DARPA wants to know more about digital asset markets for national security

The Pentagon’s Defense Advanced Research Projects Agency—better known as DARPA—is currently undertaking a year-long review to determine potential risks the digital asset market may present to national security and law enforcement. Apart from digital assets’ use in criminal activities, DARPA is also looking at hacking threats with the backing of hostile foreign governments, money flows in and out of blockchain networks, the role of public ledgers in providing transparency, bot-driven trading activity on exchanges, and other digital asset scams.

In September 2022, DARPA announced it would hire blockchain intelligence firm Inca Digital to assist with its research. Inca is tasked with mapping out the “cryptocurrency universe” in detail and developing tools to give the agency a “granular view of crypto markets’ inner workings.” 

DARPA is best known to most as the arm of the United States military that played a key role in developing the internet, which initially linked military and academic networks before a civilian version evolved by the 1980s and 90s. As such, DARPA has a long-standing interest in the changes digital networking technologies create in the world and human interaction from a defense and national security perspective.

DARPA has previously engaged in other research on blockchain networks, looking at security vulnerabilities in blockchain protocols that could help present risks. In announcing its work with Inca Digital, the agency reassured the public it was not interested in accessing or identifying information on individual digital asset users. 

“DARPA is not engaged in surveillance,” said program manager Mark Flood.

Inca Digital CEO Adam Zarazinski, an Air Force veteran who previously worked for Interpol, said, “There’s a lot of concerns about crypto scams right now.” Many of these are well-organized and run by international criminal organizations, and some may have direct or implicit support from governments in “adversarial countries.”

Thefts worth billions of dollars from ordinary citizens and companies in the USA and Europe can potentially disrupt financial networks and possibly even national economies.

Certihash and risk mitigation in cybersecurity

Certihash is a company within the BSV industry that specializes in identifying security risks and working to reduce the costs of data breaches. It is currently working with IBM Consulting to develop a cybersecurity infrastructure based on National Institute of Standards and Technology (NIST) frameworks and running on the BSV blockchain. Its Sentinel Node network event monitor is the first of five enterprise utility tools planned for eventual release.

Over the last 24 hours, #CERTIHASH continues to showcase the resilience of the BSV blockchain for critical infrastructure integrity. Over a half a million txs without fail. Required miner fees paid, zero sat change outputs. No other blockchain is capable of offering this utility. pic.twitter.com/DxitPmf7TU

— Bryan Daugherty, CCI, CBI, SME (@BWDaugherty) October 17, 2022

Certihash grew out of the SmartLedger project. SmartLedger’s Chief Development Officer Greg Ward commented on DARPA’s new initiative. BSV Blockchain, he noted, is the perfect blockchain, the perfect platform, and technology for facilitating both privacy as well as proper law enforcement capabilities.

However, this is only possible “when blockchain technology developers implement certain alert keys, or flagging mechanisms, miners follow court-ordered transaction and address blacklists, only confirming and acknowledging blocks with legal transaction within, and exchanges only follow the chain-tip of legally constructed blocks (containing no flagged transactions),” he said.

The original Bitcoin protocol did feature such an alert key, but it was deprecated and later removed in the mid-2010s—purportedly amid BTC Core developers’ fears the key may have been compromised or could be too powerful in the wrong hands. This has left the current BTC without any system-wide alert mechanism that could freeze UTXOs or address software bugs, with developers relying instead on informal networks to communicate with miners. 

Ward also addressed concerns that DARPA’s latest investigation into the blockchain and digital currency ecosystem will limit or destroy any chance of free-market success, saying:

“In order to have a stable market, safe for consumers (no anonymity and or scammers without identity), private but not anonymous, having enforce-ability of contracts, and capable of holding liable actors accountable for their actions, it is of utmost importance that we examine these topics closely.” 

Existing as it does on the scalable BSV blockchain, Certihash is well-positioned to develop tools to deal with these issues, Ward added. It would bode the government well to take a closer look at BSV’s capabilities and how these could be used to create robust security systems.

“Utilizing the scalable blockchain technology of BSV, our company Certihash embraces the full features, functionalities, and immutability of the blockchain to capture auditable forensic trails of network activity and data integrity. With this, we are able to show regulators that beyond the crypto casino that has been the source of many scams and reason for regulatory frameworks, there is a world of next-generation tools that blockchain brings the world, never before possible,” Ward explained. 

“The government, as well as the public, should have better access to understand the multitude of fraud pervading the crypto markets, as well as come to a better and more fuller understanding of the powers of the original Bitcoin design and blockchain’s intended design, secure data, instant financial settlement, asset management, trustless transactions, and extreme availability, and ultra efficiency,” he added.

Watch: The BSV Global Blockchain Convention presentation, Sentinel Node: Blockchain Tools to Improve Cybersecurity

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