The Blockchain Arms Race: America vs. China

A man holds a laptop computer as cyber code is projected on him in this illustration picture taken on May 13, 2017. Capitalizing on spying tools believed to have been developed by the U.S. National Security Agency, hackers staged a cyber assault with a self-spreading malware that has infected tens of thousands of computers in nearly 100 countries. REUTERS/Kacper Pempel/Illustration​

Disruptive blockchain technology is coming to a gray-zone war near you.

China outlawed Bitcoin in 2017, but now Chinese cyber security experts seem poised to use it for war. A 2018 article in the People’s Liberation Army (PLA) Daily highlights how the technology behind Bitcoin, “blockchain,” will have “military applications…[and] that the future of media war must rely on a specific network media to start.” More troubling though is that it was written specifically for the PLA as a call to action: “the media battle of wars will become an important form of future military struggles. If we do not take precautions in keeping with the pace of the times, we will be subject to control everywhere.” The PLA seems to recognize the importance of this emerging technological capability, but should China be allowed to control the future of information warfare?

Emerging blockchain technology will offer enumerable defensive and offensive tools for military and intelligence operations in the twenty-first century. Whomever masters and weaponizes blockchain first will determine their penultimate power and influence over others. What exactly is blockchain and what does this mean for gray-zone warfare against America and her allies?

Detractors may believe that it is preposterous that some unheard-of-Bitcoin technology (e.g. blockchain) will prove pivotal to the future of warfare. However, with blockchain weaponized and integrated into a specific national strategy, it has the potential to fundamentally alter relations between states, societies and citizens. If properly utilized as an instrument by the Chinese (and other adversaries), it can be used to undermine the United States and her allies by circumnavigating typical security measures that detect and defend against criminal and subversive activities.

The Fundamentals of Blockchain

The reason why Bitcoin—a digitally decentralized currency—is so successful is because of the nature of its underlying blockchain, which ensures the validity and accountability of transactions. Thus, a blockchain, also known as “distributed ledger technology,” is just a “record” that is stored across enumerable computers. It enables the ability to authenticate and provide payment with partial anonymity in a secure way, without the worry of suffering from some Western Union wire fraud or expensive fees. Unfortunately, such secure payment methods present the opportunity for funding covert operations in other countries. Beyond simple monetary transfers, there are also non-economic ways of utilizing this technology as the development of blockchain 2.0 matures, which will impact “every area of finance, economics, and money; hard assets, such as physical property; and intangible assets such as votes, ideas, reputation, intention, health data, information, etc.”

In 2016, three Chinese cyber experts published an article titled “Blockchain technology and its potential military value,” in the journal of National Defense Science & Technology. Their article highlighted the value of blockchain technology, noting the numerous security ramifications, especially in the realm of defensive and offensive cyber operations. In addition, as written in an article for the journal of China Management Informationization, blockchain supports “trustworthiness, reliability, openness, consensus mechanism and smart contract” in business transactions and other dealings where discrete payments are needed. This supporting function of blockchain, if properly manipulated into a cyber weapon by adversaries, could be used to “trick” systems into providing whatever information desired, or worse, manipulate data without being detected. Scholars in India are similarly concerned about blockchain supporting the conduct of military operations, recognizing that as governments and individuals develop quantum computing abilities, blockchain will make it easy to hack into highly secure networks.