Have you read any recent articles about Blockchain? Have you heard of distributed ledger technology? Did you know that well over $1 billion has already been invested in applications using blockchain or distributed ledger technology? Did you know that forecasters see this technology bleeding into portions of our security market – specifically for identity, authentication and compliance?
Blockchain is basically an online ledger that tracks transactions and confirms them. Think of a ledger like your checkbook or checking account – you record money going in as a deposit and record money going out as you pay for things. With blockchain or distributed ledgers, instead of you alone recording all transactions, every entity that had a role in a transaction records that event. So, it is a peer-to-peer distributed and decentralized ledger that maintains a continuously-growing list of records or transactions – called blocks. Each block contains a timestamp and a link to the previous block. The data in the block is encrypted and cannot be altered.
Blockchain’s distributed ledger system is used to keep track of online Bitcoin transactions. According to Zach Martin of secureidnews.com, in his article, Bitcoin and Blockchain for dummies, “Blockchain enables each user of the system to maintain their own copy of the ledger. It also keeps all copies of the ledger synchronized through a consensus algorithm. The invention of the blockchain for Bitcoin made it the first digital currency to solve the double spending problem – the electronic currency version of counterfeiting. In the real world, if you receive a $5 bill it is likely to be real, but online, that’s not necessarily the case.”
Blockchain is checked for every transaction. “Bitcoin’s trick is to register every single transaction on one public, tamper-proof ledger called the Blockchain, which is refreshed in such a way that the whole community in effect votes on the order in which transactions are added or, equivalently, the time when each coin is spent,” according to a report on http://coincenter.org. While someone can try to re-spend already used Bitcoins, if they don’t check out on the blockchain, the new transaction will not be recorded.
Blockchain and Security
With a better understanding of distributed ledger technology and at least one application (Bitcoin), the big question is how does this relate to the security market?
It is all about decentralization and trust. IBM’s video (https://www.youtube.com/watch?v=lD9KAnkZUjU&S) on how blockchain technology works uses the diamond industry to show how a decentralized system can create better security, greater accountability and transparency while lowering the spread of illegal or unethical diamonds being sold. Up until this technology, all transactions like this had to flow through various centralized and trusted sources like a bank or a government regulatory body. The beauty of this technology is that by recording and verifying every transaction into the blockchain or distributed ledger, and by every involved person or business having a copy of the encrypted chain, trust and Identity become a decentralized data source and the timeline of that process becomes much more efficient.
The applications now being developed using distributed ledger technology in the security industry are simply staggering. They include: PII (Personally Identifiable Information) protection; company and personal digital identity and authentication; anti-counterfeit protection for electronics, luxury items and pharmaceuticals; single-sign-on global “automated sign-offs”; malicious actor identification; verification software as a service; biometrically-controlled, multi-signature wallet applications and the list keeps growing.
If you search blockchain technology in any web browser, you will find pages upon pages of articles and websites extolling the virtues of the technology and how it could transform much of what we do today to authenticate and verify identity, security and secure transactions. It seems just a matter of time until distributed ledger technology will impact all of us and our industry.
Ric McCullough is vice president of sales and customer service for PSA Security Network. To request more information about PSA, visit www.securityinfowatch.com/10214742.
