Placing Trust in Technology: How Leveraging the Structures Behind Cryptocurrency Could Reshape and Rebuild the Post-COVID-19 World
Stevens professor Giuseppe Ateniese describes how blockchain technology and decentralized finance could bolster financial services and supply chain resilience while improving trust and transparency.
With global economic uncertainty resulting from the novel coronavirus and COVID-19 pandemic, interest in cryptocurrency has been on the rise.
Some nonprofit organizations, for example, have recently begun accepting donations in the form of cryptocurrency to allow for easier and more simplified low- or no-cost transactions across international borders.
Adopting cryptocurrency into use represents a means of conducting transactions between two parties without requiring a third party—such as a bank or government—to act as a middleman.
But more so than cryptocurrency itself, Ateniese sees what he describes as a "bright future" in the post-COVID-19 world for the structures and ideas that underlie cryptocurrency: namely, blockchain technology and smart contracts.
"From a technical perspective, cryptocurrency has been a revolution. It shows for the first time how to generate a currency in a digital form in a proper way," he said. "But the main innovation of cryptocurrency is the technology behind it, which is blockchain."
Unlike in a standard database, each record, or block, in a blockchain ledger can be added to but not easily changed or taken away from. Every block contains metadata, a unique cryptographic fingerprint, and the history of all previous blocks before it in the form of an algorithm-generated cryptographic hash. In order to alter or delete data from a blockchain record, one would need to manipulate data in, and regenerate new cryptographic hash for, every block previous in the chain—a task so immense and complicated, especially as the size of a blockchain grows, as to be virtually impossible.
Data in a blockchain is also not subject to the dictates or whims of a single, centralized authority: rather, a blockchain ledger is, by design, decentralized. Multiple copies of the blockchain are distributed on a network of computers with no single authoritative source or copy, and a new block in the chain is added to the official record only after the majority of computers on the network have come to a consensus on the block's authenticity.
An expert in blockchain technology and cybersecurity, Ateniese freely admits that many claims of potential use cases for blockchain are exaggerated to the point of hype.
But the baked-in safeguards and redundancies that make blockchain nearly impossible to tamper with are precisely what's needed during the chaos and disruption of a global crisis like COVID-19, where decisions must be made quickly and plans implemented in an environment of doubt and distrust.
Take, for instance, the $2-trillion Coronavirus Aid, Relief, and Economic Security Act passed by the U.S. Congress in late March. Meant to alleviate the economic strife resulting from the COVID-19 pandemic, the law's implementation and allocation of funds have been fraught with controversy, errors, delays, and secrecy.
Had payments been made using cryptocurrency, Ateniese suggested, a blockchain-based system would have allowed taxpayers to see precisely how funds were being allocated, distributed, and spent, while providing a permanent and immutable public record of the transactions.
"Improving transparency is definitely one thing that we could learn from the cryptocurrency area," he said. "In certain sectors where transparency is essential, it's one way to achieve it basically for free."
Blockchain technology is not limited to financial transactions, however.
Ateniese points to an example already seeing early adoption in the wake of the coronavirus: using blockchain to address emergency supply chain vulnerabilities.
With the sudden, rapid spread of the coronavirus around the globe in early 2020, healthcare systems faced shortages of critical medical and personal protection equipment. Factory and transportation closures and bottlenecks further strained established supply chain networks, leading to rationing and the need to reuse single-use supplies, placing both healthcare workers' and patients' lives at risk.
"We couldn't get masks. We couldn't get tests. We couldn't get ventilators," Ateniese said. "[COVID-19] definitely showed that we have problems."
Alternative equipment sources began to appear as new and existing companies, such as clothing and consumer goods manufacturers, pivoted to producing N95 masks, gloves, gowns, and ventilator parts.
But vetting and establishing relationships between vendors and buyers can take weeks, or even months, of negotiation. With time in short supply and lives at stake, what guarantees could hospitals have that the supplies they've been promised are what they say they are?
Enter the blockchain.
"It's a technology that is designed for these tasks," Ateniese said. "Using the blockchain makes sense when there are different parties that may not be from the same organizations, or of the same country, with different objectives. They have to work together, but they don't necessarily trust each other."
Leveraging blockchain technology to track equipment data, for example, hospitals could verify the provenance and history of a particular item, thereby removing the fear or risk that a mask, medication, or tool could be counterfeit or expired.
Because trust in the blockchain's data integrity is high, the blockchain ostensibly replaces the need for trust between individual parties with trust in technology.
Ateniese says a similar system could be established that resembles a virtual global medical stockpile. If all members of the World Health Organization (WHO), for example, collaborated on a blockchain that tracks every country's available medical equipment and supplies, in an emergency the WHO could quickly coordinate resources to where they were most needed, regardless of any political issues or disagreements between countries occurring in the background.
"I wouldn't be surprised if, in discussions after COVID-19, blockchain enters this kind of framework," Ateniese said.
Blockchain's safeguards, coupled with adequate and accurate testing availability, also hold potential for reliably tracking the spread of COVID-19 without compromising individual privacy or exposing users to potential security risks, identity fraud, or government overreach. Succinct references to sensitive personal and health data are stored and rendered anonymized and inalterable, protecting both the data and the users whom the data represents.
Blockchain-based apps are already in development for conducting contact tracing of people who have tested positive for COVID-19. They could also serve as the basis for so-called immunity passports, for verifying who in a population has built up enough antibodies to SARS-CoV-2 to be considered "safe" to travel, work, or use public transportation without serving as a potential disease vector.
Ateniese expects the movement toward a more cashless economy to accelerate in the wake of COVID-19 but remains doubtful the pandemic will prompt widespread adoption of cryptocurrency specifically.
"Unlike other innovations in the past—like, say, cloud computing—[cryptocurrency] technology is very hard to use and understand. Financial institutions, even CIOs don't fully grasp the technology. Right now you have to be technologically savvy in order to use these tools."
More likely, he said, COVID-19 has prompted politicians and governments who may previously have been suspicious of these technologies to reconsider their viewpoints by revealing the stresses and vulnerabilities of current vital infrastructure systems.
Ateniese also shares optimism that cryptocurrency and blockchain's central tenet of decentralization is likely to gain more widespread attention. Eliminating the central authority of data and decision-making is a key part of what makes these systems reliable.
Based on openly auditable algorithmic protocols called smart contracts, decentralized finance frameworks eliminate not only the middleman formerly required to conduct transactions, but also said middleman's rules, restrictions, and potential points of failure.
"With decentralized finance, there's no human in the loop, no server, no organization. There's no bias," Ateniese said. "It cannot just stop working. It cannot be censored. It's a huge evolution compared to existing systems. Once the code has been analyzed and set in stone, it runs, and that's it. You can rely on it almost 100 percent."
In the context of the coronavirus, he offered as an example, your ability to get a loan would not be subject to delay because a bank's servers had been targeted by a denial-of-service attack or a local bank branch office had been closed due to public health emergency lockdowns.
Moreover, because all decision-making is done algorithmically, your loan application would not be subject to the whims or prejudices of an individual, institution, or government. All participants are treated equally, allowing access to services some users might otherwise be blocked from. Although decentralized finance adoption is limited at present, Ateniese feels confident we'll see growing interest in it because of its "transparency, reliability, and the fact that making these decisions through code is probably fairer for the average user."
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