that the site you’re visiting isn’t a spoof one by somebody pretending to be, for example, your bank.  In this case, the bottom turtle is the root CA[7], and its manifestation in the chain of trust is its root certificate.

And chains of trust aren’t restricted to the world of IT, either: supply chains care a lot about chains of trust.  Can you be sure that the diamond in the ring you bought from your local jewellery store, who got it from an artisan goldsmith, who got it from a national diamond chain, did not originally come from a “blood diamond” nation?  Can you be sure that the replacement part for your car, which you got from your local independent dealership, is an original part, and can the manufacturer be sure of the quality of the materials they used?  Blockchains are offering some interesting ways to help track these sorts of supply chains, and can even be applied to supply chains in software.

Chains of trust are everywhere we look.  Some are short, and some are long.  In most cases, there will be a need to employ transitive trust – I need to believe that whoever created my browser checked the root CA, just as you need to believe that your local dealership verified that the replacement part came from the right place – because the number of links that we can verify ourselves is typically low.  This may be due to a variety of factors, including time, expertise and visibility.  But the more we are aware of the fact that there is a chain of trust in any particular situation, the more we can make conscious decision about the amount of trust we should put in it, rather than making assumptions about the safety, security or validation of something we are buying or using.

1 – citizens of the US of A,

2 – have a look on a stock photography site like Pixabay if you don’t believe me.

3 – tortoises are land-based, turtles are aquatic, I believe.

4 – Wikipedia has a good article explaining both the concept and the story’s etymology.

5 – the genders of the protagonists are typically as I tell, which tells you a lot about the historical context, I’m afraid.

6 – this used to be “SSL”, but if you’re still using SSL, you’re in trouble: it’s got lots of holes in it!

7 – or is it?  You could argue that the HSM that (hopefully) houses the root CA, or the processes that protect it, could be considered the bottom turtle.  For the purposes of this discussion, however, the extent of the “system” is the certificate chain and its signers.

AI, blockchain and security – huh? Ahh!

There’s a place for the security community to be more involved AI and blockchain.

Next week, I’m flying to the US on Tuesday, heading back on Thursday evening, arriving back in Heathrow on Friday morning, and heading (hopefully after a shower) to Cyber Security & Cloud Expo Global to present a session and then, later in the afternoon, to participate in a panel.  One of the reasons that I’m bothering to post this here is that I have a feeling that I’m going to be quite tired by the end of Friday, and it’s probably a good idea to get at least a few thoughts in order for the panel session up front[1].  This is particularly the case as there’s some holiday happening between now and then, and if I’m lucky, I’ll be able to forget about everything work-related in the meantime.

The panel has an interesting title.  It’s “How artificial intelligence and blockchain are the battlegrounds for the next security wars“.  You could say that this is buzzwordy attempt to shoehorn security into a session about two unrelated topics, but the more I think about it, the more I’m glad that the organisers have put this together.  It seems to me that although AI and blockchain are huge topics, have their own conference circuits[2] and garner huge amounts of interest from the press, there’s a danger that people whose main job and professional focus is security won’t be the most engaged in this debate.  To turn that around a bit, what I mean is that although there are people within the AI and blockchain communities considering security, I think that there’s a place for people within the security community to be more involved in considering AI and blockchain.

AI and security

“What?” you may say.  “Have you not noticed all of the AI-enabled products being sold by vendors in the security community?”

To which I reply, “pfft.”

It would be rude[3] to suggest that none of those security products have any “Artificial Intelligence” actually anywhere near them.  However, it seems to me (and I’m not alone) that most of those products are actually employing much more basic algorithms which are more accurately portrayed as “Machine Learning”.  And that’s if we’re being generous.

More importantly, however, I think that what’s really important to discuss here is security in a world where AI (or, OK, ML) is the key element of a product or service, or in a world where AI/ML is a defining feature of how we live at least part of our world.  In other words, what’s the impact of security when we have self-driving cars, AI-led hiring practices and fewer medical professionals performing examinations and diagnoses?  What does “the next battleground” mean in this context?  Are we fighting to keep these systems from overstepping their mark, or fighting to stop malicious actors from compromising or suborning them to their ends?  I don’t know, and that’s part of why I’m looking forward to my involvement on the panel.

Blockchain and security

Blockchain is the other piece, of course, and there are lots of areas for us to consider here, too.  Three that spring to my mind are:

Whether you believe that blockchain(s) is(are) going to take over the world or not, it’s a vastly compelling topic, and I think it’s important for it to be discussed outside its “hype bubble” in the context of a security conference.

Conclusion

While I’m disappointed that I’m not going to be able to see some of the other interesting folks speaking at different times of the conference, I’m rather looking forward to the day that I will be there.  I’m also somewhat relieved to have been able to use this article to consider some of the points that I suspect – and hope! – will be brought up in the panel.  As always, I welcome comments and thoughts around areas that I might not have considered (or just missed out).  And last, I’d be very happy to meet you at the conference if you’re attending.

1 – I’ve already created the slides for the talk, I’m pleased to say.

2 – my, do they have their own conference circuits…

3 – not to mention possibly actionable.  And possibly even incorrect.

3 tests for NOT moving to blockchain 

How to tell when you can avoid the hype.

So, there’s this thing called “blockchain” which is quite popular…

You know that already, of course.  I keep wondering if we’ve hit “peak hype” for blockchain and related technologies yet, but so far there’s no sign of it.  As usual for this blog, when I’m talking about blockchain, I’m going to include DLTs – Distributed Ledger Technologies – which are, by some tight definitions of the term, not really blockchains at all.  I’m particularly interested, from a professional point of view, in permissioned blockchains.  You can read more about how that’s defined in my previous post Is blockchain a security topic? – the key point here is that I’m interested in business applications of blockchain beyond cryptocurrency[1].

And, if the hype is to be believed – and some of it probably should be[2] – then there is an almost infinite set of applications for blockchain.  That’s probably correct, but that doesn’t mean that they’re all good applications for blockchain.  Some, in fact, are likely to be very bad applications for blockchain.

The hype associated with blockchain, however, means that businesses are rushing to embrace this new technology[3] without really understanding what they’re doing.  The drivers towards this move are arguably three-fold:

  1. you can, if you try, make almost any application with multiple users which stores data into a blockchain-enable application;
  2. there are lots of conferences and “gurus” telling people that if they don’t embrace blockchain now, they’ll go out of business within six months[4];
  3. it’s not easy technology to understand fully, and lots of the proponents “on-the-ground” within organisations are techies.

I want to unpack that last statement before I get a hail of trolls flaming me[5].  I have nothing against techies – I’m one myself – but one of our characteristics tends to be enormous enthusiasm about new things (“shinies”) that we understand, but whose impact on the business we don’t always fully grok[6]. That’s not always a positive for business leaders.

The danger, then, is that the confluence of those three drivers may lead to businesses deciding to start moving to blockchain applications without fully understanding whether that’s a good idea.  I wrote in another previous post (Blockchain: should we all play?) about some tests that you can apply to decide whether a process is a good fit for blockchain and when it’s not.  They were useful, but the more I think about it, the more I’m convinced that we need some simple tests to tell us when we should definitely not move a process or an application to a blockchain.  I present my three tests.  If your answer any of these questions is “yes”, then you almost certainly don’t need a blockchain.

Test 1 – does it have a centralised controller or authority?

If the answer is “yes”, then you don’t need a blockchain.

If, for instance, you’re selling, I don’t know, futons, and you have a single ordering system, then you have single authority for deciding when to send out a futon.  You almost certainly don’t need to make this a blockchain.  If you are a purveyor of content that has to pass through a single editorial and publishing process, they you almost certainly don’t need to make this a blockchain.

The lesson is: blockchains really don’t make sense unless the tasks required in the process execution – and the trust associated with those tasks – is distributed between multiple entities.

Test 2 – could it work fine with a standard database?

If the answer to this question is “yes”, then you don’t need a blockchain.

This question and the previous one are somewhat intertwined, but don’t need to be.  There are applications where you have distributed processes, but need to store information centrally, or centralised authorities but distributed data, where one may be yes, but the other “no”.  But if this is question is a “yes”, then use a standard database.

Databases are good at what they do, they are cheaper in terms of design and operation than running a blockchain or distributed ledger, and we know how to make them work.  Blockchains are about letting everybody[8] see and hold data, but the overheads can be high, and the implications costly.

Test 3 – is adoption going to be costly, or annoying, to some stakeholders?

If the answer to this question is “yes”, then you don’t need a blockchain.

I’ve heard assertions that blockchains always benefit all users.  This is a patently false.  If you are creating an application for a process, and changing the way that your stakeholders interact with you and it, you need to consider whether that change is in their best interests.  It’s very easy to create and introduce an application, blockchain or not, which reduces business friction for the owner of the process, but increases it for other stakeholders.

If I make engine parts for the automotive industry, it may benefit me immensely to be able to track and manage the parts on a blockchain.  I may be able to see at a glance who’s supplied what, when, and the quality of the steel used in the ball-bearings.  On the other hand, if I’m a ball-bearing producer, and I have an established process which works for the forty companies to whom I sell ball-bearings, then adopting a new process for just one of them, with associated changes to my method of work, new systems and new storage and security requirements is unlikely to be in my best interests: it’s going to be both costly and annoying.

Conclusion

Tests are guidelines: they’re not fixed in stone.  One of these tests looks like a technical test (the database one), but is really as much about business roles and responsibilities as the other two.  All of them, hopefully, can be used as a counter-balance to the three drivers I mentioned.

 

1 – which, don’t get me wrong, is definitely interesting and a business application – it’s just not what I’m going to talk about in this post.

2 – the trick is knowing which bits.  Let me know if you work out how, OK?

3 – it’s actually quite a large set of technologies, to be honest.

4 – which is patently untrue, unless the word “they” refers there to the conferences and gurus, in which case it’s probably correct.

5 – which may happen anyway due to my egregious mixing of metaphors.

6 – there’s a word to love.  I’ve put it in to exhibit my techie credentials[7].

7 – and before you doubt them, yes, I’ve read the book, in both cut and uncut versions.

8 – within reason.

What’s a blockchain “smart contract”? 

The first thing to know about blockchain smart contracts is they’re not contracts, smart or necessarily on a blockchain.

The first thing to know about blockchain smart contracts is they’re not contracts, smart or necessarily on a blockchain.  They are, in fact, singularly ill-named*.  Let’s address these issues in reverse order, and we should find out exactly what a smart contract actually is along the way.  First, and introduction to what transactions are, and things which aren’t transactions.

An intro to transactions and non-transactions

The best known blockchains are crypto-currencies like bitcoin**.  The thing about currencies – virtual or not – is that what you mainly want to do is buy or sell things using them.  What you want is a simple transaction model: “once I provide you with this service, you’ll give me this amount of currency.”  We know how this works, because every time we buy something in a shop or online, that’s what happens: the starting state is that I have x amount, and the state after completion of the transaction is that I have x-y amount, and you have y amount****.  It’s the moving from one state to another that you care about before you complete the transaction.  Most crypto-currencies are set up to support this type of construct.

This is great, but some clever people realised that there are actually many different ways to do this.  Ethereum was where non-transactional constructs made it big time, and Solidity is the best known example.  Both, I’m pleased to say, are open source projects.  Why not have a more complex set of conditions that need to be met before I hand over whatever it is that I’m handing over?  And – here’s the clever bit – why not write those in code that can be executed by computers?  You might want the currency – or whatever – only to be released after a certain amount of time, or if a stock price keeps within a particular set of boundaries, or if a certain person continues to be prime minister*****, or if there’s no unexpected eclipse within the next five days******.  You could have complex dependencies, too: only complete if I write a new post three weeks in a row and nobody writes unpleasant comments about any of them*******.  Write this code, and if the conditions are met, then you move to the next state.

Not just for blockchains

Let’s start addressing those “not” statements.

Now, in a blockchain, the important thing is that once the state has changed, you then ensure that it’s recorded on the blockchain so that it’s public and nobody can change or challenge it.  But there are other uses for blockchain technology, as I explained in Is blockchain a security topic?  Permissionless systems, often referred to as DLTs, or “Distributed Ledger Technologies” are a great fit for non-transactional state models, largely because the sort of people who are interested in them are closed groups of organisations who want to have complex sets of conditions met before they move to the next state.  These aren’t, by the tightest definition, blockchains.  Banks and other financial institutions may be the most obvious examples where DLTs are gaining traction, but they are very useful in supply chain sectors, for instance, where you may have conditions around changing market rates, availability and shipping times or costs which may all play into the final price of the commodity or service being provided.

Not that smart

Smart contracts could, I suppose, be smart, but for me, that means complex and able to react to unexpected or unlikely situations.  I think that people call them “smart” because they’re embodied in code, not for the reasons I’ve suggested above.

That’s actually a very good thing, I think, because I don’t think we want them to mean what I was talking out.  Most of the usages that I’m aware of for “smart contracts” are where two or more organisations agree on a set of possible outcomes of a system based on a set of known and well-constrained conditions.  This is what contracts are generally about, and although I’m about to argue with that part of the nomenclature as well, in this context it’s fairly apposite.  What you want, generally, is not unexpected or unlikely situations and smart processing in an AI/ML type way, because if you do, then the parties involved are likely to get outcomes that at least one or more of them are surprised, and likely unhappy, about.  Simple – or at least easily defined – is a key behaviour that you’re going to want built into the system.  The Solidity project, for example, seems aware of at least some of these pitfalls, and suggests that people employing smart contracts employ formal verification, but as we’ll see below, that just scratches the surface of the problem.

Not contracts

Of course, there are some contracts – IRL contracts – that exist to manage complex and unexpected conditions.  And they exist within a clear legal jurisdiction.  The words and phrases that make them up are subject to specific and well-defined processes, with known sanctions and punishments where the conditions of the contract are not met or are broken.  There are often instances where these are challenged, but again, clear mechanisms exist for such challenges.

For now, “smart contracts” just don’t fit this description of a contract.  Just mapping legal contractual wording to computer code is a very complex process, and the types of errors to which processing of code is prone don’t have a good analogue within the justice system.  There’s the question, as well, of what jurisdiction is relevant.  This is usually described in the contract terms, but what if the processing of the “smart contract” takes place in a different jurisdiction to that of the parties involved, or even in an unknown jurisdiction. Should this matter?  Could this matter?  I don’t know, and I also don’t know what other types of issue are going to crawl out of the woodwork once people start relying on these constructs in legally-enforceable ways, but I doubt they’re going to be welcome.

We’re not helped, as well, by the fact that when IT people talk about software contracts, they’re talking about something completely different: it’s the advertised behaviour of a system in the context of known inputs and starting conditions.

What has this got to do with security?

Once a transaction – or “smart contract” has completed, and made its way onto the blockchain or distributed ledger, it is immutable, pretty much by definition.  But what about before then?  Well, simple transactions of the type described at the beginning of this post are atomic – they happen or they don’t, and they are “indivisible and irreducible” to use the jargon.  They are, for most purposes, instantaneous.

The same is not true for “smart contracts”.  They require processing, and therefore exist over time.  This means that while they are being processed, they are subject to all the sorts of attacks to which any system may be vulnerable.  The standard list is:

  • C = confidentiality.  The state of a “smart contract” may be subject to snooping, which may lead to asymmetric knowledge or leakage to non-approved parties.
  • I = integrity.  This is the nightmare case for many “smart contracts”.  If an entity – whether a party to the underlying contract or not – can change the internal state of the code executing the “smart contract” intentionally or unintentionally, then the outcomes of that “smart contract” will not be as expected, and any of the parties involved may have good cause to dispute the outcome.  What’s more, such a dispute may not even depend on proof of loss of integrity, but just on suspicion.  Proving run-time integrity – let alone mitigating when it is shown to have been lost – is extremely difficult within an execution context.
  • A = availability.  If one party sees that the conditions associated with a “smart contract” are turning out to be unfavourable to them, then they might try to affect the availability of any part of the system the makes up the “smart contract”, whether the processing of the code itself, the inputs to the system or the outputs from the system.  Any of these might have a significant impact on the real-life outcomes.

So what?

This post started with what may have seemed to be a pedantic attack on a naming convention.  As I think will probably be clear********, I’m not comfortable with the phrase “smart contract”, and that’s mainly because I think it has caused some people to think that these constructs are things that they’re not.  This, in turn, is likely to mean that people will use them in contexts where they’re not appropriate.

I also worry that because the use of words means that they bring baggage with them, this will lead to people not fully thinking through the impact of security on these constructs.  And I think that the impact can be very major.   So, if you’re looking into these constructs, please do so with your eyes open.  I’ve not talked much in this article about mitigations, but some exist: keep an eye on future posts for more.

 

*I like to think that the late, lamented authors Terry Pratchett and Douglas Adams would both appreciate smart contracts for exactly this reason.

**the first thing you’ll find many bitcoin commentators saying is “I wish I’d bought in early: I’d be a multi-millionaire by now.”***

***I wish I’d bought in early: I’d be a multi-millionaire by now.

****less taxes or house cut.  Sorry – that’s just the way the world works.

*****or doesn’t.

******I’m not expecting one.  I’d tell you, honest.

*******this is not an invitation.

********if it isn’t by now, either you’ve not read this carefully enough, or I’ve done a bad job of explaining.  Try reading it again, and if that doesn’t help, write a comment and I’ll try to explain better.

 

 

Blockchain: should we all play?

Don’t increase the technical complexity of a process just because you’ve got a cool technology that you could throw at it.

I’m attending Open Source Summit 2017* this week in L.A., and went to an interesting “fireside chat” on blockchain moderated by Brian Behlendforf of Hyperledger, with Jairo*** of Wipro and Siva Kannan of Gem.  It was a good discussion – fairly basic in terms of the technical side, and some discussion of identity in blockchain – but there was one particular part of the session that I found interesting and which I thought was worth some further thought.  As in my previous post on this topic, I’m going to conflate blockchain with Distributed Ledger Technologies (DLTs) for simplicity.

Siva presented three questions to ask when considering whether a process is a good candidate for moving to the blockchain.  There’s far too much bandwagon-jumping around blockchain: people assume that all processes should be blockchained.  I was therefore very pleased to see this come up as a topic.  I think it’s important to spend some time looking at when it makes sense to use blockchains, and when it’s not.  To paraphrase Siva’s points:

  1. is the process time-consuming?
  2. is the process multi-partite, made up of multiple steps?
  3. is there a trust problem within the process?

I liked these as a starting point, and I was glad that there was a good conversation around what a trust problem might mean.  I’m not quite sure it went far enough, but there was time pressure, and it wasn’t the main thrust of the conversation.  Let’s spend a time looking at why I think the points above are helpful as tests, and then I’m going to add another.

Is the process time-consuming?

The examples that were presented were two of the classic ones used when we’re talking about blockchain: inter-bank transfer reconciliation and healthcare payments.  In both cases, there are multiple parties involved, and the time it takes for completion seems completely insane for those of us used to automated processes: in the order of days.  This is largely because the processes are run by central authorities when, from the point of view of the process itself, the transactions are actually between specific parties, and don’t need to be executed by those authorities, as long as everybody trusts that the transactions have been performed fairly.  More about the trust part below.

Is the process multi-partite?

If the process is simple, and requires a single step or transaction, there’s very little point in applying blockchain technologies to it.  The general expectation for multi-partite processes is that they involve multiple parties, as well as multiple parts.  If there are only a few steps in a transaction, or very few parties involved, then there are probably easier technological solutions for it.  Don’t increase the technical complexity of a process just because you’ve got a cool technology that you can throw at it******.

Is there a trust problem within the process?

Above, I used the phrase “as long as everybody trusts that the transactions have been performed fairly”******.  There are three interesting words in this phrase*******: “everybody”, “trusts” and “fairly”.  I’m going to go through them one by one:

  • everybody: this might imply full transparency of all transactions to all actors in the system, but we don’t need to assume that – that’s part of the point of permissioned blockchains.  It may be that only the actors involved in the particular process can see the details, whereas all other actors are happy that they have been completed correctly.  In fact, we don’t even need to assume that the actors involved can see all the details: secure multi-party computation means that only restricted amounts of information need to be exposed********.
  • trusts: I’ve posted on the topic of trust before, and this usage is a little less tight than I’d usually like.  However, the main point is to ensure sufficient belief that the process meets expectations to be able to accept it.
  • fair: as anyone with children knows, this is a loaded word.  In this context, I mean “according to the rules agreed by the parties involved – which may include parties not included in the transaction, such as a regulatory body – and encoded into the process”.

This point about encoding rules into a process is a really, really major one, to which I intend to return at a later date, but for now let’s assume (somewhat naively, admittedly) that this is doable and risk-free.

One more rule: is there benefit to all the stakeholders?

This was a rule that I suggested, and which caused some discussion.  It seems to me that there are some processes where a move to a blockchain may benefit certain parties, but not others.  For example, the amount of additional work required by a small supplier of parts to a large automotive manufacturer might be such that there’s no obvious benefit to the supplier, however much benefit is manifestly applicable to the manufacturer.  At least one of the panellists was strongly of the view that there will always be benefit to all parties, but I’m not convinced that the impact of implementation will always outweight such benefit.

Conclusion: blockchain is cool, but…

… it’s not a perfect fit for every process.  Organisations – and collections of organisations – should always carefully consider how good a fit blockchain or DLT may be before jumping to a decision which may be more costly and less effective than they might expect from the hype.

*was “LinuxCon and ContainerCon”**.

**was “LinuxCon”.

***he has a surname, but I didn’t capture it in my notes****.

****yes, I write notes!

*****this is sometime referred to as the “hammer problem” (if all you’ve got is a hammer, then everything looks like a nail)

******actually, I didn’t: I missed out the second “as”, and so had to correct it in the first appearance of the phrase.

*******in the context of this post.  They’re all interesting in the own way, I know.

********this may sound like magic.  Given my grasp of the mathematics involved, I have to admit that it might as well be*********.

*********thank you Arthur C. Clarke.

Is blockchain a security topic?

… we need to understand how systems and the business work together …

Blockchains are big news at the moment.  There are conferences, start-ups, exhibitions, open source projects (in fact, pretty much all of the blockchain stuff going on out there is open source – look at Ethereum, zcash and bitcoin as examples) – all we need now are hipster-run blockchain-themed cafés*.  If you’re looking for an initial overview, you could do worse than the Wikipedia entry – that’s not the aim of this post.

Before we go much further, one useful thing to know about many blockchains projects is that they aren’t.  Blockchains, that is.  They are, more accurately, distributed ledgers****.  For now, however, let’s roll in blockchain and distributed ledger technologies and assume we’re talking about the same thing: it’ll make it easier for now, and in most cases, the difference is immaterial for our discussions.

I’m not planning to go into the basics here, but we should briefly talk about the main link with crypto and blockchains, and that’s the blocks themselves. In order to build a block, a set of transactions to put into a blockchain, and then to link it into the blockchain, cryptographic hashes are used.   This is the most obvious relationship that the various blockchains have with cryptography.

There’s another, equally important one, however, which is about identity*****.  Now, for many blockchain-based crypto-currencies, a major part of the point of using them at all is that identity isn’t, at one level, important.  There are many actors in a crypto-currency who may be passing each other vanishingly small or eye-wateringly big amounts of money, and they don’t need to know who each other is in order to make transactions.  To be more clear, the uniqueness of each actor absolutely is important – I want to be sure that I’m sending money to the entity who has just rendered me a service – but being able to tie that unique identity to a particular person IRL****** is not required.  To use the technical term, such a system is pseudonymous.  Now, if pseudonymity is a key part of the system, then protecting that property is likely to be important to its users.  Crypto-currencies do this with various degrees of success.  The lesson here is that you should do some serious reading and research if you’re planning to use a crypto-currency, and this property matters to you.

On the other hand, there are many blockchain/distributed ledger technologies where pseudonymity is not a required property, and may actually be unwanted.  These are the types of system in which I am most generally interested from a professional point of view.

In particular, I’m interested in permissioned blockchains.  Permissionless (or non-permissioned) blockchains are those where you don’t need permission from anyone in order to participate.  You can see why pseudonimity and permissionless blockchains can fit well today: most (all?) crypto-currencies are permissionless.  Permissioned blockchains are a different kettle of fish, however, and they’re the ones at which many businesses are looking at the moment.  In these cases, you know the people or entities who are going to be participating – or, if you don’t know now, you’ll want to check on them and their identity before they join your blockchain (or distributed ledger).  And here’s why blockchains are interesting in business********.  It’s not just that identity is interesting, though it is, because how you marry a particular entity to an identity and make sure that this binding is not spoofable over the lifetime of the system is difficult, difficult, lemon difficult******** – but there’s more to it than that.

What’s really interesting is that if you’re thinking about moving to a permissioned blockchain or distributed ledger with permissioned actors, then you’re going to have to spend some time thinking about trust.  You’re unlikely to be using a proof-of-work system for making blocks – there’s little point in a permissioned system – so who decides what comprises as “valid” block, that the rest of the system should agree on?  Well, you can rotate around some (or all) of the entities, or you can have a random choice, or you can elect a small number of über-trusted entities.  Combinations of these schemes may also work.  If these entities all exist within one trust domain, which you control, then fine, but what if they’re distributors, or customers, or partners, or other banks, or manufacturers, or semi-autonomous drones, or vehicles in a commercial fleet?  You really need to ensure that the trust relationships that you’re encoding into your implementation/deployment truly reflect the legal and IRL trust relationships that you have with the entities which are being represented in your system.

And the problem is that once you’ve deployed that system, it’s likely to be very difficult to backtrack, adjust or reset the trust relationships that you’ve designed in.  And if you don’t think about the questions I noted above about long-term bindings of identity, you’re going to be in some serious problems when, for instance:

  • an entity is spoofed;
  • an entity goes bankrupt;
  • an entity is acquired by another entity (buy-outs, acquisitions, mergers, etc.);
  • an entity moves into a different jurisdiction;
  • legislation or regulation changes.

These are all issues that are well catered for within existing legal frameworks (with the possible exception of the first), but which are more difficult to manage within the sorts of systems with which we are generally concerned in this blog.

Please don’t confuse the issues noted above with the questions around how to map legal agreements to the so-called “smart contracts” in blockchain/distributed ledger systems.  That’s another thorny (and, to be honest, not unconnected issue), but this one goes right to the heart of what a system is, and it’s the reason that people need to think very hard about what they’re really trying to achieve when they adopt our latest buzz-word technology.  Yet again, we need to understand how systems and the business work together, and be honest about the fit.

 

*if you come across one of these, please let me know.  Put a picture in a comment or something.**

**even better – start one yourself. Make sure I get an invitation to the opening***.

***and free everything.

****there have been onlines spats about this.  I’m not joining in.

*****there are others, but I’ll save those for another day.

******IRL == “In Real Life”.  I’m so old-skool.

*******for me.  If you’ve got this far into the article, I’m hoping there’s an evens chance that the same will go for you, too.

********I’ll leave this as an exercise for the reader.  Watch it, though, and the TV series on which it’s based.  Unless you don’t like swearing, in which case don’t watch either.