Getting On Board: NIST Talks Blockchain
It’s exciting to see NIST jumping into the blockchain fray since the U.S. – like other countries – clearly has to come to terms with the fact that cryptocurrency trading, ICOs, and more are here to stay, at least for the foreseeable future.
As we’ve seen in other countries, blockchain-based applications (cryptocurrencies or otherwise) have proven to be considered suspect in places such as South Korea and elsewhere. In this recently released document, the authors logically conclude that “To avoid missed opportunities and undesirable surprises, organizations should start investigating whether or not a blockchain can help them.”
- Beyond Financial Services: I disagree with the authors about pushing the notion that blockchain’s primary applications are only in the financial services sector. They do this in their concluding section when they write “Financial organizations are likely to be the businesses most impacted by blockchains.” In fact, because cryptocurrencies became so widely known before blockchain as a protocol was discussed, people continue to think that the only – or at least the main – applications of this technology are related to financial services. Nothing could be further from the truth, with blockchain increasingly becoming the basis of contracts (see the document’s reference to Hyperledger Burrow, for example), healthcare and manufacturing.
- Quantum Computing Implications: While this topic is typically only discussed among the deepest experts, it is outstanding to see this referenced in their NIST document. Specifically, it is important that the authors have highlighted the possible vulnerabilities and long-term impact the quantum computing-based cryptography would have on the key algorithms that currently underpin blockchain technology. Until this happens (or comes close), I’d doubt that most people will pay attention. When it does, the headlines will be screaming about it.
- Paradigm Shift: The authors do an excellent job of explaining the precise significance of blockchain’s impact on business operations. They discuss the implications surrounding data modifications when they write: “Organizations considering implementing blockchain technology need to understand important aspects of the technology. For example, what happens when an organization implements a blockchain system and then decides they need to make modifications to the data stored? …Organizations need to understand the extreme difficulty in changing anything that is already on the blockchain.” One can imagine a real-world example in which this poses problems for the uninitiated who decide to embark on a program without fully understanding the implications and issues at stake.
This document – while not perfect – does justice to explaining to both business and technical users the key implications, aspirations and issues at play regarding blockchain. It references some important projects and deserves to be read. As NIST’s blog entry announcing its publication states, “The roughly 60-page report might enlighten anyone who wants a picture of blockchain that is not skewed to any players’ interests” and in fact, it does just that. The public comment period should be interesting and is worth participating in if you care how U.S. regulation, policy and laws are (or are not) crafted around this technology.