Bitcoin, blockchain and GIS could change the world

March 14, 2018  - By 10 Comments

“The blockchain cannot be described just as a revolution. It is a tsunami-like phenomenon, slowly advancing and gradually enveloping everything along its way by the force of its progression.”
— William Mougayar *

A kidnapping in Kiev

War-torn and ragged, the once glistening jewel on the Dnieper River adorned in Christmas lights bustled with Yuletide celebration. But further from the city center, the streets were quieter, more demure as the dark night settled in. A black Mercedes Benz pulled up and parked along a poorly lit street. In the car sat four men wearing facemasks and carrying Kalashnikovs. In the cold Kiev night, they waited.

Pavel Lerner (Photo: dw.com)

Pavel Lerner (Photo: dw.com)

Across the street a large, husky man pulled shut the security curtain, turned out the lights and locked the front door of his store. He turned, his briefcase hanging at his side, and walked a few steps toward his car.

The four men crossed the dim street, forming a semi-circle as they moved toward the man. He slowly raised his hands. He was Russian; his accent gave him away. One of the four men placed a thick black bag over the Russian’s head. With gun barrels pointed into his back, he followed their orders, climbing into the back of the Mercedes Benz.

The four men got into the car and sped away into the cold, dark Kiev night. The man was Pavel Lerner, a blockchain expert and owner of a digital currency exchange in the Ukrainian capital. His captors demanded a ransom of $1,000,000 paid in Bitcoins, the highest valued cryptocurrency.

Three days later, on Dec. 29, 2017, safe and unharmed, Pavel’s abductors released him along an unmarked road in the middle of nowhere.

Cryptocurrencies and crime. Crimes involving cryptocurrencies have been increasing; perhaps the most widespread is hackers using ransomware demanding payment in Bitcoins. The worldwide WannaCry virus is the most pernicious of these attacks, costing hundreds of billions of dollars.

Other crimes of the more traditional variety are also on the rise such as kidnapping, as in the case of Chloe Ayling, a British glamour model held for $500,000 payable in Bitcoin.

Blackmail and money laundering are also on the rise; all of them are using Bitcoin as the currency of choice, as are black markets lurking on the darknet.

Silk-road-Icon-WThe fall of the dark web marketplace Silk Road netted unexpected surprises, capturing two rogue FBI Agents and a DEA agent found to be peddling in the underworld’s vast enterprise. Silk Road’s net worth when it was shut down was 614,305 Bitcoins.

As December 2017 came to a close and Pavel Lerner paid his ransom, the value of one Bitcoin peaked at $19,843, making Silk Road worth $12.2 billion and the Dread Pirate Roberts the second wealthiest criminal in history. Ross Ulbricht, the creator of Silk Road, is serving a life sentence.

The 2015 documentary Deep Web describes the government’s takedown of Silk Road. View the trailer below.

When currencies fail

Governments have always been slow to act, or at least slow to comprehend. Such is the case with cryptocurrencies. The government sees the phenomenon as a mechanism supporting criminal enterprise, but the trending use in digital currencies represents a seismic shift in the way people think about money and where they are placing their trust.

There is a decline in the faith of fiat currencies as the countries backing them fall into mounting debt. Concern is fueled by the instability of national and international politics and the threat to the U.S. dollar by the unraveling of the petrodollar.

As well, the euro has been hit by wave after wave of bad news by the economies of Greece, Italy and Portugal and the so-called Brexit, as the United Kingdom withdraws from the European Union. What does that spell for the future of the euro?

Plus, with sanctions, Russia’s Ruble has lost 50% of its value since 2013. The farcical worthlessness of a Zimbabwe 50 trillion dollar note proves there is no limit to the loss in value a fiat currency can suffer when it implodes.

 

Photo: iStock

Photo: iStock

Venezuela’s currency collapse. And now, Venezuela is in a plummeting currency death spiral, officially falling in value from a par of 10 Bolivars to equal one U.S. dollar to 25,000 bolivars, all in the month of February. Unofficial reports are that the value has sunk to 230,000 bolivars to the U.S. dollar.

As of Tuesday, Feb. 27, in a desperate attempt to salvage itself, Venezuela announced an initial coin offering (ICO) for a national cryptocurrency called the petro. The irony in this is that the digital currency will probably survive because it’s on the blockchain, but Venezuela will not.

If anyone wants to learn about what happens when a nation’s currency collapses, Venezuela is a terrifying case study. It is no wonder people around the world seek refuge in an asset that promises freedom from government meddling. It is also no wonder governments are terrified of blockchain’s potential, yet fascinated at the same time, like so many other technologies holding great power for both good and evil.

There is a stalemate of sorts, a stand-off between those early adopters with the courage to invest and risk it all for the hope of great fortunes, and governments who hold the power to regulate, fine, confiscate and imprison. Tension separates both sides. Who will budge?

The United States and Europe have so far been measured in their response, while China and South Korea are cracking down on cryptocurrencies. Most people, curious and cautious, sit waiting it out. These stories represent the darker side of bitcoin, blockchain and the rise of cryptocurrencies, but there is another side, the more benevolent, useful and hopeful side.

What are cryptocurrencies?

Unlike gold, which has traditionally been considered a store of value, cryptocurrencies have no physical existence. They are digital assets held in a digital wallet. They are an asset with a finite number of tokens. They are driven purely by supply and demand. If there is a greater supply than there are traders, the value is next to nothing as there was in 2009 when Bitcoin first came into existence.

May 22, 2010, marks the milestone when a digital currency first purchased something in the physical world. Two pizzas sold for 10,000 Bitcoins. Now, there are more traders than tokens, and the demand has driven the value to unprecedented heights. One Bitcoin was worth $19,499 on Dec. 15, 2017.

Bitcoin is the most explosive financial instrument ever created. But Bitcoin is not the only digital currency. In all, there are more than 1,800 cryptocurrencies. The term “crypto” implies they are secretive and have a layer of anonymity, but there is an irony. Cryptocurrencies are based on blockchain technology.

Blockchains have an unalterable integrity system built into them, leading to the adage “What happens on the blockchain stays on the blockchain.” That creates a conundrum and begs the question, just how is it that what provides a veil of secrecy also holds the promise of open transparency?

Blockchains

Image: iStock

Image: iStock

To answer that question, we need to explore blockchains. What exactly is a blockchain? A blockchain is a digital, decentralized, distributed, open and immutable ledger. Each transaction has a string of characters called a hash. Each hash includes a date/time stamp, a unique ID, a code linking it to the previous hash, and a private key identifying ownership, albeit anonymously.

Each transaction is another link in a chain that can be traced backwards to the previous link, all the way back to the origin of the entire chain, called the Genesis Block.

What makes the blockchain decentralized is no single computer or entity controls it. Hundreds and thousands of computers make up a blockchain network. Each computer is called a node. A blockchain is distributed because all the nodes work together in a peer-to-peer network. Nodes on a network record each transaction, and these transactions are mirrored on every other node throughout the network.

The transactions can be accessed and downloaded from any node on the network. This makes a blockchain an open and distributed ledger. When a node is out of sync with other nodes on the network, it is rejected until it is reset to match the other nodes. That makes it impossible to alter any records, making a blockchain immutable.

For these reasons integrity, is built into the blockchain. Anonymity is provided by a private key that ties it to a digital wallet that can only be accessed by the owner. The digital wallet connects to the owner, but not the blockchain itself. As a result, a blockchain identifies what, when and who about each transaction. A blockchain does not provide where the transaction occurred.

At this time, blockchains lack a geospatial capability.

“Anytime there’s some data that needs to maintain its integrity, blockchain is definitely there. Essentially, what you would do is get the hash and you would have a hash key and then any changes or alterations are made fully aware at all times.”
— Reem El Seed **

Geospatial blockchain benefits

Image: FOAM

Image: FOAM

A company called FOAM is working to change that, creating a geospatially enabled blockchain using a crypto-spatial coordinate (CSC) system. Location in a FOAM blockchain doesn’t just record a specific time, it also validates proof of location and gives a spatial context that regular blockchains lack.

This functionality creates an immutable digital connection to the physical world. Kristoffer Josefsson, CTO of FOAM Inc., confirms this, saying, “We can securely connect offline spaces to online assets.”

If digital currencies based on blockchain technology are going to be considered a safe and viable medium for conducting business, they must include location. Blockchain’s abilities are what the world needs to curtail crime and corruption and be able to follow the money trail from whom and to where it flows.

“This is what we are working on at FOAM and believe that such a system is needed as a crucial infrastructure in our decentralized future and can open new marketplaces of privacy preserving location data.” — John Ryan King, CEO, FOAM Inc.

Adding a geotag to a blockchain is like adding ribonucleic acid to a cell bringing it to life. Something can’t exist until it exists in time and space. A blockchain with a geospatial tag makes that possible and allows mapping of events in a temporal sequence. This inhibits criminal activity.

If a crime were committed using a geotagged blockchain, the location of the crime would immediately be known. The hash code from the blockchain would be extracted with a date/time/location stamp and would be flagged on the network to all the nodes, making that hash code “hot.” A hot blockchain means that particular hash in the chain would be monitored. If it were involved in a transaction, an alert would be broadcast throughout the network, focusing on the location.

Security cameras and other assets would converge, putting eyes on the target, and the transaction would be rejected. Authorities would then be able to trace the digital wallet’s owner like running license-plate tags for a car, and, shortly thereafter, descend on and apprehend the offender.

Did George Orwell dream the dream we are now living, “Big Brother is watching you,” while he himself mocks us from his eternal sleep?

Empowerment with location. Mansour Raad, senior software engineer and Big Data advocate at Esri, sees location-enabled blockchain opening up opportunities for people to interact with their representatives. He is excited about the prospects saying, “We can envision dozens of potential use cases in geospatial contexts, from fine-grained citizen engagement in smart-city initiatives through to activity-based military intelligence applications.”

Certainly, this is a more empowering view. Some of the largest companies in the world are also exploring uses for blockchain and geospatially tagged ledgers. This mass effort and focus on innovation will have some magnificent results.

Mansour goes on to add, “The influx of companies like Boeing and Lockheed Martin and forward-thinking communities like Dubai are searching for blockchain-based solutions to their problems.” This will drive innovation. Both ends of the spectrum are there, from the frontline developers to the back-end buyers with large pockets.

Latitude and longitude has been the backbone of location and navigation for more than 2,000 years, when people navigated primarily by landmarks and the stars. That worked well for those not venturing beyond their familiar locales; but as knowledge of the world expanded and monarchs ruled larger and larger empires, and trade spread to further and further regions, and wars and conquest extended to unknown realms, maps were necessary. A grid system for maps was created by Hipparchus, another of those great Greeks upon whose shoulders the world still stands. That coordinate system, known as latitude and longitude, has served well for two millennia, but the digital age demands another solution.

And so it is with change. It happens over many years, but the transformation happens all at once. The change has been taking place for years with location-based formats such as the Military Grid Reference System (MGRS) and the more universal digital Degrees Minutes Seconds (DMS) supporting GPS-based systems, as well as the more novice friendly what3words (W3W), which is especially useful for disaster-relief operations. All of these serve their purpose, but fall short of providing a concise code that is critically important to make geotagging a blockchain possible. That is of great value considering blockchain’s potential in logistics and transportation, both of which are dependent upon precise location data.

Photo: Port of Rotterdam

Photo: Port of Rotterdam

Add the growth of IoT (the internet of things) and one gets a sense of the demand for a location-based blockchain and how enormous such a system would be. The Port of Rotterdam, Europe’s largest shipping facility, is testing blockchain for logistics. Companies like Ford, IBM and PwC also are looking at its potential.

Mansour Raad adds, “Some data scientists see a benefit to utilizing an addressed reference system such as the Open Geospatial Consortium Discrete Global Grid System (OGC DGGS), due to its holistic ability to fit into existing hashing algorithms. This also turns map algebra into map-set mathematics with drastic advantages to speed, computational resource usage and distribution.”

Get ready! Blockchain is a disruptive technology. It is so powerful that it is difficult to predict its impact, but it will touch everything.

“The old question ‘Is it in the database?’ will be replaced by ‘Is it on the blockchain?’” — William Mougaya

Governments will be more accountable to the people tracing where their expenses are actually going. The government could post an annual tax bill for each person online that could, in theory, show each taxpayer where each dollar was spent. This is an empowering new model for transparency.

A digital wallet is virtual, but it can be connected to the physical world through a smart key, like a SIM card. And, if the blockchain were geospatially enabled, it would create a layer of security preventing any use if the owner of the digital wallet were not nearby. That’s automatic two-step authentication.

A geospatially embedded blockchain could make that possible. Cash can transfer hands and no one is any wiser about where the money came from, but transfer a blockchain-based currency and the new owner is part of the permanent record.

Tough on crime. What would that do to crime? How would it affect blackmail, kidnapping, human trafficking? Perhaps the smart key is attached to the owner’s cellphone, or a smart watch, or a smart ring? Most likely it would be a smart chip implanted in the owner’s arm or thigh.

A smart chip implant. (Photo: Escape Alert, LLC)

A smart chip implant. (Photo: Escape Alert, LLC)

The technology would also be useful for password tokens, building access security cards, passports, etc. It holds great promise for warding off theft and increasing security.

Uses for a blockchain extend beyond currency and are not necessarily associated with financial transactions. Transactions are events: a download is a transaction; clicks on a webpage are transactions; passing through a checkpoint is a transaction; an image capture is a transaction; IoT-triggered events are transactions; and electronically signing a document is a transaction. Blockchains can be coded into software to track downloads of digital copies such as songs, movies, audio, video, images, programs and documents. The obvious implications are copyright protection.

Blockchains can also provide information security for trade secrets, military secrets and even national secrets. Companies that contract to the government would be able to lock their trade secrets from hackers and spies by controlling digital copies with a blockchain. A geocoded blockchain could encrypt data outside of geospatially approved areas or if accessed by anyone other than approved private keys. The contents of secure packages could never fall into the wrong hands even if the package was intercepted. The encryption could not be unscrambled without being in the proximity of the smart key.

Additionally, every download would record what, when, who and where any attempts at access occurred. Blockchain technology also enables smart contracts such as medical records, land ownership records, shipping manifests and notaries. Blockchains can be made a part of physical inventory.

Geocoded-embedded blockchains make asset management more secure, restricting transactions to within specific locations. This would be beneficial in a store for controlling inventory, or at a facility for tracking movements of assets, whether the facility is a military installation, an industrial complex, a government facility, a school campus or a penitentiary. In the case of a penitentiary, the prisoners themselves can be tracked.

Closing Thoughts about Blockchain

“In a time of deceit, telling the truth is a revolutionary act.”
― George Orwell

Elections. In a free republic, the integrity of elections must be protected and made fully transparent. Geotagged blockchain election ballots would be an immutable record of the election. A little geospatial analysis could easily detect locations with multiple votes making it highly suspect for voter fraud. Add the requirement to have a private key associated with each voter and voter fraud would be eliminated.

One of the benefits would be eradicating the months of post-election bickering wasting time, tax dollars and sanity. It’s hard to argue with a transparent, decentralized, distributed and immutable ledger; so, no matter which side of the political divide someone is on, removing reasons for conflict should benefit everyone.

Immutable record. If you look at the non-stop news cycle about the government missing texts, missing emails, possible collusion, a dossier, possibly two, and who knew what, and when did they know it, all of that could be resolved with blockchain technology. An immutable record would make it nearly impossible for anything to come up missing, and a geospatially tagged blockchain would show exactly who knew, what they knew, and where they were when they learned it. Deception would be made much more difficult.

Blockchain has the potential to sterilize corruption in politics. The ideal for an open and transparent political system is worth holding on to.

Learn about blockchain, because it will become more and more prevalent in conversations, on television, in movies, and on the news. I hope this article helped shed some light on the technology and its future and the advantages of adding a geospatial component to a blockchain.


* William Mougayar is the Voltaire of the blockchain revolution. He applies his visionary intellect to the merits of a trust-based, information-sharing system prescribing it a cure against the ills of business, politics and society. Mougayar is stoking the coals of the digital transformation just as Voltaire helped light the torch of the French Revolution.

** Reem El Seed is the coordinator of the Blockchain Users Group for the Washington, DC Chapter. She is a prodigious and enthusiastic proponent of blockchain and cryptocurrencies and a well-known figure in the Washington, D.C., area.

About the Author:

Tewelow is a former intelligence specialist with the U.S. Navy. He also served a special assignment at the U.S. Department of Transportation and is currently a manager with the U.S. Federal Aviation Administration.

10 Comments on "Bitcoin, blockchain and GIS could change the world"

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  1. William K. says:

    It is still not clear where the intrinsic value of bitcoin is. If, as some claim, it is created by some software mining process, where some monster equation is solved, that act of creation presents no value at all to me, but rather a waste of the energy to produce it. There can be no value unless users agree on a value, and I think that “clams” would be a better type of currency than bitcoin. The governments can stomp it out of existence by refusing to accept that it has any value and not accepting it as payment for anything. What the world does not needi is more home-made currency.

    • Satoshi says:

      You could say the same for gold or diamonds, we spend a ton of money mining it, and assign it some arbitrary value (minus the gold that is used in electronics, but the majority of gold is in gold reserves). Governments can’t shut it down. It allows me to send money to anyone in the world in about 15 minutes for just a couple pennies. No banks scraping money off the top and slowing the process down by several days. It has value because it is scarce. There will only ever be 21 million bitcoin, it will never exceed this. I can also store wealth without relying on a bank, it is physically impossible to hack.

  2. William K. says:

    It is still not clear where the intrinsic value of bitcoin is. If, as some claim, it is created by some software mining process, where some monster equation is solved, that act of creation presents no value at all to me, but rather a waste of the energy to produce it. There can be no value unless users agree on a value, and I think that “clams” would be a better type of currency than bitcoin. The governments can stomp it out of existence by refusing to accept that it has any value and not accepting it as payment for anything. What the world does not need is more home-made currency.

  3. Muhindo Wilson says:

    Am so touched by this piece of information.
    Will do my MSC. thesis on this very piece of knowledge. We need location attachment to block chain.

  4. Neil Doherty says:

    I am yet to see bitcoin or a derivative being used for GIS, but think it is useful as a effective way to avoid duplication, all thats needed is a app/plugin setup that can be linked to GIS entry. I haven’t managed to find this setup either but since there are quite a few bitcoin/ethereum wallet reviews I guess a setup like this is just around the corner. I know Tasmanian fruit companies are already using the technology to track fruit to point of sale in china.

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