economy that’s pushing for more peer-to-peer and device-to-device commerce. As more people connect over peer-to-peer social networks and use online services, and as more so-called Internet of Things (IoT) devices such as smart thermostats and refrigerators and even cars join the network, ever more access points are created. Hackers use these points to find their way into the Internet’s ever-growing centralized data-stores and steal or otherwise mess with their contents.
The risks contained in these contradictory trends were brought home with the October 2016 attack on Dyn, a registered DNS (domain name system) provider. The attack started when a hacker figured out that users of mini computing systems such as game consoles and laptops weren’t routinely downloading security patches as they did with home computers. Once compromised, those devices could then be used as launchpads to direct attacks on other parts of the Internet. When the hacker published a how-to list of instructions, some rogue actors inevitably gave their approach a whirl. Taking control of multiple devices, these malefactors launched a massive distributed denial of service (DDOS) attack against Dyn, a strategy that involved sending a relentless barrage of domain name queries to the firm’s hosting service, so many that it paralyzed the Web sites of its clients, including Twitter, Spotify, Reddit, and many other heavy-traffic sites. This was a direct outcome of the paradox we’ve been talking about. Domain name registrations are managed by increasingly large, centralized, third-party providers while lightweight IoT devices are getting into the hands of an ill-prepared general public. That combination is a hacker’s dream.
And what a pool of data we are gathering for those hackers to play with. In 2014, IBM estimated that human beings were creating 2.5 exabytes, otherwise expressed as 2.5 quintillion bytes of data, every day, most of them now stored permanently thanks to a cloud computing era in which storage has become so cheap that it no longer makes sense to destroy data. Let’s lay that number out numerically, with all seventeen zeroes: 2,500,000,000,000,000,000. (Another way of expressing it: the equivalent of 2.5 trillion PDF versions of The Age of Cryptocurrency.) According to the IBM team, this number meant that human beings had created 90 percent of all data accumulated throughout history in just two years—most of it stored on the servers of cloud service providers like the ones IBM runs.
The only way to protect this data and slow down the force of attacks against it, we will argue, is to take it away from centralized servers and create a more distributed storage structure. Control of data needs to be put back into the hands of those to whom it belongs, the customers and end users of the Internet’s services. If hackers want our data they’ll have to come after each and every one of us, a far more expensive exercise than simply finding a weak entry point into a giant silo database that holds all of our data in one convenient place. To achieve this goal, we need to embrace the decentralized trust model.
Before we delve more deeply into this solution, let’s reflect further on why it matters for humanity. It’s about much more than dollars and cents. There is an intrinsic link between the challenge of protecting privacy, a necessary element of a functioning society, and data security. When that protection breaks down, as it does repeatedly, lives can be destroyed: people’s money and assets are stolen, their identities and reputations are hijacked, they face extortion and blackmail, and they find that the intimate moments they’ve shared with others are thrust into the public domain. Online identity theft has been linked to depression and even suicide. And if this isn’t bad enough, experts are convinced we’ll soon experience cyber-murders, as Internet-enabled cars and other potentially lethal devices become targets of hacker hitmen. Murders may have already been committed; speculation that the mysterious disappearance of Malaysian Airlines flight MH370 was the result of a hacking attack on the plane’s onboard computer is no longer the stuff of conspiracy theorists. We must get ahead of this problem.
Individuals aren’t the only losers in this model. Companies and institutions lose out as well. The list of recent big cyber-attack targets includes some of the biggest names in the S&P 500—J.P. Morgan, Home Depot, Target, Sony, Wendy’s. All paid a high cost in legal fees, restitution to their users, and investment in upgraded security systems. And it’s not just corporate America. Governments, too, have been hit. Recall that security clearance data on 18 million people was compromised when the U.S. Office of Personnel Management was hacked in 2015. And, of course, the alleged Russian hacks of the Democratic National Committee in 2016 have unleashed an all-out political crisis during the Trump administration’s first year.
These constant attacks are expensive, ongoing headaches for the IT departments at companies and other institutions. Every new trick deployed by a rogue hacker prompts a new patch to a security system, which attackers inevitably figure out how to compromise. That prompts even more expensive investment in cybersecurity systems that will themselves, inevitably, get breached or require further upgrades. The companies keep spending more dollars to build ever-higher firewalls, only to learn their adversaries are constantly getting ahold of taller ladders.
Clearly, we need a new architecture for security. And the ideas contained within blockchain technology might help us get there. Within the distributed structure of a blockchain environment, participants do not depend on centralized institutions to maintain cybersecurity infrastructure such as firewalls to protect large groups of users. Instead, security is a shared responsibility. Individuals, not trusted intermediaries, are responsible for maintaining their own, most sensitive information, while any information that is shared is subject to a process of communal consensus to assure its veracity.
The potential power of this concept starts with the example of Bitcoin. Even though that particular blockchain may not provide the ultimate solution in this use case, it’s worth recalling that without any of the classic, centrally deployed cybersecurity tools such as firewalls, and with a tempting “bounty” of more than $160 billion in market cap value at the time we went to print, Bitcoin’s core ledger has thus far proven to be unhackable. Based on the ledger’s own standards for integrity, Bitcoin’s nine-year experience of survival provides pretty solid proof of the resiliency of its core mechanism for providing decentralized trust between users. It suggests that one of the most important non-currency applications of Bitcoin’s blockchain could be security itself.
Security by Design
One reason why Bitcoin has survived is because it leaves hackers nothing to hack. The public ledger contains no identifying information about the system’s users. Even more important, no one owns or controls that ledger. There is no single master version; with every batch of confirmed transactions, the so-called blocks of the blockchain, a new, updated version of the entire ledger is created and relayed to every node. As such, there is no central vector of attack. If one node on the network is compromised and someone tries to undo or rewrite transactions in that node’s local version of the ledger, the nodes controlling the hundreds of other accepted versions will simply refuse to include data from the compromised node in the updates. The contradiction between the many clean versions and the one that’s been altered will automatically label the compromised block as false. As we’ll discuss further in the book, there are varying degrees of security in different blockchain designs, including those known as “private” or “permissioned” blockchains, which rely on central authorities to approve participants. In contrast, Bitcoin is based on a decentralized model that eschews approvals and instead banks on the participants caring enough about their money in the system to protect it. Still, across all examples, the basic, shared, and replicated nature of all blockchain ledgers, in which the common record of truth resides in multiple locations, underpins this core idea of distributed security, that the risk of failure is backstopped by multiple “redundancies.”
This is not how big companies tend to think about security, however. In March 2016, at a symposium organized by the financial securities settlement and clearing agency Depository Trust & Clearing Corp., or DTCC, the audience, filled with bankers and representatives of companies that support them, was asked to vote on what IT sector they would invest in tomorrow if they had $10 million to deploy. From a menu of options, the votes came back,