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Blockchain Financial Services Technology

Benefits of blockchain in emerging markets

JAKARTA - Indonesia. March 12, 2018: Aerial photo of iconic BNI 46 Tower with located in South Jakarta Central Business District,

Blockchain in emerging markets promises to drive down to the cost of remittances and trade finance, improving financial inclusion for many of the world’s nearly two billion people currently without a bank account.

One thing that categorizes developing countries is inadequate access to banking. Individuals and small businesses would like greater access to financial services currently unavailable trough traditional finance. High levels of mobile coverage and new disruptive payment apps such as Bitpesa offer new solutions.

Blockchain technology is a digital, distributed, immutable transaction ledger that eliminates the need for intermediaries. By doing so, it provides several opportunities for cost savings while opening new market segments for existing financial institutions and new players alike. 

While developed markets experience exponential growth and advancements, the chances of emerging markets competing fairly with them on a global scale seem bleak sometimes. Nevertheless, the introduction of blockchain in emerging markets has reopened the prospects of a revival in these nations. Some of blockchain’s use cases can improve payments in developing countries by reducing remittance costs, enhancing financial inclusion, and eliminating corruption loopholes. 

But before that, let us briefly discuss how blockchain technology drives efficiency in existing businesses and how it creates new markets in developing countries.   

How blockchain drives efficiency in existing businesses 

Much of the attention surrounding blockchain technology is from developed countries, especially in the payment sector, where the technology will likely have a significant impact because of its power to minimize payment costs. This has led some to reassess micropayments as a viable model, for example.

As a result, distributed ledger technology is heavily linked with financial institutions that deal with process efficiency services. These companies have started using blockchain-based solutions to solve specific issues or improvements in their business models, such as data reconciliation, supply chain tracking, clearing, and internal settlements. 

Meanwhile, some international banks and financial intermediaries have partnered with blockchain firms to explore applications that apply to their business models and learn how this revolutionary invention may improve their legacy infrastructure. They are also considering consortia to leverage development and potential transition expenses and to raise the standard of blockchain technology.   

Many corporate projects so far have embraced private blockchains, such as the Linux Foundation’s Hyperledger Fabric, as companies try to weigh the pros and cons of the revolutionary technology and retain the integrity of their existing business models. 

The Post-Trade Distributed Ledger Group brings together international banks, custodians, central security depositories, and central banks from all over the world to share information and concepts on how blockchain technology can positively influence the post-trade landscape. 

Creation of new markets

Blockchain is a disruptive technology that can re-engineer economic models and facilitate the creation of markets and products that were formerly nonexistent or unproductive. Most of these new market prospects are related first to its offer as an alternative to fiat currency, solving issues of currency inflation and political instability. Second, its power to achieve a digital identity in a fast and cost-effective way improves financial inclusion of previously underserved markets. 

Blockchain technology also creates opportunities for startups and established businesses form non-financial sectors with a strong consumer base, like telecommunications or e-commerce establishments. Such players are rapidly innovating to create new business models and services, and are transforming the value chain landscape and challenging banks.  

These initiatives have mostly originated from established markets, targeting developing countries directly or indirectly. Though they are not entirely based in developing countries, the best-funded ones are from developed markets for now.  

A considerable chunk of the total venture capital has been invested in the digital wallet and capital market service segment. Regardless of their source, these startups are targeting the economic activities of emerging markets, such as remittances and trade finance. 

This is an exceptional phenomenon, implying that developing countries can be reasonable testing grounds for new ventures, where high demand for financial inclusion and relative inadequacy of infrastructure can speed up the use of new technologies — particularly blockchain. The prospect of outspreading banking services in such markets is high, with two billion adults lacking access to financial and credit services globally. Cross-border payments and remittances are a case in point: it has a market value of over $4 trillion with transaction charges that range from 5% to 30%. 

How blockchain in emerging markets can improve payments

Minimizing Remittance Costs

Citizens of developing nations who have migrated to developed countries for work drive the international remittance system. Time and again, these individuals send money to their families and friends back home using financial intermediaries such as Western Union, PayPal, MoneyGram, Payoneer, etc. These intermediaries impose high transaction charges. 

According to the World Bank’s latest Migration and Development Brief, remittances to developing countries hit a record high in 2018. The recorded remittance to emerging markets in 2018 was $529 billion, an increase of 9.6% from 2017. The brief also revealed that the global remittance fee for Sub-Saharan African countries was an average of $20 per $200, which was the highest in the world. 

With the emergence of cryptocurrencies, the cost of remittances can be considerably lower. While Bitcoin remains the largest cryptocurrency by trading volume, it can be difficult and unpredictable to use for remittances. Stellar meanwhile offers faster transactions and low fees making it ideal for remittance systems.

Already, there are several platforms using blockchain in emerging markets in Africa and Southeast Asia that support cross-border and peer-to-peer payment solutions, like BitPesa. 

BitPesa is a blockchain firm offering foreign exchange and business-to-business crypto-based payment services in Kenya and many parts of East and Central Africa. The startup has managed to leverage the existing financial models by partnering with the M-Pesa mobile money network, a subsidiary of Telecom Company Safaricom and provider of mobile payments and significant incumbent player (almost three-quarters of Kenya’s adult population have an M-Pesa wallet). 

Improving financial inclusion

Low financial inclusion is a significant problem in developing countries. According to the World Bank, there are over two billion people globally without a bank account, and a big percentage of this number comes from developing countries. In nations like Pakistan, Chad, Somali, Burundi, Niger, Yemen, and Cameroon, less than 15% of the adult population has access to banking services. Even those with bank accounts lack access to premium banking services, so they qualify as unbanked. The lack of access to banking services prevents them from partaking in global commerce.  

With crypto services like BitPesa in Kenya, BitSpark in Hong Kong, OkCoin in China, OkLink in India, Rebit, and Coin.ph in the Philippines, billions of the unbanked population have access to financial services through cryptocurrencies. These startups are providing crypto banking services via mobile phone applications. The telecommunication industry has been able to attain a higher market penetration compared to the banking industry. 

These blockchain-based companies are capturing the existing widespread use of telecoms to deliver their services to unbanked and underbanked people. The eventual result is better financial inclusion. 

Besides, there is also an added advantage of empowering small and medium-scale businesses. Local merchants can tap into global trade. Financial institutions in developing countries are reluctant to offer loans for small-scale enterprises even when appropriate collaterals are in place.

With blockchain, platforms like BitPesa and OkLink can provide crypto-backed loans to small and medium scale businesses. This will go a long way in getting them started in foreign trade, which is an integral part of national commerce. 

Another feature of financial inclusion that many developing countries face is the lack of global payment systems. International commerce is mainly denominated in US dollars, and it calls for specialized payment and documentation systems. This is an obstacle for many merchants in these countries as they lack access to foreign exchange and the means to send and receive money in foreign currency. 

BitPesa is championing the provision of solutions to these issues across Africa. In Indonesia, TenX has a digital wallet that enables users to receive Visa card payments. 

Eliminate corruption loopholes

Corruption is one of the significant issues facing developing countries. The absence of economic democratization and corrupt officials has created a framework that has left the mutual prosperity of these nations at the mercy of a few individuals. The middle-class has shrunk, and over 70% of the people survive below the poverty level.  

In emerging markets, misappropriation of government funds by corrupt officials is a significant issue. Refusal to adhere to project contracting best practices leaves state projects to be run by groups that channel the allocated funds to their pockets. The use of digital currencies, particularly those embracing smart contracts, will enable a more transparent contract system. With blockchain records being accessible to everybody, citizens will be able to track the way their funds are being used. 

Conclusion

Blockchain in emerging markets will lead to lower remittance costs, better financial inclusion, and put an end to corruption loopholes. Driven by high demand, especially in catering for the needs of financially excluded markets, and a hedging plan through cryptocurrencies in situations of currency inflation and political instability, blockchain technology appears ripe for adoption. It will undoubtedly be interesting to see to what extent emerging markets apply blockchain solutions to the problems facing them.

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Blockchain Finance Financial Services

Ethereum smart contracts vs. Stellar smart contracts

Ethereum smart contracts vs. Stellar smart contracts is a binary I often have to answer in my consulting work and product design workshops. The answer, of course, is not always so straightforward. What are the pros and cons of each innovative solution and when should you choose one over the other? A lot has to do with the level of decentralization you’d like to achieve and what tradeoffs you’re willing to accept.

TL;DR, Both Ethereum and Stellar are smart contract-enabled blockchains. Ethereum is more decentralized — but slower. Stellar is less decentralized — but faster.

Preliminary explanation

So if you’re considering which blockchain protocol to use, carefully identify your target users’ wants and needs and build your solutions around those.

Smart contracts underpin many of the arguments for the utility of blockchain technology. These computer programs automatically execute specific actions once all the criteria are met.

Public blockchains add a layer of transparency to the type of data moving around. There are many public blockchains nowadays but not all are useful for the same things. At Espeo we primarily work with Ethereum and Stellar ecosystems as guiding public blockchains. Of course, there are others on the market but the specific utility of these two is the main reason for this choice. 

Ethereum is a global, open-source platform for decentralized applications on which you can write code called a smart contract that controls digital value and runs exactly as programmed. Ethereum is the most popular blockchain because of the apps you can write on top of it.

On the other hand, the Stellar blockchain is an open network for storing and moving money. As we can see these two blockchains represent different business values. Ethereum works best for programming smart contracts in business integrations while Stellar facilitates the transfer of funds in a blockchain ecosystem.

Smart contract origins

Legal scholar and cryptographer Nick Szabo invented the smart contract concept which he laid out in a 1996 paper. In it, he defined smart contracts as “a set of promises, specified in digital form, including protocols within which the parties perform on the other promises.”

A smart contract is a self-executing contract made possible by blockchain technologies and enforced by cryptographic coding. 

First, we should know that Stellar blockchain doesn’t have a smart contract as a smart contract language or build in a virtual machine to execute code. A Stellar smart contract is a composition of transactions that are connected and executed using various constraints and is instead optimized for sending, storing and trading value.

Stellar smart contracts

The following are examples of constraints for Stellar smart contracts:

  • Multisignature —  a concept requiring signatures of multiple parties to sign transactions stemming from an account. 
  • Batching / Atomicity — the concept of including multiple operations in one transaction. Atomicity is the guarantee that given a series of operations if one operation fails they all operate if the transaction fails.
  • Sequence —  represented on the Stellar network through sequence number. Using a sequence of numbers in transaction manipulation, it can be guaranteed that specific transactions do not succeed if an alternative transaction is submitted.
  • Time bounds — are limitations on the time period over which a transaction is valid and can be used to represent time in a Stellar smart contract.

Each transaction on the Stellar blockchain is confirmed by a consensus algorithm. The Stellar Consensus Protocol is an evolution of a federated Byzantine agreement.” The FBA protocol has a determined membership list but SCP uses open membership.

Stellar takeaways

Transactions on the Stellar blockchain are faster and the fee for a transaction is cheaper than Ethereum. So, Stellar offers new possibilities for business models. IBM, for example, uses Stellar to facilitate cross-border payments. The project is called IBM Blockchain World Wire and seems to be a very promising project. In Espeo Blockchain we use the Stellar blockchain to create P2P payment applications.   

Ethereum smart contracts

The Ethereum blockchain offers nearly endless possibilities to write smart contracts. We can approach many more uses than another blockchain because we can control our written code.  To write Ethereum-based smart contracts there are a few different programming languages: Solidity, which is like JavaScript and the most popular nowadays and Serpent like Python. 

The question is how and why it works. To understand it that we should know two important and related concepts with Ethereum blockchains like the Ethereum Virtual Machine and gas. 

  • The Ethereum Virtual Machine (EVM) is a place where smart contracts run in Ethereum. It is Turing Complete programing language or we can say that it is a distributed global computer where all smart contracts are executed.
  • Each transaction has a cost measured in gas and each gas unit consumed by a transaction must be paid for in Ether, based on a gas/Ether price which changes dynamically. We should know that in each transaction we have a gas limit parameter that is an upper bound on how much gas we can consume. This parameter is used as a safeguard against programming errors that could deplete an account’s funds.

As we can see we have control over our smart contract. It has both good and bad sides. If we are about to create a decentralized application we have way more possibilities using Ethereum, because it offers more than the Stellar blockchain. On the other hand, if our code has a bug, it can be hacked very easily. As in any other blockchain, each smart contract run on the Ethereum blockchain is confirmed by a consensus algorithm. 

Ethereum takeaways

Ethereum is currently a proof-of-work consensus model. In proof of work, miners lend their computing power and compete against each other to complete transactions on the network and get rewarded in cryptocurrency. unsurprisingly, this is very energy-intensive but this algorithm protects the network against hacking.

Real-world applications

There are many different industries and solutions for these industries. When we want to choose blockchain we should ask which blockchain helps us solve problems and grow our business. These questions we can put in public and private blockchains too.  

Ethereum is the most popular blockchain that uses smart contracts. Ethereum is the best choice where we need to set parameters for the smart contracts. The best applications for the Ethereum blockchain are decentralized finance and asset tokenization.

The second very important thing is the ability to create different ERC tokens based on Ethereum. Many of us can say that Ethereum is slow and it’s true. Although, there are tricks to overcome this. However, we should pay attention that it’s the beginning of this technology and Ethereum core developers are working to improve the protocol.

Ethereum has versatile applications in which it outperforms other blockchains. In the real estate industry, we can tokenize real estate, or art opening these investments up to a larger number of people. We can improve and automate this process of fractional ownership as well. Today we have platforms that use Ethereum smart contracts to change ownership of parts of the building.

You deposit fiat or digital currency money and receive tokens that represent part of the building. It looks like a notary’s contract but is faster, automatic and considerably cheaper. Ethereum has an advantage over other blockchains because it has its own tokens such as ERC20, and ERC721 among others.

Conversely, the Stellar blockchain is quite different blockchain for the other applications. The Stellar blockchain doesn’t have smart contracts based on Turing machines. We have an API where we have a number of endpoints to use. 

Stellar and Ethereum – Conclusion

Developers can’t write our own smart contracts as in Ethereum. It’s not wrong because our work could be faster when we use existing methods. The Stellar blockchain is better for industries where we want to transfer assets like cryptocurrency or tokens generated on the Stellar blockchain. A good example it’s a peer-to-peer mobile payment application or payment gateway using Stellar’s cryptocurrency, Lumens. In Espeo Blockchain, we have started work on a peer-to-peer payment system based on Stellar which is the most appropriate solution for this use case. 

Three main things why: very low fee for transactions than other blockchains, very fast transactions and the ability to create our own token which we can use as our asset in the finance ecosystem.

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Software Technology

Is web application testing worth the expense?

Is web application testing worth the expense?

Recently a client asked me how I prove application testing is worth the money? For me, it’s obvious that testing is a vital part of the development process. Without it, there is little chance for a successful, high-quality product. So how do I prove it to someone who isn’t familiar with the reality of the business?

It is a fact that in almost any aspect of life higher quality comes at a higher price. Do you want to have a great, luxurious car? You need to pay more. Do you want to have a tailor-made suit? You better dig deep into your pocket. Software development is no different in this matter. If you want to have a fast, reliable and threat-secure application you need to invest in testing. But – in the long run — is it really worth the expense? First, we need to understand how an application development cycle looks and how it affects the bug-fix cost.

The software development cycle usually starts with requirements & design phases. This is where you outline the scope of the application, its main functionalities, visuals, architecture, test scope and any other requirements that you may have. This is a very important phase because any issue at this point may result in complications later on. If a developer overlooks a requirement it may be considerably more expensive to fix it later. If you decide to change a requirement at a later stage then the other parts of the application may get affected in a way you could have not anticipated. Fixing an issue at this stage is almost costless – all you need is to rethink and rewrite it or add some new requirements.

The next phase is the actual coding part. Web application development teams usually consist of several people who measure the code in thousands of lines. Each line of code is a potential place for a defect. The more complex the software is the more interdependencies between modules, integrations and architecture pieces there are. Developers are also human and in this jungle of advanced logic, code standards, abstract end-user ideas and external system integrations it is very easy to overlook something. They also have to consider the fact that different browsers/devices often operate in a different manner. There are also changing requirements and bug fixes that require adjustments in code already written. It often happens that one part of the code affects some other unrelated functionalities. Finally, there is also a business pressure to meet the agreed deadlines which can sometimes make the developers work in a hurry. And, this is just the tip of the iceberg. An issue usually found at the development stage is fairly easy to fix as the developer is aware of the code he has just written and it doesn’t take much time to isolate the specified issue. Still, it’s much more costly than a simple change in the requirements phase.

In agile development methodologies testing happens alongside the development process. You may ask yourself a question: if testing takes place, there should be no issues on production, right? Well, not exactly. First of all, it is not feasible to test all the possible inputs and outputs of a complex application. Moreover, it is not possible to test the application for all browser and device combinations in all possible versions. Finally, the user’s creative ways are sometimes futile to predict – it is not possible to come up with all the things that a user may think of doing and prevent them from happening.

There is also a matter of maintaining the application. At times, the new software version may clash with the application and cause bugs. From time to time, the external integrations get updates without updating the code. This, in turn, may cause the app to malfunction. Although it may sound strange sometimes we also choose not to fix some of the bugs. If we know that a defect only causes a minor discomfort for a limited number of users it isn’t sometimes worth fixing because the costs would surpass the actual damage caused by this issue.

Despite the fact that a well-chosen test strategy may minimize the project risks and eliminate all critical issues, it still cannot guarantee an issue-free project. So what is the cost of fixing a bug at the testing stage? It’s even higher than in the development stage. Usually a tester, a developer and, sometimes, a PM decide on the priority of the bug. It is also much more difficult for a developer to diagnose the root cause of the issue. Is it architecture? Does it occur only for a certain set of data? Is it a bug within the code? Is it possible to reproduce it on my machine or is it only test environment related? A developer has to find an answer to these questions and it takes more time than investigating his own code and functionality.

The last phase of the development cycle is when an application is already deployed to production. The cost of fixing bugs on production is significantly higher, sometimes it can be incredibly large. Even setting aside the hard-to-measure costs of damage to company reputation, users leaving the application or customers not being able to complete their purchases – the cost of fixing the bug is higher. The issues that users find are usually much more difficult to reproduce in the development environment. They’re often connected to a specific production architecture or database state. On top of everything, the users usually don’t provide as many details as a qualified software tester which prolongs the investigation. The table below presents some real-life examples revealing how much an issue can affect a company’s revenue.


So is it even possible for software to be bug-free? Well, let me answer that question with another question. Do big companies with a huge amount of resources – like Apple, Google or Facebook provide bug-free software?

Knowing all that and based on the above explanations and estimated bug-fix costs provided by IBM data we can perform an example Return On Investment(ROI) analysis for testing.

Let’s try to analyze an ROI example for a 3-month project. First, let’s make the following assumptions:

1. Assuming that bug-fix cost during the design phase is $10 using the above IBM estimated costs we get:

  • Design bug-fix cost – $10
  • Development bug-fix cost – $65
  • Testing bug-fix cost – $150
  • Production bug-fix cost – $1000

2. There are 100 must-fix bugs during a 3-month period and they all cost approximately the same.
3. None of the issues were found during the design phase (which could have lowered the total cost even more)

Now we have to estimate what the cost of manual tests would be and test automation as well as the number of bugs to find in each phase. Assuming that basic manual application testing costs around $2000 per month (that’s the salary of a specialist) and adding some minor infrastructure fee for the test environment we receive a total investment of $6,500. When it comes to test automation let’s increase the specialist’s salary as well as the infrastructure & setup cost – then we get $11,000.

Let’s estimate that out of 100 total bugs 25 of them will be found by the developers (this is a constant number no matter whether we carry out tests or not). We can estimate that during the testing phase the testers will find 35 issues while performing manual tests and 50 when we add automation on top of that.

The rest of the bugs will be found by the end-users. Now we can count the total cost of quality as the sum of conformance (cost of ensuring that the app conforms to quality requirements) and non-conformance (money that needs to be spent for not conforming to the quality requirements). Finally, we can count the test ROI as the value brought by testing divided by the cost of actual testing.

This example certainly contains numerous assumptions but you can use it in an actual project. It shows how we can actually estimate ROI. I believe that it provides some insight to whether application testing costs are worth the money. Even though hiring a testing team is, in fact, an expense, when you look at your entire application development cycle you will view it as an asset. Testing will spare you a lot of future quality expenses. This also causes things like user frustration, clients leaving and even company reputation damage – factors which are difficult to measure in terms of money.

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Blockchain Public

Blockchain in multi-domain command and control targeting

Template logo for blockchain technology. Rhombus with connected lines for brand, logo, logotype of smart contract block symbol. Design for decentralized transactions. Vector Illustration

To effectively plan and accomplish today’s complex military activities in defense of a country’s best interest calls for timely, reliable, trusted, and clear communications across a lengthy chain-of-command covering multi-national forces.

Unlike traditional guard solutions that are accompanied by several drawbacks, such as lack of trusted end-to-end data provenance, blockchain technology can facilitate and accelerate these multi-domain command and control targeting activities by offering reliable, cross-domain virtual identities and policy-based information distribution channels for the target design process.    

The problem: siloed targeting people, processes, systems, and data

Targeting is the process of choosing and ranking targets and assigning the appropriate measures to them. It is often a multi-disciplinary process, calling for collaboration from various joint force staff aspects and mechanisms aided by multiple non-military organizations to:

  • Decide which target to engage
  • Decide the best way to engage them to attain the desired impact within political, technical, and operational limits. 
  • Discover their current hideout with adequate confidence. 
  • Achieve the right effects. 
  • Evaluate the impacts of the engagement. 

data siloing greatly hinders command targeting essential to its different members. These are contributors from different countries, different operational domains (air, space, sea, and cyber), using multiple automated systems running on different networks with distinct classification, authorization levels and security policies trying to produce, distribute, plan, and execute prioritized target information. 

Coalition-based networks and computing power are set up to enable communication between co-located joint targeting squad members. Appropriately categorized information is channeled through these collective infrastructures in a regulated way through traditional cross-domain guards linked to each member’s non-shared national networks.

However, as we discuss in this article concerning cross-domain security, traditional guard methods are affected by numerous downsides, like lack of trusted end-to-end information origin for the information shared. Confidential background information and decision attribution are essential for mission sensitive targeting processes.

The challenge of providing confidential identities for the workforce- person and non-person- interacting across various domains causes lack of trust. Trusted virtual identity is the hub of all verification and approval decisions, and facilitates other integral security operations (non-repudiation, reliability, and encryption).

Traditional centralized public key infrastructure (PKI) methods with their domain-based certification authorities (CA) fail to lend themselves well to cross-domain bridging applications.        

More issues arise from the necessity to guard sensitive identity information across security domains- the subject identifying information contained in CA-generated certificates circulated to top-secret networks can also be classified and hence be shared in other security domains. 

These drawbacks disappoint and limit solid, synchronized targeting information production, collection, and circulation, inhibiting the creation of a confidential joint operational display of a target and restricting situational awareness of the targeting process itself. All these increase the probability of creating sub-standard targeting methods that could make the mission impossible. 

Blockchain-based MDC2 targeting solution

Blockchain technology, coupled with W3C verifiable credentials, offer a trustable solution that is better than siloed multi-domain command and control targeting procedures and participants. Blockchain-based MDC2 targeting solution comprises of three key aspects:

Unclassified multi-domain targeting blockchain consortium

A permissioned, private, random leveling consortium blockchain engaging all contributing security personnel offers a trusted common operational picture (COP) for the targets and situational awareness (SA) of the targeting activity itself. All proposed changes to targets are validated and circulated with the help of this targeting blockchain network. Targeting procedures and strategies, like target selection standards (TSS), are implemented through smart contracts and endorsement programs.   

For instance, a target suggested to be incorporated into the high-payoff list would first be recommended according to the endorsement rule. The recommenders would implement smart contracts with the help of confidential input argument values and requests to systems of record to confirm that the TSS had been fulfilled and create a random ledger transaction read/write set of consent and other uncategorized metadata. The uncategorized information would be dedicated to the targeting consortium blockchain nodes found in each domain to act as an immutable attribution of the policy.  

Classified verifiable credentials and unclassified verifiable presentations

Classified targeting data is confidentially and selectively distributed through digitally signed W3C Verifiable Credentials distributed to every target entity’s virtual identity to affirm its targeting-process assembled traits. A target can be defined as an entity that executes a defined role for the opponent considered for a potential engagement. The MDC2 Targeting procedure gradually creates a logical illustration of a target entity, populating appropriate features using multiple schemes and artifacts. 

These certifiable badges would act as the basis of creating presentations and zero-knowledge proofs (ZKP) to circulate suitably confidential data within and across security domains selectively. For instance, uncategorized certifiable presentations obtained from classified badges affirming high payoff target lists, selection criteria, and the commander’s goals could be distributed to every security domain network. 

Unclassified multi-domain self-sovereign identity network  

A permissioned, public, unstipulated blockchain identity network involves all contributing entities and provides random confidential digital badges and public key enablement (PKE) for all involved parties. Using blockchain-powered self-sovereign identity (SSI, or decentralized PKI), a random W3C Decentralized Identifier (DID) is allocated to each domain, immutably linked to its public key and other uncategorized metadata in its DID document, and circulated through a blockchain network to all identity network nodes found across all involved security entities without the need of third-party CAs.   

Since DID and DID documents are meant to carry only random data, they may be freely spread across all security domains through the blockchain identity network hence offering a mutual all-domain source of trust for digital identity and PKE. DID forms stipulate a DID’s certification and approval methods and also facilitate innovation and collaboration with an entity through its blockchain printed service portals. Service portals found in every network domain act as a means of accessing an entity’s conforming organization of certifiable permits, presentations, and other useful data. 

For instance, a target entity can contain a service portal positioned on both an uncategorized network and a categorized network. Uncategorized information regarding the target can be retrieved from its Uncategorized Service Portal on the uncategorized system. Uncategorized certifiable presentations of a categorized target feature can be shared through the cross-domain guard and accessed on the uncategorized domain through the uncategorized service portal. 

The diagram below shows how a smart contract on the targeting blockchain implements target selection criteria for a suggested target/weapon system arrangement:     

  • A target squad participant hands a transaction suggestion for a target (recognized by its DID) to be considered suitable for a mission using a particular weapon system (recognized by the weapon system’s DID) to approving nodes of the targeting blockchain network. 
  • The targeting blockchain network’s chain-code employs the two DID opinions to question the target’s and the weapon system’s service portals for the specific data necessary to apply the TSS strategy. 
  • The service portals return supportable presentations of mandatory characteristics sharing only the minimum contentions needed by the chain code.
multi-domain command and control targeting
Source: Blockchain Pulse: IBM Blockchain Blog

Not demonstrated in the diagram, the chain-node authenticates the provable presentation signatures using public keys from the identity ledger inputted to the DIDs, utilizes the attribute information to authorize target suitability using the chain node’s business rationality, produces a random ledger read/write set with the determination, and regenerates a signed recommendation. Then, also not illustrated, the signed recommendations are gathered and send to the blockchain orderer for circulation throughout the cross-domain, targeting blockchain nodes for commit.

  • The targeting blockchain network peer nodes give reports upon commit. 
  • After getting a commit report, the target squad member gives a certifiable credential declaring that the target is suitable for attack by that weapon system. The declaration comprises the authorizing blockchain transaction ID and other extra information for thorough provenance. The target domain retains this supportable record plus all other permits that have been dispensed to it, affirming the other attributes. Uncategorized provable presentations of this categorized certifiable credential may be formed and disseminated to uncategorized domain service portals. 

The U.S. Air Force’s senior commander has made multi-domain command and control targeting one of his top priorities. Further reports suggest that now he aspires to see it become the Pentagon’s first development initiative.

How Blockchain technology can be used to coordinate other industries

Blockchain can also be used to co-ordinate the supply chain process in the pharmaceutical industry. All transactions, from the sourcing of drugs to the actual sale can be transparently documented and kept without the likelihood of ex-post information meddling. Once a transaction is initiated, it is kept on the blockchain and is unchangeable. As a result, pharmaceutical firms will be able to prevent human errors, logistical delays, and minimize expenses. 

The technology can also be used to coordinate the energy sector. A confidential blockchain alliance chain offers an energy distributed ledger and energy trading smart contract services. Energy internet comprises of energy resources, energy transmission, energy distribution, energy consumption, energy storage, and other distributed resources, and supports coordinated control and market trading.  

The value of blockchain-powered MDC2 targeting

Blockchain-powered multi-domain command and control targeting can facilitate, speed up, and secure MDC2 targeting operations by offering reliable, trusted identity and permits for all targeting domains throughout their lifecycle. Smart contracts execute targeting strategies on a cross-domain targeting consortium blockchain. This in turn, shares targeting information selectively across domains through certifiable badges and confirmable presentations.  

A distinct cross-domain blockchain identity network acts as a source of trust for digital identities to PKE and all involved members (person and non-person) in the targeting course who issue, keep, present, and authenticate credentials and their presentations without leakage of confidential identifying information. 

When combined, these solution features offer the targeting squad and their supported operation officers with a dependable, provable end-to-end attribution for all target-based data and policy-related resolutions within and across different security domains. This blockchain-powered solution offers cross-domain, cross-national, cross-functional, cross-organizational targeteers and users of targeting intelligence with a confidential joint operational image of each target and its features, precise situational awareness of the targeting process itself, and guaranteed execution of targeting and security strategies. The ultimate result is an enhanced process with more accurate multi-domain command and con trol targeting. 

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