“The internet belonged to America, blockchain will belong to Russia”
Russia has loudly announced its intention to control "the blockchain". How it plans to do so is less clear.
Last year Tokyo hosted delegates from 25 different countries, for the International Standards Organisation (ISO) meeting to work on international standards for blockchain technology. These meetings are usually dense, dry and heavily technical affairs, so the heavy Russian delegation of four might have raised some eyebrows.
Even more surprising, two of those four were from the FSB, Russia's Federal Security Service and successor to the KGB. When asked why Russia was devoting so much attention to blockchain technology, Grigory Marshall, the head of Russia's delegation and FSB, was quite forthcoming.
"Look, the internet belongs to the Americans, but blockchain will belong to us," he said according to one anonymous delegate, the New York Times reports.
"The internet belonged to America. The blockchain will belong to the Russians," another delegate recalled hearing.
This level of candour is pretty typical. In a previous presentation, Russian delegate Maxim Schevchenko bullet pointed "possibility to influence the technology" and "implementation Russian standards and solutions worldwide" as reasons to attend the ISO conference. Meanwhile, another Russian delegate Alexey Urivskiy, reportedly told the Russian newspaper Vedomosti that the ISO committee was aiming to get Russian cryptographic algorithms into the standard.
Since then the Kremlin has also clearly declared its interest in cryptocurrency as an economic weapon, and used Venezuela as a guinea pig for testing a national digital currency.
Its heavy focus on the blockchain standards at the ISO meeting might be a separate concern though.
Control the blockchain, control the world?
"It really does create the foundation for the future that is coming," said Gilbert Verdian, the head of the British ISO delegation and founder of the Quant Network. "To get behind it and back it now is going to put people at an advantage, either politically or economically."
Opinions are split over whether or not potential Russian government interference in blockchain standards is anything to worry about.
Craig Dunn, ISO blockchain committee chairman and head of the Australian delegation, reckons not. He points out that member countries need to reach agreement before moving forwards, over the course of many different rounds of voting.
"There has to be agreement and consensus across the member countries to take a standard forward," he said.
Others are concerned that it's not enough.
"In the context of software it is the perfect trojan," said Emma Channing, co-founder of the Satis Group ICO advisory firm. "If something gets buried in it, these things will get adopted wholesale and won't be questioned on the way in."
Should the world be worried?
No. There's probably important work going on in ISO/TC 307, but it's not happening very fast relative to other developments in distributed ledger technology. The ISO blockchain standards project began in 2016 and is still in early days. The standards showing the most development are focused on the less-technical, but no less interesting, elements like what exactly a smart contract needs before it's legally binding, and the privacy implications of DLT.
The most optimistic timeline for finalisation would probably be 2019.
Trying to plant sneaky tech backdoors into distributed ledger technology standards is like trying to throw a dart at a bullseye on a car that's speeding past. Trying to do it through ISO meetings is like trying to do it with broken arms.
Channing's concerns are likely unfounded, and despite the unusually heavy FSB presence at the meetings they're probably more interested in representing Russian oligarch business interests by pushing their investments as standards, and enjoying a Tokyo vacation on the taxpayer ruble, rather than doing more glamorous spy stuff. If there's any security flaw to be had, it's that ISO/TC 307-compliant physical products will have backdoors built into them, while programmers working on that standard may also be able to install backdoors.
This certainly isn't specific to Russia and is the same security problem that already exists on everything else. It's a compelling reason for institutions to use permissioned public ledgers rather than completely private ones.
Either way, the actual technological standards of distributed ledger technology are still very much in flux, and the eventual formal ISO standards are more likely to follow today's leading projects which get adopted as de-facto standards, rather than re-inventing the wheel.
The odds of closed source or flawed open source cryptography, centralised networks or other deliberately-planted security problems making their way into formal DLT standards is close to 0%. But the Kremlin can dream.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, BTC, XRB
- Chamber of Digital Commerce sides with Telegram in SEC lawsuit
- Reserve Bank of India vs cryptocurrency: RBI cites Libra as point against crypto
- Digital Dollar Foundation: Why the former CFTC head is pushing for digital USD
- Understanding Australia’s proposed digital wallet regulations
- Fidelity is doubling down on Bitcoin mining in the lead up to the halving