Expert workshop on Blockchain
Opportunities and Challenges
On Monday 29 January, at the Palais des Nations in Geneva, UNICRI convened a restricted group of global experts from international organizations, the private sector and civil society organizations to discuss and validate possible applications and risk scenarios related to Blockchain technology.
Blockchain is one of the several thematic areas covered by the Knowledge Centre “Security Improvements through Research, Technology and Innovation” (SIRIO), a project of UNICRI launched in 2017 aimed at engaging governmental and inter-governmental entities, industry and research institutions in the analyses and promotion of knowledge and technology solutions to address emerging security risks.
Following a brief overview of the SIRIO Project, the experts delved into the very core of the meeting, namely an analysis of opportunities and challenges resulting from the use and possible misuse of Blockchain technology.
Regarding the opportunities offered by Blockchain, reference was made to:
- its potential in developing public-private digital platforms for secure and trusted information sharing between the private sector and the law enforcement;
- its potential use to enhance intellectual property rights protection, i.e. the possible contribution of Blockchain to create a shared repository of registered IP rights between National IP Offices that would reduce the rising of disputes related, for instance, to patents, trademarks or design rights registration.
Challenges and risks were then extensively discussed. In this regard, major concerns include (but are not limited to):
- the management of users’ private keys;
- consensus hijack in decentralized, permissionless networks – and even more severely in regulated, permissioned networks – given the 51% likelihood of an attack by a hacker taking control of the majority of the users to manipulate and tamper the validation process of certain transactions;
- malware and Distributed Denial of Service attacks, with reference to the potential denial of service and increase in the processing time by pushing large numbers of spam transactions to the network.
Finally, risk scenarios related to the use and misuse of blockchain were identified and validated, with a focus on:
- the use of cryptocurrencies for the purchase of illicit goods (e.g. counterfeit goods) on dark marketplaces, which may threaten the effectiveness of the imposition of payment blockades on infringing merchants by cutting out the role of payment service providers (PSPs), thus eliminating the need for third-party intermediaries to act as trusted authorities in the processing and verifying of transactions between merchants and costumers (circumvention of payment blockades by disintermediation);
- the use of cryptocurrencies for money laundering and terrorism financing, with reference to the laundering of proceeds of crime through virtual currency systems traded online (i.e. exploiting virtual currencies to access cash anonymously and hide the transaction trail which would enable faster transactions and undisclosed costumers’ identities), as well as financing anonymously terrorism through virtual currencies (the number of cases of such misuse by terrorist groups is increasing);
- the hacking of the Blockchain, with reference to the various attacks conducted against blockchain technology by exploiting its vulnerabilities, that raise doubts about the safety of blockchain.
The experts attending the meeting, recognised that although both the above risk scenarios would require a high degree of technical expertise and the available evidence of their occurrence is still limited, other concurring factors, like the lack of regulation, the disparity in countries adoption, are currently worrying elements of vulnerability and they might have serious consequences in the medium and long term. Therefore, the risk of different forms of misuse cannot be underestimated.
As a follow-up to the workshop, UNICRI will facilitate the development of future risk scenarios and the preparation of a Risk Report. These will be used to open a discussion with technology providers and map the technology solutions that can mitigate the risks. All results on security risks and solutions connected to the blockchains will be showcased with the Member States of the United Nations and other relevant stakeholders.
Photo credits @williambout