Although often less appreciated than remote-access cyber threats, insider threats to U.S. critical infrastructure can be just as damaging. Learn how to defend against threats from witting or unwitting insiders at: https://lnkd.in/ewQS2Vd
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Across the sprawling Defense bureaucracy, it’s not a stretch to say there are dozens of different organizations who each see themselves at the forefront of buying or building innovative technologies. So it makes a certain degree of sense for the Pentagon’s top technology official to start her tenure by asking who’s working on what.
Heidi Shyu, the undersecretary of Defense for research and engineering, says one of her top priorities since being sworn in three months ago has been to build a better understanding of what’s actually happening across DoD’s vast innovation ecosystem — not just for the benefit of her own office, but for those working inside the military services and DoD’s various innovation organizations.
To the greatest extent possible, she said, she wants to limit the number of Defense R&D dollars and time that go toward reinventing the wheel.
“We’re looking across the entire DoD to look at all the different innovation activity that’s ongoing. I’d like to get my arms around just how many innovation organizations that we have,” she said during an interview with Federal News Network at the annual Association of the U.S. Army conference. “We’re asking questions like, ‘What is your mission? What have you procured? What capabilities do these products have? What have you transitioned into the hands of the warfighter, and which company are you buying these products from?’ The second piece I would like to understand is what the best practices are in each organization. If we can share those across the board, that would be valuable.”
The discovery process is happening under the auspices of DoD’s Innovation Steering Group, which Deputy Defense Secretary Kathleen Hicks established earlier this year. Hicks appointed Shyu to lead the group after she took the post as undersecretary and chief technology officer in June.
In a related effort, Shyu said she has also begun asking the military services for specific prototype technologies that could fill “capability gaps” that have already been identified as joint requirements for the Pentagon.
After working with the Joint Staff and DoD’s global combatant commands to identify which requirements needed to be met most urgently, Shyu said the steering group got 203 white papers from the military services over the course of just five weeks, identifying prototypes they’d already started developing that could fill those gaps. Her office has recommended that 32 of them be funded and tested in joint exercises next fiscal year.
“We’ve briefed what we’re planning to do, and we were given the thumbs up. So one of the key things we’re doing now is going through the detailed planning. All the details of planning will be done in Fiscal 2022 to enable the execution in FY 23,” she said. “But the thing that’s exciting is three of those projects are actually joint projects with our allies. We definitely want to partner with allies and partner nations to be able to deliver capabilities much quicker.”
Ultimately, Shyu wants the outcome of those efforts to be a much easier discovery process for anyone in the Defense Department who’s looking for a particular capability. As of now, there’s no easy way for a program office to find out whether one of its counterparts is working on — or has already solved — an individual technology problem.
“R&E looks across every service. We’ve already gone to the Air Force, the Navy, the Marines, the Army, the [Defense Innovation Unit] and the [Strategic Capabilities Office] to try to understand what process they utilize and what companies they have gone out to,” she said. “So all of those things will be pulled together. We’d like to create a database we can tap into so that I can basically Google for a specific capability or product. Right now, you’re making a zillion phone calls.”
To the extent the department’s technology efforts are disjointed and decentralized, that’s not just a problem for DoD itself — but also for the sorts of nontraditional companies DoD said it wants to attract into its science and technology ecosystem. For small businesses, getting through the Pentagon’s front door has always been hard. Creating dozens of new and different doors doesn’t necessarily help, unless they’re well-marked.
Shyu, who previously served as assistant secretary of the Army for acquisition, logistics and technology during the Obama administration, said she learned that lesson directly during an interlude in private industry during the past four years.
“Having worked with a number of small companies on the outside, it made me really realize how difficult it is to work with the Pentagon,” she said. “You don’t know who to talk to, and there’s no focal point. You talk to Person A, who will refer you to Person B and then Person C, and vendors go around and around and around before they find someone to go talk to and who’s interested in what they have.”
Starting to catalogue the department’s capability gaps and innovation activities should help with that problem, Shyu said, even if DoD can’t always share the precise details of its most urgent capability gaps. The needs statements the Innovation Steering Group sent to the military services earlier this year, for example, were entirely classified.
“But once we get all of that information together, we can go the next step. Figuring out what we already have — pulling a database together to share across the board will speak volumes,” she said. “Then, we need to figure out if there is a specific entry point we need to highlight even more to the small businesses. It’s a stepwise process we’re going through.”
Written by Billy Mitchell
Mar 7, 2022 | FEDSCOOP
Director of National Intelligence Avril Haines announced Adele Merritt as the new CIO of the intelligence community on Monday.
Merritt officially took the role, housed under the Office of the Director of National Intelligence, in late January.
Michael Waschull had been serving as acting CIO of the IC since January 2021 and will continue on in his official role as deputy CIO.
“Dr. Merritt will lead our ongoing modernization efforts to transform the IC Information Technology Enterprise, ensure the security of the IC’s Information Technology systems, and enhance IT cooperation within the IC,” Haines said in her announcement. “Dr. Merritt brings over 20 years of technical, analytic, and policy expertise in cyber and national security operations to the role. Her accomplishments span the U.S. government.”
Within that portfolio, she’ll also be responsible for the continued rollout of the IC multi-cloud offering, the Commercial Cloud Enterprise (C2E) program.
Merritt comes to the IC after serving most recently as a program manager for Dreamport, a nonprofit associated with the Maryland Innovation and Security Institute and created by U.S. Cyber Command. Prior to that, she spent time in government as principal deputy CIO for cyber at the Department of Energy and as acting senior director for intelligence programs on the National Security Council during the Obama administration.
She’ll be the first permanent CIO for the IC since Matthew Kozma stepped away from the role. Before that, John Sherman — now serving as the CIO at the Department of Defense — held the role for several years.
Article link: https://www.fedscoop.com/intelligence-community-gets-new-cio-in-adele-merritt/
-In this Story-
Adele Merritt, intelligence community (IC), john sherman, Michael Waschull, Office of the Director of National Intelligence (ODNI)
Eric Walz Jun 22, 2021 11:00 AM WST
At the fourth annual Computer Vision and Pattern Recognition (CVPR 2021) conference this week, Tesla’s senior director of AI, Andrej Karpathy, shared details the company’s latest supercomputer that will be used to train deep neural networks (DNN) for Tesla’s Autopilot and Full Self-Driving (FSD) autonomous driving features.
Tesla said its new supercomputer will be ready by the end of the year. It’s actually the predecessor to Tesla’s more powerful supercomputer nicknamed “Dojo”, which Tesla Chief Executive Elon Musk says should be ready by the end of the year.
“Project Dojo” was first announced at Tesla’s Autonomy Investor Day in April 2019. Musk mentioned the supercomputing power of “Dojo” will help Tesla better label visual data, which is a difficult and time consuming task for developers of self-driving vehicles.
For autonomous vehicles, neural networks are used to train software for complex tasks, such as identifying street signs, detecting pedestrians and predicting their movements, as well as for safe navigation. A typical self-driving vehicle can use dozens of DNNs for perception, localization and path planning.
However training neural networks requires a hefty amount of processing power, which is why Tesla built its supercomputer using powerful Nvidia GPUs.
Tesla’s supercomputer uses 720 nodes of 8x NVIDIA A100 Tensor Core GPUs (5,760 GPUs total) to achieve an unparalleled 1.8 exaflops of performance, making it one of the world’s most powerful computers. This kind of processing power is mind boggling. One exaFLOP is one quintillion (1018) floating-point operations per second.
NVIDIA’s A100 GPUs power the world’s highest-performing data centers. The A100 GPU provides up to 20x higher performance over the prior generation, according to NVIDIA.
“This is a really incredible supercomputer,” Karpathy said during his presentation at CVRP 2021. “I actually believe that in terms of flops, this is roughly the No. 5 supercomputer in the world.”
Tesla uses the data from more than one million Tesla vehicles on the road to refine and build new autonomous driving features for continuous improvement. Having a fleet of connected vehicles to regularly collect data from gives Tesla an enormous advantage over other automakers in the development of autonomous driving technology.
Camera data from Tesla vehicles is continuously fed into the supercomputer in order to improve the software powering Autopilot and FSD. The neural networks are used to label 4D data from videos taken from eight onboard cameras that make up each vehicle’s 360-degree perception system.
How Tesla’s Supercomputer is Put to Work
In a blog post, Nivida’s Senior Director of Automotive, Danny Shapiro, provided an overview of how Tesla’s supercomputer is used to train its deep neural networks for autonomous driving. Tesla’s cyclical development actually begins in the car, he said.
Whenever a Tesla vehicle is driving, a deep neural network running in the background known as “shadow mode” quietly perceives and makes predictions without actually controlling the vehicle, explained Shapiro.
The predictions are recorded, and any mistakes or misidentifications are logged. Tesla engineers then take this information and use each instance to create a training dataset of difficult and diverse scenarios to refine the DNN for improved performance.
The dataset is a collection of roughly one million 10-second clips recorded at 36 frames per second, equal to around 1.5 petabytes of data. The DNN runs through these scenarios in the data center over and over until it operates without a mistake. From there, it’s sent back to the vehicle and the process repeats.
Karpathy said training a DNN in this manner and on such a large amount of data requires a massive amount of compute power, which led Tesla to build and deploy the current generation supercomputer with NVIDIA’s high-performance A100 GPUs.
In addition to training DNNs, Tesla’s supercomputer provides vehicle engineers with the high performance needed to experiment and iterate in the development process.
Karpathy said the current DNN structure that Tesla is deploying allows a team of 20 engineers to work on a single network at once, isolating different features for parallel development, which is much faster.
These DNNs can then be run through training datasets at speeds faster than what has been previously possible for rapid iteration.
“Computer vision is the bread and butter of what we do and enables Autopilot,” said Karpathy. “For that to work, you need to train a massive neural network and experiment a lot.”That’s why we’ve invested a lot into the compute.”
Tesla’s autonomous driving system uses just radar and cameras, while most other developers of self-driving vehicles rely on supplemental lidar data. However, as Tesla’s computer vision capabilities improve, the radar will no longer be needed. Tesla said it would drop radar altogether, and began transitioning solely to the camera-based system in its Model 3 and Model Y vehicles starting in May.
Earlier this year, Musk said during the company’s fourth quarter earnings call in January that its upcoming Dojo supercomputer could potentially be offered as a service for other companies for training their neural networks.
“So some of the others need neural net training, we’re not trying to keep it to ourselves,” Musk said in January. “So I think there could be a whole line of business in and of itself.”
Tesla’s supercomputer is also a work in progress and the company plans to build an even more powerful one than the upcoming Dojo in the future. Although Karpathy declined to elaborate on the next iteration of Dojo, he said it will take Tesla’s supercomputing plans to the “next level”, which might get Musk closer to his target of level-5 autonomous driving, which requires no human supervision whatsoever.
Article link: https://m.futurecar.com/4698/A-Closer-Look-at-Teslas-Nvidia-powered-Supercomputer-for-Training-Deep-Neural-Networks
MARCH 3, 2022 |BY DAVID VERGUN, DOD NEWS
The Defense Department’s industrial base is huge, encompassing some 220,000 companies. With criminals and nefarious state actors intent on stealing intellectual property or taking down networks, cybersecurity is a huge concern for the department, the companies and national security.
As a result, the department is bolstering defense industrial base cybersecurity by sharing threat information, offering easy-to-implement ways the industrial base can shore up its own cyber defenses, and looking for ways to make further improvements as the threat continues to evolve, according to a DOD panel that spoke during a recent town hall.
“I think we’ve thwarted a good number of attacks by our intelligence sharing and your sharing of information about things going on in your network,” said David McKeown, DOD’s chief information security officer and deputy chief information officer for cybersecurity.
In addition to intelligence sharing, the department requires industrial base companies to achieve Cybersecurity Maturity Model Certification, which sets the minimum cybersecurity requirements for companies, he said, noting that the department has been working to streamline those requirements to make it easier for companies to comply.
He also said the department wants companies to review the National Institute of Standards and Technology’s special publication 800-171, “Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations.”‘
A third requirement, he said, is that if there’s a major cybersecurity breech, it must be reported within 72 hours to the DOD Cyber Crime Center. The center’s hotline is 410-981-0104 or 877-838-2174, and the website is https://dibnet.dod.mil.
“We would love to see you go beyond those requirements,” McKeown said.
An excellent place to start is by visiting https://dibnet.dod.mil, which is DOD’s gateway for defense contractor reporting and voluntary participation in DOD’s Defense Industrial Base Cybersecurity Program, he said.
On that site, companies can report a cyber incident, as well as become a DOD voluntary public-private cybersecurity partner, he said. The site also has points of contact for anyone having questions or needing additional information.
DOD Partnerships
The defense industrial base is one of 16 critical infrastructure sectors, identified in the presidential policy directive “Critical Infrastructure Security and Resilience”, said Kristi Hunt in the office of the undersecretary of defense for policy.
That document spells out the policy for how the federal government will work to build trust with those sectors, how those sectors will work with other sectors, and how the whole effort for public-private partnership will advance national unity of effort to strengthen and maintain secure functioning and resilient critical infrastructure, she said.
Hunt said her agency works closely with the Department of Homeland Security and the Office of the Director of National Intelligence, sharing mitigation strategies, threat indicators, critical incidents and best practices.
Kristina Walter, chief of defense industrial base cyber defense at the National Security Agency, said, “NSA has great insight into foreign actors targeting DOD Information on DOD networks, national security system as well as defense industrial base networks.”
However, the NSA must rely on industry partners to mitigate cybersecurity threats, she said.
“You are experts in your networks. We understand what foreign actors are doing, and when we work together, we can understand more rapidly what’s happening and address the issue,” she said.
The NSA, in partnership with the FBI, has set up a collaboration channel to get out as much information before an incident occurs, she said. More information can be found at https://www.nsa.gov/About/Cybersecurity-Collaboration-Center/.
Krystal Covey, director of DOD’s Defense Industrial Base Collaborative Information Sharing Environment, said the Defense Cybercrime Center hosts cybersecurity conferences and performs malware analysis, publishes cyber threat analyses, and shares actionable cybersecurity incidents.
Covey said that although only cleared defense contractors are covered by Code of Federal Regulations, Title 32, Part 236, there is work within the department to incorporate other companies into this program.
For More Information
DOD Focused on Protecting the Defense Industrial Base From Cyber Threats
FORT MEADE, Md. — The National Security Agency (NSA) released the “Network Infrastructure Security Guidance” Cybersecurity Technical Report today. The report captures best practices based on the depth and breadth of experience in supporting customers and responding to threats.
Network environments are dynamic and evolve as new technologies, exploits, and defenses affect them. While compromise occurs and is a risk to all networks, network administrators can greatly reduce the risk of incidents as well as reduce the potential impact in the event of a compromise. This guidance focuses on the design and configurations that protect against common vulnerabilities and weaknesses on existing networks.
Recommendations include perimeter and internal network defenses to improve monitoring and access controls throughout the network.
Existing networks likely have some or most of the recommended configurations and devices noted, so administrators can use the report to help prioritize next steps in continuing to harden their network against cyber threats.
Read the full technical report here.
Visit our full library for more cybersecurity information and technical guidance.
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Article link: https://www.nsa.gov/Press-Room/News-Highlights/Article/Article/2949885/nsa-details-network-infrastructure-best-practices/
March 4, 2022 | By Greg Hadley
The Defense Department needs to upgrade its IT, add more software specialists, and empower certain programs to be more innovative—especially when it comes to artificial intelligence, the former CEO of Google said March 3.
Eric Schmidt, who led Google and its parent company Alphabet from 2001 to 2015 and chaired the Defense Innovation Advisory Board, delivered a keynote address at the AFA Warfare Symposium in Orlando, Fla., offering what he called several “blunt” criticisms and recommendations for the Pentagon.
“In the tradition of the military, I will be direct and I hope that’s OK,” Schmidt told an audience of Airmen, Guardians, and industry leaders. “If I look at the totality of what you’re doing, you’re doing a very good job of making things that you currently have better, over and over and over again. But I’m an innovator. And I would criticize, if I could say right up front, that the current structure, which is an interlock between the White House, the Congress, the Secretary of Defense’s , the various military contractors, the various services, and so forth, is a bureaucracy in and of its own. And it’s doing a good job at what it has been asked to do, but it hasn’t been asked to do some new things.”
Schmidt did note one exception to that criticism—the B-21 Raider program. Praising the Rapid Capabilities Office, Schmidt said the Air Force developed the new stealth bomber in a “new and innovative” way.
The challenge now is to take that approach and apply it to programs across the DOD, Schmidt said, especially to non-hardware platforms.
“Every time you try to do something in software, one of these strange scavenging groups within the administration takes your money away. It’s insane,” Schmidt said. “The core issue here in the military is you don’t have enough software people. And by software people, I mean people who think the way I do. You come out of a different background, and you just don’t have enough of these people.
“These are hard people to manage. They’re often very obnoxious—sorry, welcome to my field. They’re difficult. They’re sort of full of things, but they can change the world, and a small team can increase your productivity of whatever you’re doing.”
This issue is particularly glaring when it comes to artificial intelligence (AI), Schmidt said. And not only does the military lack the necessary personnel, the defense industrial base does too. Touring the symposium’s exhibition hall, Schmidt said he only saw “like two AI companies, … and by the way, they’re the little ones in the corner.”
Just like the B-21 program has been innovative, there are some examples of good software development, Schmidt said, pointing to Project Maven, a DOD AI project that ignitedcontroversy among Google employees, but which Schmidt said has had “very successful classified use in the right ways.”
But Project Maven was just one project, and “to be very blunt, you don’t have enough people, you don’t have the right contractors, and you don’t have the right strategy to fill in this,” Schmidt said of the Pentagon’s work in AI. “We need 20, 30, 40 such groups—more, more, more. And as that transformation happens, the people who work for you, the incredibly courageous people, will have so much more powerful tools.”
Schmidt’s intense enthusiasm for artificial intelligence is born out of his belief that “AI is a force multiplier like you’ve never seen before,” he said. “It sees patterns that no human can see. And all interesting future military decisions will have as part of that an AI assistant.”
Schmidt is hardly alone in predicting AI will have a seismic impact on warfare. But advocates say they’ve also encountered resistance and inertia within the Pentagon.
Such doubts are preventing the U.S. military from fully embracing AI’s possibilities and forcing service members to “spend all day looking at screens doing something that a computer should do.”
Potential uses include precision weapons targeting, precision analysis, and autonomous systems, Schmidt said. But to get there, there’s something the Pentagon has to do first.
“The real problem you have is that you don’t have enough bandwidth, … which no one ever tells you this,” Schmidt said. “Your networks, excuse the term, suck. You’ve got to get the networks upgraded. You just have to, because all of these things depend on that kind of connectivity, right?”
Schmidt’s comments were met with applause from his audience—the issue of poor network connectivity and IT systems is a constant source of frustration among Airmen and Guardians.
Yet despite all this, perhaps the biggest issue facing the Air Force’s software and AI efforts isn’t really about software.
“We love to talk about strategy, and we need more money over here, and by the way we do, and we need more partnerships over here, and yes we do, and we need more of this over here, and every state has to have its money and all of that’s fine,” Schmidt said. “But what we don’t have and we need a lot more of is the kind of talent to drive this world.”
To attract and retain talent, Schmidt said, the military needs to empower innovators instead of holding them back, granting them a certain level of autonomy to make decisions and take risks. In that regard, his comments echo ones made by Chief of Staff Gen. Charles Q. Brown Jr., who has made empowering Airmen one of the key themes and goals of his tenure.
Article link: https://www.airforcemag.com/former-google-ceo-ai-force-multiplier-pentagon/
MARCH 3, 2022 |BY C. TODD LOPEZ, DOD NEWS
Earlier this year, the Defense Department’s chief technology officer, Heidi Shyu, released a list of 14 technology areas deemed most critical for investment, including biotechnology, advanced materials, trusted artificial intelligence and microelectronics.
A handful of products related to those focus areas — such as hypersonics and directed energy weapons — are almost exclusively military-related, but the majority are already being developed for the commercial market by private companies that may not have done business with the federal government. Those innovations include next-generation wireless communications, microelectronics, and human-machine interfaces.
For DOD to have its needs addressed by the private sector with or without DOD involvement, the department will need to do a better job of engaging with those companies.
Spotlight: Engineering in the DOD
DOD’s Defense Innovation Unit is one segment of the government already on board with locating companies involved in the development of critical technologies and helping them become suppliers.
“We’re really trying to look at what all of the innovative companies are doing around the country … because most of what we need to do to modernize the Defense Department is led by industry now; it’s commercial technologies,” Mike Brown, director of the DIU, said during a discussion Wednesday at George Mason University’s Center for Government Contracting in Northern Virginia.
“We have to be harnessing what the private industry is doing if we’re going to be giving our warfighters the capability that they need,” Brown said.
DIU, Brown said, has been working to accelerate adoption of commercial technology using “other transaction authority,” which is different from classic procurement contracts and is instead used for things like research or prototyping.
The approach DIU uses is called “commercial solutions open,” and Brown said this includes things like agile work statements, modular contracts and working at commercial speeds.
“We don’t start with requirements, which often dictates how the department might start to bring in a new capability — a process that’s well-honed if you’re going to build a new aircraft or tank,” Brown said. “If you’re going to look at commercial technology, you don’t need to start with requirements. The commercial market has already built that.”
When DIU was looking at counterdrone technologies, Brown said, it didn’t need to specify requirements because the commercial market had already developed things DOD could use.
With modular contracts, he said, comes the flexibility to bring in different vendors and have them work together and go from a successful prototyping effort directly into production.
Finally, modular contracts can limit the challenging requirements for intellectual property that might delay the transition of a capability from the private sector into warfighter hands, he said.
“We’re trying to get companies on contract in 60 to 90 days, in commercial terms — that means no onerous IP [intellectual property] requirements for companies that we work with,” Brown said.
Budgeting is also an issue, Brown said. Traditional budgeting requires planning as much as two years in advance before dollars can be spent.
“That’s not the agile process we need to compete with China in technology,” he said. “We need to be able to move not the whole $750 billion defense budget, but we need some flexibility at the edges to respond to emerging threats and plug in new commercial technology solutions that address those threats.
The Commission on Planning, Programming, Budgeting, and Execution Reform, as directed in the 2022 National Defense Authorization Act, is looking now at better solutions to budgeting so that the department can be more agile in the technology it procures. That’s something Brown said he’s glad to see.
Article link: https://www.defense.gov/News/News-Stories/Article/Article/2953893/addressing-dods-tech-focus-areas-requires-new-approaches/
March 02, 2022
Contributor: David Furlonger and Christophe Uzureau
Blockchain is already building trusted digital environments, and one day, it will underpin Web3 and the Metaverse. Don’t get left behind.
In short:
- Blockchain enables two or more people, businesses or computers that may or may not know each other to exchange value in digital environments — in a monetary transaction, information or other exchange of assets — without an intermediary.
- Blockchains are a form of distributed (digital) ledger. Complete blockchains combine five design elements to authenticate users, validate transactions and record information to the ledger in a way that can’t be corrupted or changed later. It thus eliminates the need for a central administrator.
- Blockchain solutions today are continuing to mature, e.g. in terms of scalability, but will ultimately underpin new social and economic models.
Have you bought a house lately? Imagine if you could have transacted with the seller directly, even though you had never met, confident that the deal would be recorded in a way that neither of you could change or rescind later. You wouldn’t have to reconcile rafts of personal information with a real-estate agent, mortgage broker, insurance agent, property inspector and title company. Enter blockchain: A way to directly and securely connect and record value chain interactions.
Albeit this is just a scenario for records management inspired by blockchain. Once further developed, however, blockchain technology will be able to layer on the intelligent decision-making ability of artificial intelligence (AI) and the sensory powers of the Internet of Things (IoT) to create whole new social and economic constructs in the peer-to-peer age of Web3 and the Metaverse.
But let’s not get ahead of ourselves.
Read book excerpt: The Real Business of Blockchain
What is blockchain?
Blockchain combines existing technologies and techniques including distributed digital ledgers, encryption, immutable records management, asset tokenization and decentralized governance to capture and record information that participants in a network need to interact and transact. There are no intermediaries, like banks, validating and protecting the transactions.
While the recorded event could be a monetary transaction, it could also be an exchange of information, such as metadata attached to records like medical history, personal identity and supply chain logistics. In a blockchain-enabled future, your government ID won’t be floating around dozens of databases without your knowledge.
Its component technologies enable the blockchain to:
- Confirm the pseudonymous identity of the participants
- Validate that the participants own the information/assets they want to exchange
- Authenticate and approve that the transaction can occur
- Record the transaction information to the ledger, a copy of which is independently updated and held by each node on the network.
In this digital environment, records are unalterable, time-stamped, encrypted and linked to each other in blocks, where each block is a cluster for Bitcoin of roughly 1,500 transaction records (other ledgers vary in block size). The ledger grows as participants transact, and roughly seven transactions are processed every second (for Bitcoin; other ledgers vary in throughput scale).
The business potential of blockchain
The potential impact of blockchain on business is massive. Imagine all the deals your firm won’t or can’t do today because you don’t know who is on the other end of the transaction and can’t be certain they own the assets they want to trade.
For millions of potential trading partners, asset types and transactions, that uncertainty will cease to matter. The blockchain will identify participants, ensure all elements of a transaction are valid, enforce the ecosystem rules and guarantee everyone holds to them.
Gone will be the slow, expensive, analog-based methods we have relied on to establish identity and legal status in commercial transactions since the 19th century.
Equally important is blockchain’s ability to enable faster and more diverse transactions — in both type and size — than is possible with traditional centralized systems.
For generations, businesses have relied on centralized infrastructures, such as payment systems, insurance, delivery and logistics services, and governments, to execute commercial transactions and manage risk. But these systems weren’t designed to handle the complexity, size and scale of the machine-to-machine transactions made possible by digital platforms.
Single units of data, digital business assets such as cryptocurrency, reward points or pieces of an asset are (or soon will be) tradable over digital networks as part of the programmable economy. Units worth less than $0.01 can be traded by the millions or trillions. Current payment systems can’t cost-effectively and securely process transactions below a certain value nor can they handle the volume possible today.
Businesses need a different way to deal with new digital assets and interactions without involving an intermediary that collects data on every party and takes a cut of the value. Blockchain promises a solution.
How blockchain works
Blockchains are a specific type of create, write and read-only distributed ledger. Not all distributed ledgers are blockchains, but all blockchains are distributed ledgers.
Complete blockchains combine five design elements to authenticate users, validate transactions and record that information in a way that can’t be corrupted by a single participant or changed after the fact. They also enable the adoption of decentralized ecosystem governance and deployment of programmable capabilities, including the creation and use of digital business assets or new forms of money.
While complete blockchain solutions do exist, many of today’s enterprise initiatives only include some of the elements — distribution, encryption and immutability. Often missing are tokenization to exchange value, and decentralization to enable consensus-driven governance.
These incomplete or “blockchain inspired” solutions can still add value by digitalizing manual processes, such as real-estate purchases, or by enabling more efficient information exchange in multiparty transactions, such as insurance claims. But without all five elements, their value is limited in terms of new revenue growth.
Five key elements of blockchain
A complete blockchain incorporates all five elements:
- Distribution. Blockchain participants, connected on a distributed network, operate nodes (computers) that run a program to enforce the business rules of the blockchain. Nodes also keep a full copy of the ledger, which updates independently when new transactions occur.
- Encryption. Blockchain uses technologies such as public and private keys to record data securely and semi-anonymously. During the process of creating a Bitcoin wallet, for example, the blockchain generates an address for the participant that is visible to all network participants but provides pseudonymity.
- Immutability. Completed transactions are cryptographically signed, time-stamped and sequentially added to the ledger. Records can’t be changed unless all participants agree to do so. Such an agreement is known as a fork.
- Tokenization. Value is exchanged in the form of tokens, which can represent a wide variety of asset types, including monetary assets, units of data or user identities. Token use can be programmed via smart contracts. Tokenization, or the creation of tokens, is the way a blockchain represents and enables trade via digital business assets.
- Decentralization. No single entity controls a majority of the nodes or dictates the rules. A consensus mechanism verifies and approves transactions, eliminating the need for a central intermediary to govern the network. Decentralization — and its inverse, centralization — comprises three core elements: technology, economics and decision making. Each can be adjusted to vary the manner in which governance is applied to the ecosystem.
Executives: Don’t ignore blockchain
Blockchain has already started to revolutionize ways of doing business, but even CIOs aren’t totally on board, let alone the rest of the executive leadership team. Gartner research shows that from 2016 to 2021, on average, 45% of CIOs said their organization had no interest in blockchain.
Startups and leading digital enterprises are nevertheless deploying blockchain to solve problems and create value that conventional, centralized technologies and processes can’t. The cryptocurrency market is now worth around $2 trillion, and nation states and public and private companies own nearly $30 billion of Bitcoin alone.
Large companies in fashion, sports, consumer packaged goods, music and gaming are using nonfungible tokens (NFTs) to bridge online and offline worlds, especially in the Metaverse as a way to enhance their brands and engage more effectively with digital customers. In the supply chain space, FoodTrust now has over 300 members. In shipping, TradeLens is processing over 700 million events and 6 million documents per year. In financial services, the Depository Trust & Clearing Corporation (DTCC) plans to launch its Project ION stock settlement solution in 1Q 2022.
Blockchain is clearly heading out of the Gartner Hype Cycle’s Trough of Disillusionment, and now is the time to act. CIOs should alert and educate their board of directors, CEO and fellow business leaders about the fact that enterprises must accelerate blockchain initiatives as part of the enterprise digital transformation, or risk falling so far behind that they permanently lose a competitive edge.
Article link: https://www.gartner.com/en/articles/what-is-blockchain?
By Jerry McGinn
Mar 2, 09:35 AM
Under Secretary of Defense for Research and Engineering Heidi Shyu recently outlined the Pentagon’s critical technology areas. Not surprisingly, 11 of the 14 are heavily commercial areas such as biotechnology, artificial intelligence, quantum science and advanced materials.
The Department of Defense’s increased engagement with commercial companies in recent years clearly demonstrates the critical role these and other technologies will play in future military systems. Unfortunately, DoD has struggled to adopt commercial technology at scale, in large part due to its industrial-age acquisition practices.
Defense Secretary Lloyd Austin acknowledged this in his remarks at December’s Reagan National Defense Forum when he noted the department “has to do better” at helping innovative companies cross the valley of death from “inception to prototype to adoption.”
Indeed, DoD must do better. To ensure strategic advantage against adversaries like Russia and China, the Pentagon needs an acquisition system that innovates, iterates and scales to develop and field effective military capabilities. This is true for commercial or dual-use technologies, but it’s also critical for the major defense programs that use software and advanced technologies to create the next generation of ships, vehicles and aircraft.
Getting to this objective end state requires first and foremost a change in mindset, a paradigm shift. At the Center for Government Contracting, we call this mindset Acquisition Next.
Defense acquisition today is optimized for the assembly lines of the industrial age, developing programs to build platforms and acquire services based on precisely designed military-specific requirements. Meanwhile, the broader economic system has entered the digital age.
Modern engineering and business practices have dramatically accelerated the product development cycle. Commodity production has been replaced by software, data and product design — intangible capital that requires knowledge labor. For example, in 1970, most of the value of a newspaper was in the paper, ink and printing equipment. By the 1990s, the news moved online, but firms still had to own servers. By the 2010s, almost the entire tech stack was virtualized. The largest and most innovative firms today are software natives.
For the Department of Defense to keep pace, it needs to adopt approaches based on modularity and iteration as opposed to linearity and prediction. We looked for this approach in a year-long study of real-world programs. Interviews with more than 75 government and industry professionals from a variety of backgrounds offered evidence that a paradigm shift is already underway.
Importantly, we focused on practices that can be undertaken today and do not require any changes in authority and regulations. Congress has given DoD numerous new and expanded authorities in recent years and DoD has been actively pursuing innovative approaches through initiatives such as the Adaptive Acquisition Framework. Moreover, there is actually a tremendous amount of flexibility in the much-maligned Federal Acquisition Regulation.
Our final report suggests a way to implement the Acquisition Next mindset through a series of “plays” or leading practices in defense acquisition programs. The first three apply at the total program level:
- Requirements. Focus on short statements of outcomes to increase flexibility in solution design and create a stakeholder process for requirements iteration over time.
- Market research. Develop an organizational capability for continuously engaging with industry to identify technologies and vendors that can increase program value.
- Master the baseline. Determine which system elements are technically separable and pursue traditional contracting approaches for technologies with slower cycle times while faster moving applications receive modular contracts.
These practices enable the second group of three plays, which are suited to contracts with software intensive content:
- Agile work statements. Separate technical direction from contract requirements and use a living roadmap adjusted to the product backlog and user feedback.
- Modular Contracts. Start with broad and flexible solicitations, then transition to multiple-award contract vehicles with recurring task orders and streamlined procedures.
- ·Intellectual Property. Rather than focus on specific standards, influence a microservices architecture with rights to interfaces and operational data.
Taking an Acquisition Next approach can help government programs become leaders in innovation again.
Many of these practices are being used in programs today, but widespread adoption will help drive culture change across the acquisition community. All that’s required is top cover from leadership and support up and down the chain of command.
While there is a need for structural reform in defense budgeting, our playbook demonstrates the flexibility in today’s authorities and regulations. To accelerate the next generation of military capabilities, we need to adopt an Acquisition Next mindset focused on modularity, speed, iteration, competition. Let’s get rolling.
Jerry McGinn is executive director of the Center for Government Contracting in George Mason’s School of Business and a former senior DoD acquisition official.
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