Politics Analysis

Blockchain and its importance in the current cyber war

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As trust is fracturing between global powers, blockchain technology could result in setbacks for international trade (Image via Pixabay)

A digital infrastructure platform could be the next tool in cyber warfare as trust declines and tensions increase between global powers, writes Paul Budde.

WE RECENTLY TALKED about cyber warfare and cybersecurity. It is with some reluctance that I say this, but I think we need to view the current geopolitical affairs being conducted in a state of war. In this war, digital technologies are used as the new weapons. If we look at the billions of dollars invested by governments around the world in cyber warfare technologies, then that needs to be viewed in a similar way as investments in fighter planes, submarines and so on.

Most likely, these digital tools are going to be the most important weapons as very few countries will be willing to use conventional weapons (which now also includes nuclear warheads).

Who would have thought a decade ago that we would end up in this situation? It looks like that we are going back to a cold war of competing global powers: the USA, China and Russia. The most important ones are, of course, the first two as they have the knowledge, power and money to fight this war.

Russia also has the knowledge and power. But not the current military budget. And they are in the middle of nationalistic sentiments, perhaps building a new set of cyber warfare capabilities, which is another worry.

All of this is a very sad and unfortunate situation that will have grave consequences for the international community, at a time that international cooperation is urgently needed to address the various global calamities.

These cyber wars are already leading to a massive change in global developments. Many of these are shrouded in secrecy and most people will not be aware of it.

With this geopolitical war in place, we suddenly cannot rely on each other anymore. So much in our lives is based on trust and if that disappears, many of the current international structures are put under severe stress. The West is scrambling to unscramble the egg in relation to components used in critical infrastructure such as communication, digital equipment, military equipment, energy and medicines. They no longer trust components from the cyber war opponent. Furthermore, it becomes essential that authentication and provenance are critical in these relationships and the arrangements within them.

We suddenly realise that we need to know much more about all the components that are going into the various products and which parties are involved in often very complex global networks covering: mining the raw materials, producing components, assembling them, transporting them and selling them via equal complex trading networks.

I was reminded of this listening to an excellent presentation on Blockchain from Pete McCrystal.

Blockchain is the platform on which the original cryptocurrency (Bitcoin) was developed and is now also used in Distributed Ledger Technologies (DLT).

This refers to the technological infrastructure and protocols that allow access, validation and record updating in an immutable manner across a network that is spread across multiple entities or locations. It is, among other things, used in contracts, settlements and payments, supply chains, IoT, digital identification and healthcare.

While it would make total sense that these systems are used in international trade settings, it increasingly looks like that this technology tool is also becoming a part of cyberwarfare.

A few months ago, I painted a similar scenario for the developments in 6G mobile technology.

Blockchain and, for that matter, cryptocurrency highly rely on trust. Trust in the organisations involved in the chain of people and organisations involved and trust in institutions, international conventions, governments and their agencies. As mentioned above, that trust is fracturing between the three global players.

At the same time, there is also an urgent need for secure chains of transactions, contracts and authentication. The reality is that in relation to geopolitically sensitive products, services and arrangements, blockchains will now be mainly built between trusted partners along geopolitical lines and exclude others. This is a serious setback for international trade.

In China, we already see that they built their own blockchains and that organisations and governments trading with them will be increasingly forced to use Chinese systems and technologies. We are also seeing that there will be attachments to this “privilege”, such as, for example, adhering to their social (business) code. In Australia, we can see what happens if you do not adhere to such a code — you get boycotted and ostracised by China.

Over the last four decades, China has created a serious dependency on its trade and investments and, unlike Australia, many governments will simply not be able to stand up against the rules that China will put on these relationships.

The Western economies are not centrally led and it will be far more difficult for them to build up their own blockchains, however, this is a very important tool in the current geopolitical situation and serious work is underway to improve the relations between democratic countries. Because of its geographic position, Australia could play a key role in these rapidly changing new developments and geopolitical realignments.

Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.

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