The Blockchain Revolution Read online

  Frank picked up his tablet to check on the news, scowling as his Band-aid-encumbered index finger swept ineffectively across the touchscreen. Uh-oh. There’d been another breach of a cryptocurrency exchange. He started the video to find out how big it was. One of two men in suits sitting at a news desk began to speak.

  “Good evening. This is your host, Fred Marx. In what may be the biggest cryptocurrency theft to date, cybercriminals have made off with over one billion dollars’ worth of the Delirium alt coin. Here to tell us what this means to the cryptocurrency markets is Karl Engels, our chief financial analyst. Karl, the alt coin sector has been soaring lately. Do you think this will bring it back to earth?”

  “Well, Fred, normally, the theft of a billion dollars’ of something would catastrophically affect any market. But we’re talking about DTs here –”

  “I should tell our viewers that DT stands for Delirium Tremens, the alt coin that was hit.”

  “That’s right, Fred. Anyway, you’d expect a meltdown after an event like this. But this is the crypto market, where it seems like nothing – and certainly not reality – can spoil the party. And after all, this kind of crime isn’t new. Six months ago, over one hundred million Tabbies –”

  “The alt coin issued by PerpetualKitten.com, right?”

  “Right again, Fred. Tabbies worth almost four hundred million dollars were stolen. And yet, the Tabby hit a new high just eight days later.”

  “But Karl, don’t you think this will have some sort of impact on how the other cryptocurrencies are valued?”

  “Of course. All the other cryptocurrencies are up dramatically.”

  The news anchor shook his head.

  “That doesn’t make any sense.”

  “Sure, it does. Part of Satoshi Nakamoto’s genius was to launch a currency with a set number of alt coins. Unless a majority of the bitcoin miners agree to change the software, there can never be more of that alt coin than the number Nakamoto set back in 2008. Most other cryptocurrencies are capped, too.”

  “But what does that have to do with the Delirium breach, Karl?”

  “It’s supply and demand, Fred. Don’t forget, before this breach, Delirium was second only to bitcoin in total value. Now that it looks insecure, everyone’s flocking to the other cryptocurrencies.”

  Frank closed the video. Well, it did make sense, in a crazy, world-turned-upside-down kind of way. But only if you accepted that cryptocurrencies made any sense to begin with. And he didn’t. Even if you could build a totally secure system for issuing alt coins and recording transactions, people would still need electronic wallets to keep them in and exchanges to trade them on, both of which had been hacked. Or you could “spoof” – that is, pretend to be – somebody else and get someone to send their alt coins to your wallet instead. Lots of people had fallen prey to that type of scamming. Since no one could reverse a transaction once it was added to a blockchain, they were just out of luck.

  And that was only the start. If cryptocurrencies were to replace regular money – “fiat currency,” in the jargon of economists – stores, restaurants, gas stations, and everyone else would have to start accepting them. If they did, all the usual ways bad guys used to clean out your bank account or run up your credit card bill could be used to steal cryptocurrencies, too. Only better, because everything was so new. Software flaws would abound, and the black hat hackers usually spotted vulnerabilities before the white hat developers did.

  Frank’s phone buzzed, and he saw an invitation. Oh heck. Cronin had called a meeting of the cryptocurrency team for eight-thirty a.m. tomorrow. Frank had just gotten home from New York, and now he’d have to be on the six a.m. shuttle headed back.

  * * *

  Crypto had been pleased to see that the hand on the faster of his countdown clocks had begun to move within minutes of being activated. Two days later he could tell that the hand on the large clock had begun its stealthy approach to midnight. Soon they were both progressing in a most satisfactory fashion indeed.

  Checking in on his countdown clocks became the first thing Crypto did when he arose and the last before he retired. As well as a frequent diversion in between.

  Chapter 7

  On Second Thought, Make that a Double

  After a few weeks on the job, Frank was feeling diligent but unfulfilled. He was now pretty well accepted by the IT staff, mostly because he’d been careful to keep a low profile. He attended meetings of the security team but rarely spoke. Once a week, he had a half-hour sync-up meeting with Hank Taylor, the manager of the BankCoin project. Frank sensed the purpose of the brief get-togethers was to reassure Taylor that Frank wasn’t undermining his own authority.

  Over time, both men loosened up, and their weekly exchanges grew more productive. Frank learned Taylor was a methodical engineer dedicated to ensuring that the bank’s controls were redundant, scrupulously maintained, and constantly reviewed and updated. For his part, Taylor came to realize Frank had an intuitive approach to security and often made creative suggestions not to be found in any manual of best practices.

  All of which was well and good but not enough to make Frank feel particularly useful. The more impressed he became with the team, the more he felt like a useless appendage. BankCoin had been up and running for several weeks now, processing over a hundred thousand transactions a minute. Everything had gone astonishingly smoothly for such an ambitious undertaking. And the only bugs he’d found on his own were minor glitches rather than real security flaws.

  But new software always had flaws that took months, or even years, to surface. He decided he needed to come at the problem from a new angle to find where they were lurking in BankCoin.

  * * *

  Crypto had finished both books detailing Frank’s exploits and found his mind turning often now to the First Manhattan Bank employee. As it was right now while he pedaled away furiously on a stationary bicycle. He rather loathed the unforgiving machine, but found he did his best thinking in the narrow, vibrating saddle, sweat creeping down his back as he propelled himself endlessly forward into the exact same place. Better yet, for some reason the voices seemed to be unable to monitor his thinking when he was gasping for breath.

  In any event, he found his preoccupation with the First Manhattan employee to be curious, given that he was only one of what must be hundreds of bank personnel, contractors and government staff focused on maintaining the security of BankCoin. So, why always focus on him, and never them?

  Part of the answer, of course, was because he knew Adversego’s name. But all those others would have names, too. He just hadn’t bothered to find out what they were.

  Crypto considered whether he’d simply adopted Adversego as a proxy for all the other foes who might stand between him and victory. That made objective sense; from time immemorial, people and societies had projected their angers and fears on representative individuals. And also, their hopes and dreams. Scape-goating and hero-worship were as much a part of human nature as were the emotions that gave rise to them.

  But that didn’t seem to adequately explain his preoccupation. There must be something more.

  He mulled over that question for days. If Adversego was more than just the personification of the defenders of BankCoin, what unique feature was it that explained Crypto’s fixation?

  In the end, exertion outran inspiration. He deferred resolution of the issue until another day.

  * * *

  Frank settled with a grunt of relief into the town car waiting to take for him to the airport. Access to a cushy ride was one of the perks that accompanied his exalted position at the bank. It had been a long day, and he’d spent most of it in a conference room on the sixty-fifth floor. And not just with Cronin and the cryptocurrency team. For the first two hours, Horace Nukem, the executive chairman of the board of directors, had participated as well.

  Nukem was a heavy hitter: a retired
four-star general who’d served on the joint chiefs of staff. He’d pushed everyone hard today – especially Frank and Dirk – on whether the bank’s new blockchain platform was bulletproof. Cronin almost rose out of his seat when Frank observed that nothing deployed over the internet was ever one hundred percent secure.

  “While Frank, of course, is right,” Cronin interrupted, “You can be sure we’re doing everything humanly possible to ensure the bank’s assets are secure.”

  “That’s not good enough,” Nukem replied.

  “Well, if you find an alien willing to do the job, send him my way,” Cronin said, giving Frank a sideways look that said, “and I’ll gladly give him Frank’s job.”

  Yeah. Frank sighed. A long day indeed. Sometimes he worried whether he really had any idea how secure the BankCoin blockchain actually was. The bank’s security team continued to find and patch flaws. None big or fundamentally worrisome so far, but weaknesses nonetheless. What worried him was he had no way to tell what hadn’t been found yet. The bad guys were still finding great, big flaws in twenty-year-old programs, and BankCoin was brand-new. Who knew what little monsters might be lurking in it, waiting to unleash disaster?

  One commentator had nailed it when he observed, “Blockchain technology is like a proof of concept that escaped the laboratory into the wild.” Not that anyone seemed to care. People in all kinds of industries were jumping on board without thinking the security concerns through. Or in many cases considering security at all. People were even ignoring some vulnerabilities everybody knew existed.

  Most famously, Satoshi Nakamoto’s original white paper admitted that anyone owning more than half the number of copies of the bitcoin blockchain could take over the system. Then they could reverse a transaction or steal anyone’s bitcoins. That was still as true for bitcoin a decade later as it was for many other blockchains. The likelihood of such an event occurring – it even had a name: a “fifty percent attack” – was simply ignored by bitcoin enthusiasts as an inconvenient truth.

  And then there was Etherium, one of the most popular cryptocurrencies in the world. Almost immediately after Ether, its alt coin, began to circulate, somebody launched a crowd-sourced venture capital fund to invest only in Etherium-based startups. The fund founders slapped together a blockchain system to manage the funds, pulling in a hundred and fifty million dollars in no time. Almost as quickly after that, someone made off with forty percent of it! More and bigger hacks of alt coins followed.

  But that hadn’t slowed down the cryptocurrency movement at all. Some things would never change, Frank sighed as the town car rolled to a stop at the edge of a fancy awning running out to the curb.

  A uniformed doorman opened the door for him.

  “Good evening, Mr. Adversego. I hope you’ve had a pleasant day.”

  “Sure, sure. Thanks. Hope you have, too.”

  “Yes, thank you, sir,” the doorman said.

  Frank gave a tight smile, embarrassed he’d forgotten the doorman’s name again.

  The two-story lobby he crossed to reach the elevator was all milky travertine, brushed aluminum, and glass. Abstract paintings in muted colors ran from floor to ceiling. Indirect lighting and soft ambient music completed the understated atmosphere of expensively modern elegance.

  The elevator took him to the forty-eighth floor, where only six doors opened on to the lengthy hall.

  What he could see from his bank-provided apartment was almost as impressive as the view from the management floor at work. He wasn’t as high up, but that made it easier to appreciate Central Park through the glass walls of his living room. He could enjoy the same view from his bedroom, which was twice as large as the room he slept in back home. Five classic, tailored suits lived in his closet here, one for each day of the full week he never spent at the bank. Each was partnered with a matching shirt, tie, belt, and shoes, all selected from posh Fifth Avenue stores by a personal shopper under the personal direction of Audrey Addams. Frank was under strict orders from her not to be seen on the sixty-fifth floor unless he was inside one of those outfits.

  He flopped on a couch he knew must have cost more than all the furniture he owned and contemplated the well-stocked credenza against the wall. Like a hotel wet bar, it was replenished daily. Unlike the hotel version, he never received a bill for what he consumed. The bank saw to that, as it did each of his other New York living expenses. As ridiculously expensive as his Big Apple apartment must be, he decided he could get used to the place so long as someone else picked up the tab. The truth was, he was starting to appreciate living somewhere that was comfortable, cleaned by someone else, and not reminiscent of a Goodwill Industries showroom.

  Not forever, of course. But if the job demanded it, well, what could he do? Besides, he reminded himself, the only reason he was putting up with such outrageous luxury was for his grandkids-to-be.

  He walked over to the wet bar and poured himself a shot of fifteen-year-old scotch. He’d checked its price at the liquor store around the corner. Seventy bucks a bottle! He’d never dream of paying that for a bottle of hooch, no matter how much he was earning. But he was learning to appreciate good scotch on somebody else’s nickel. He decided he could get used to that, too. And then he added another shot to his glass.

  Chapter 8

  Quizzing Dirk, Gently

  Frank stared at his computer, looking for trends in reported cryptocurrency attacks. On his screen was a breakdown by category of every significant theft since bitcoin first erupted on to the scene. Most heists involved successful phishing exploits, which meant fooling someone into thinking an email came from a sender they knew. The email would ask the intended victim to click on a link they shouldn’t or get them to send their valuable cryptocurrency to the disguised address of the criminal.

  The next most common exploit involved hacking into wallets holding cryptocurrencies. Last came attacks against the exchanges where alt coins changed hands. Only rarely had an attacker successfully exploited a vulnerability in the blockchain software itself, and then the hack usually occurred early in the life of a new network, before all its bugs were worked out.

  Frank tapped his fingers. Was that because blockchain architecture was as secure as its fan boys claimed? Or was it that other parts of a cryptocurrency ecosystem were so much easier to exploit? He suspected the latter, but there was no way to tell for sure.

  And then there was this: sometimes it was possible to reverse the effect of an enormous theft. That was because the software of some blockchains permitted a majority of the ledger owners to agree, in effect, to a “do-over.” What that meant was going back to a place in the blockchain before the crime occurred and starting again from there.

  This was referred to as “forking,” because it resulted in two different copies of the same blockchain – identical up to the point in time just before the theft occurred and then diverging. The branch with bogus transaction would usually be abandoned, the other would continue, and voila, it was as if the crime had never been committed. Messy and difficult to agree upon, to be sure, but effective. So, at least when an enormous theft occurred, there was a chance everybody would get their money back.

  So, the potential security of a properly designed and executed blockchain architecture did seem strong – maybe stronger than that of the traditional banking system. With the BankCoin platform, it was even more robust: the entire global network lived on the highly protected servers of major banks, there were no third-party exchanges involved, and only participating financial institutions hosted wallets. Was he letting paranoia overcome reason? Perhaps he was looking for a fatal flaw that did not exist.

  Still – what if someone did figure out how to hack the BankCoin software? In just its first few weeks, it had already handled a hundred times more transactions than all other blockchains combined. What an unholy mess it would be if anyone ever took it out, even for a day.

  * * *
>
  Frank stopped by Magnus’s cubicle, and Dirk turned, his bug eyes training themselves on Frank’s normal ones like a pair of headlights.

  “Frank,” he said. It was an acknowledgment, not a greeting. “What is up?”

  “Would you have time today to review the BankCoin architecture with me? I’m trying to take a fresh look at it to see if there are any flaws I’m missing.”

  Magnus stared at Frank for a second, reminding Frank of a computer processing a particularly difficult equation. Then he blinked twice and said, “There are no flaws in BankCoin.”

  Frank tried again. “Well, sure, it’s really secure. Still, I’m supposed to be worrying about it one way or other, so would you be able to find the time today?”

  Magnus stared some more. But at last he said, “Yes. What would you like me to cover?”

  “Well, that’s part of the problem. I think I understand BankCoin pretty thoroughly, but I don’t want to take anything for granted. Maybe I don’t know what I don’t know. Or worse, perhaps I think I’ve got something right that’s actually wrong.”

  Magnus considered that and blinked again. “How about ten o’clock? Does that work?”

  “That would be great.”

  “In your office?”

  “Perfect.”

  “I’ll bring Ruth.”

  “Ruth?”

  “Yes,” Magnus said, “Ruth Kim.” He turned back to his computer.

  Magnus walked into Frank’s office on the hour and sat down without speaking. A young woman stood behind him, looking for a second chair that wasn’t there. Magnus treated her as if she weren’t either. She wore round, black-framed glasses and a bowl-cut hairdo. If you put her in a Chairman Mao era tunic, Frank thought, she’d be a dead ringer for Honey, Duke’s ever-loyal assistant in the Doonesbury comic strip.

  Frank hopped up and held out his hand to shake the young woman’s. “You must be Ruth. Let me find you a chair.”