Nevada's blockchain leadership can safeguard US values, says election security advocate

This summer, the Nevada Legislature passed a series of bills promoting experimentation with blockchain technology. It is one of the first states to take a stab at capturing a share of the projected $60 billion global blockchain market, and the opportunity is an exciting one for the state. But Nevada’s leadership shouldn’t be solely about economic opportunity: As the United States competes internationally with authoritarian regimes like China and Russia to develop the technical foundations of the future, Nevadans have an opportunity to drive this technology in a direction that both realizes its economic potential and safeguards our nation’s values.

So what exactly is blockchain? Blockchain technology draws on collective trust to execute secure transactions that cannot be modified or falsified. Its applications promise new economic opportunities for Nevada and the nation through contracts, supply chains, currencies, food safety, and even a new internet. If used improperly, however, blockchain can also conceal criminals, support terrorism and undermine global financial systems. These challenges are often discussed alongside the use of cryptocurrencies like bitcoin.

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Nevada’s legislation comes at a time when the United States and its democratic partners are grappling with how to retain our technological edge while defending our values. From the facial recognition systems policing Reno casinos to the DNA sequencing that illuminates family trees in initiatives like the Healthy Nevada Project, advances in emerging technologies reflect the value systems of their creators. They can provide societal advances on the one hand or destroy transparency and accountability on the other — depending on who is in the developer’s chair. Blockchain is no exception. As such, Nevada — and the industry it grows — will have a head start in shaping its development.

Nevada’s plan allows businesses to experiment without the pressure of impending regulation. Over the coming months and years, the lessons Nevada will learn on both innovation and governance with blockchain technology should inform the nation’s posture. Guiding both to uphold democratic values will be critical.

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To understand the beneficial and harmful potentials of this technology, take a simple analogy: When a landlord and a tenant sign a contract, their agreement is subject to modification and falsification attacks. One party can forge a separate contract and claim it was the original. Or modify the contract terms and claim both parties agreed to them. But imagine if when the contract was signed, both parties gave copies to 100 mutual friends. If the tenant tried to claim the agreed upon rent was $1,500 per month instead of $2,000, 100 friends would be able to testify that the tenant was wrong. Blockchain technology automates this process for a host of secure applications.

While it is most commonly associated with new digital currencies that could upend traditional financial transactions, numerous creative applications abound: smart contracts that remove the need for escrow, methods of verifying the supply chain of consumer products like wine and sneakers, and techniques to counter the rise of sophisticated fake news online have all surfaced on the blockchain. One of Nevada's bills even allows the government to accept records on a blockchain as they would other digital documents — pioneering the technology’s use in government service.

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But blockchain and cryptocurrency, developed in the hands of malign actors or designed carelessly, also has consequences. The very security features that make transactions on your phone convenient and secure can be a haven for money laundering and terrorist financing. The anonymity it provides has enabled authoritarian countries to interfere in democracies. For example, Special Counsel Robert Mueller’s report on Russian interference in 2016 uncovered that the Russian military used bitcoin to finance hacking operations and disguise its purchases for attacks on the U.S. presidential election. China has even more long-term goals: it aims to displace the U.S. dollar as the foundation of the global financial system and sees a state-controlled currency using blockchain as a way to get there.

Of course, much of the innovation on the blockchain is happening in the private sector. Facebook recently announced its foray into cryptocurrency, outside U.S. borders, and policymakers and technologists alike are scrambling to steer its development in a direction that protects both American competitiveness and American values. As Nevada experiments with government service applications, smart contracts and cryptocurrency, it should embrace these twin goals. And then share its findings with the world.

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Lindsay Gorman is Alliance for Securing Democracy’s fellow on emerging technologies. Gorman is an expert in artificial intelligence, statistical machine learning and quantum materials. She built her policy career in the office of U.S. Senator Mark Warner, the White House Office of Science and Technology Policy where she crafted policy guidance on cybersecurity and cyber warfare, autonomous vehicles, smart cities, fintech and financial regulation, artificial intelligence, disease surveillance, advanced manufacturing and the internet of things.