IGA 538: Technology, Privacy, and the Trans-National Nature of the Internet Student Blog

In the past few years, the emergence of “blockchain” and “cryptocurrencies” in popular media has skyrocketed. Blockchain is often heralded as a revolutionary technology that will change all aspects of life, from businesses to daily life. A quick google search of the term will prove fruitful, with millions of hits linking to newly authored books about the revolution, newly created businesses riding the frenzy, and new overnight millionaires who made their millions by trusting the system that is built on a lack of trust. But what is blockchain really? How does it work? And is this technology as revolutionary as people say it is? For the remainder of this post, I’ll focus on providing a high level overview of the first two questions and some thoughts about the role of blockchain technology going into the future.

First, what is blockchain?

Blockchain is the technology behind cryptocurrencies like bitcoin which is at its core a decentralized, growing list of immutable records that are linked using cryptography. That is, the blockchain, is literally just a chain (link) of blocks (think of an excel sheet or a list containing records) that aren’t stored in any single place (decentralized) and cannot be changed (immutable) and are expanded using common cryptographic methods. The fact that the list, which is commonly referred to as the ledger, is both decentralized and immutable are key to understanding the technology. The technology itself consists of three fundamental parts: (1) the ledger (the list of transactions), (2) A consensus algorithm (will expand on this shortly), and (3) the digital currency. Each of these pieces are essential to keep the blockchain active and growing.

First, the ledger. The ledger, as mentioned above, is simply a list. You can think of an excel spreadsheets with columns and rows in which a list is kept. So what is in the list? The list stores all previous transactions involving the cryptocurrencies, contracts, records, or other information. The ledger is equivalent to the blockchain itself. That is, the ledger is a chain of a bunch of blocks linked together, where blocks are defined as newly added transactions to the previous ledger, creating a new ledger with the new block chained at the end. And a cool aspect is that this list is decentralized, that is, the same list exists on multiple computers on a network of nodes. But, the list is also immutable, meaning that once a transaction is added to the list, it cannot be changed or removed. The two natural questions to ask at this point are: 1) how is it that the list is immutable? and 2) what happens if two lists have conflicting values (given that the lists are decentralized)? To explore the first question of immutability, I will describe at a high level of abstraction, where this immutability comes from (ultimately it relies on an inability to solve difficult mathematical problems quickly).

When new blocks are added to the existing ledger, they are added cryptographically (using a hash function). A hash function is simply a one-way function (easy to compute in one direction but not the other — usually based on mathematical problems like prime factorization which is a one way function because it is easy to multiply two large prime numbers together, but difficult to factor the product of two prime numbers) that takes in a large input (in this case, the previous ledger or blockchain combined with the new block) and outputs a condensed random string of characters called a hash. The previous ledger is represented simply by another previous hash from the ledger before that and the new block that was added, and so on and so forth, creating the chain. The immutability comes from the fact that if any part of the ledger is changed, then the hash will change completely. Anyone can check to make sure that the ledger matches the legitimate ledger by running the hash function over the ledger and making sure that the hash matches the one that is published, which is where the immutability comes from.

The second question about conflicting values leads us to the second core component of the blockchain technology, namely the consensus algorithm. The consensus algorithm simply takes different ledgers that may have gotten out of sync, and chooses the ledger that everyone will agree on based on which ledger most people have. This allows for the decentralization of the ledgers, so that not one authoritative body has a right to the ledger, but the ledgers still stay in sync and updated over time.

The final component of the blockchain is the digital currency, such as bitcoin. This aspect is incredibly important to the technology because this is where the incentive comes for people to buy into the system and continue to keep it going. There is no physical manifestation of this currency, but it is represented digitally and kept on the ledger. This leads us to the discussion of bitcoin “miners” a term that you may be familiar with. When a block is hashed along with the previous ledger, the hash function produces a hash of a list of random characters (base 16 including numbers and some chars). However, the creators of blockchain have decided that most hashes will not be accepted except for hashes that start with 6 leading 0’s. What this means is that a hash must randomly be generated that starts with 6 leading 0’s in order to be considered a valid hash. Because the hash function is random, there is about a 1 in 86million chance of generating a valid hash. When a person generates a valid hash and publishes it, they are rewarded with a fixed amount of bitcoin and the system continues on. Here is a helpful graphic from this website

Given a quick, high level overview of the technology, it seems that the main draws of the technology are that it is a secure and decentralized manner to make transactions of just about anything. Given these benefits, it helps us to more clearly see the real benefits (and the lack thereof) of this technology in context. This technology is cool, but likely will not be a technology that revolutionizes all industries (as some hope). But, the technology does give us a secure outlet to make transactions in the future while keeping a list that we can trust will be safe from tampering in the future, which is helpful, but is a niche use-case that doesn’t extend as far as some of the hype entails. Rather than a solution to all problems, it seems that the blockchain is a potential solution to one problem, albeit a large one, the problem of making secure transactions.

This past week, we’ve had some very engaging and interesting discussions about the desire for, reasons against, and possibility of having back doors or golden keys in cryptography (a back door is way of subverting an encryption algorithm and a golden key is a theoretical key that would allow the holder to break any of the specified encrypted data). I’ll start this blog post by first setting up the context of the discussion as well as defining some key terms. First, the context of this discussion comes following the “Crypto Wars” of the 1990s [read here] in which parts of the US government were wrestling with private companies and individuals about the use of strong cryptography, which was at the time considered a firearm that one could not legally export (a bizarre law that lead to much confusion and difficulty given that other countries already had strong cryptography and the enforceability was also difficult and the punishment harsh). In summary, one side argued for some sort of ability for the government to have unbridled access to people’s encrypted data as they do with phones and wire taps. The other argued that this was either impossible or simply unethical. Regardless, the governments attempt to push a solution with the Clipper Chip using key escrow technology ultimately failed and ended the argument, with cryptography allowed for public use. Fast forward about 20 years and we get to the case with Apple and the FBI [read here], a privacy case in which Apple refused to provide a way for the FBI to break into all iPhones. Why did Apple do this? Was it just out of spite, to protect company image? Should authorities be given exceptional access? Is this even possible? I will focus on these final two questions and argue that any sort of exceptional access explicitly given to authorities would pose a problem with regards to the core idea of a global internet for the following two reasons.

1. First, there simply is no way to create a golden key, or any sort of intentional access to breaking cryptography without opening up potential security flaws or holes that someone else may be able to access (an adversary, say). If this is the case, then it seems that the idea of a exceptional access undermines the very same goals or reasons for having in the first place, namely for the higher level idea of increased security and safety; that is, the initial goal of safety wouldn’t necessarily be solved by exceptional access as new safety threats (or maybe just privacy threats?) could come into play as other players work to exploit the security hole.

2. The social idea of which governments will get access to this hypothetical golden key will inevitably affect global internet activity and commerce in ways that can’t even be immediately understood. If there is general knowledge that certain governments have the ability to break certain cryptographic schemes that underlie certain parts of the internet, it may change some people’s behaviors, especially those abroad who may not want a foreign government to have so much oversight over what they are doing on the internet.

Ultimately, it seems that the debate on cryptography will depend not so much on providing a technical solution, but on the political, human engineering part depending on what the goals of each party are.