Jul 10 2019

How to Think About Blockchain Security in a Federal Setting

Establishing the distributed ledger system takes attention to detail, especially in a federal environment.

CIOs in and out of government are giving the go-ahead to innovative blockchain projects in a bid to explore the technology and its potential to improve operations and service delivery. But planning for a blockchain project is a little bit different than other IT jobs.

First, figure out whether the blockchain project is a public or a private one. If the project lets anyone join and participate, it’s known as a permissionless system and is a public blockchain project

Federal agencies are less likely to rely on this type of blockchain: while most public projects provide some kind of incentive (such as a share of the cryptocurrency) to join, the government cannot; and agencies would have less control over the project in general.

A private, or permissioned, blockchain — the kind most likely to be run in a federal setting — has a large network of decentralized systems run by stakeholders and other interested parties who maintain the centralized blockchain. (Cryptocurrencies are the best-known example.)

Private projects focus on the blockchain as a shared and distributed, write-once database. In these projects, adding to the database — which can’t be changed, only added to — is done only by a set of trusted and specifically authorized participants. These projects may stretch around the globe on nonsecure internet infrastructure, but only those who have permission to join the network can participate. 


Think of Blockchain as Just Another App

Private permissioned blockchain projects may not be the most interesting, in terms of pure innovation. From that perspective, they’re reinventing the wheels of distributed voting algorithms and specialized data structures that have been studied since the dawn of distributed operating systems in the 1970s. These algorithms and data structures are fundamental to the proper operation of every supercomputer, high-performance database and TCP/IP network today. 

But blockchain projects are interesting for other reasons; for instance, public record keeping projects, which might have fallen out of favor or gone nowhere with traditional methodology, might be adapted to blockchain, spurring renewed interest and funding

In these projects, the key component is the data structure — the blocks of transactions — being maintained on the blockchain. These chunks of data could be anything that needs to be shared but unchangeable, from public records of transactions to everyday procurement documents. Without this shared, distributed and persistent data structure, the other components of blockchain are irrelevant. 

Because blockchain is part of an application, and applications run on IT infrastructure, that means starting from something agencies know and understand very well: how to run and deploy applications on servers, whether in their own data center or out in the cloud


The number of contracts analyzed daily in an HHS blockchain pilot to find the lowest prices for common purchases

Source: federalnewsnetwork.com, “HHS blockchain-AI project gets the go-ahead to use live agency acquisition data,” Dec. 14, 2018

IT managers should treat the blockchain data structure exactly as they would treat any other valuable corporate data, by reducing the risks to confidentiality, integrity and accessibility

Blockchain application servers should look a lot like an agency’s other application servers: They should be built with normal configuration controls and tools, the kind used for every other sort of app; they should have the same access controls as other application or database servers; they should fit into the agency’s IT infrastructure for redundancy, backup and monitoring, as would any other system. In other words, blockchain applications should look like other applications and shouldn’t create a new set of rules for IT managers.

Because blockchain software and tools are relatively new, especially in private blockchain variants and as commercial offerings, pay close attention to the security of these systems. Look at authentication databases, log files and configuration tools in particular. If your data center is not already microsegmented, a new blockchain project is an excellent place to start because the protocols and data flows should be easy to understand and easy to limit.

MORE FROM FEDTECH: See how the FDA wants to use blockchain to improve food safety. 

Why It Is Difficult to Scale Up Blockchains 

Blockchains, because they’re so computationally intense, do not scale easily. By their nature, the common blockchain algorithms are very expensive to compute compared with off-the-shelf database products from Oracle or Microsoft. While a blockchain looks very much like a database, experience in scaling traditional databases does not transfer easily.

This means that you need to pay careful attention to the expected number and size of transactions, which will vary depending on the project. If the project will likely have thousands of transactions per month, that’s probably OK. If it will have thousands of transactions per hour, then you’re going to have a serious performance problem that could cause the project to fail; there’s no cost-effective way to write thousands of transactions per hour. 

Performance problems will either cause the project to fail or the blockchain to be used for only a subset of transactions or for a rollup, such as an hourly summary. Figure out which of these is correct, and plan accordingly.

Blockchain projects may look like something new to the project team and CIO, but to the IT manager, blockchain is just another application. If you pay close attention to performance and scalability — the main differences between blockchain and most other applications — then successful deployment and operations are right around the corner.

MORE FROM FEDTECH: Discover why feds should look to Bolzano, Italy, to learn about blockchain. 

How Content Time-Stamping Works in Blockchain

Public blockchain projects depend on a network of participants to maintain the blockchain. In many cases, these participants join the network because there’s some kind of incentive — bitcoin miners, for example, get paid. 

Yet some blockchain advocates have found ways to build on top of existing public blockchains — usually Bitcoin or Ethereum — and use that foundation as a way to store data at low costs for an extremely long time. These systems are known as content time-stamping services and are a way to prove that a specific document (marked with a specific content checksum or hash) existed at a specific point in time. 

The time-stamp service stores the hash of the document, as well as other information (such as the time the transaction occurred), as a transaction on one of the major cryptocurrency platforms, paying a small fee (less than a dollar) for the privilege of storing data on the blockchain forever. Blockchain advocates have proposed this service as a way to verify public records ranging from property deeds to election results.

Some agencies have dipped a toe into these services, including the Department of Health and Human Services, which recently gained authority to operate and pull live data for a tool called HHS Accelerate that uses blockchain and artificial intelligence to enhance procurement. 

IT managers diving into these types of projects will find that setting up the blockchain part is the least of their worries. Yes, there will have to be a link to the blockchain at some point, as well as a way to pay for the time-stamping service, but the major portion of the work will be developing the application that generates the hashes and time stamps to be sent to the blockchain.

Illustrations by wissanu99/Getty Images

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