A report commissioned by the Pentagon concluded that the blockchain is not decentralized, is vulnerable to attacks and is running outdated software. The report, “Are Blockchains Decentralized, Unintended Centralities in Distributed Ledgers”, uncovered that a subset of participants can “exert excessive and centralized control over the entire blockchain system.”
The findings of the report are a cause of concern for a wide range of sectors, but especially serious for security, fintech, big tech and the crypto industries, which continue to grow.
The Pentagon’s research arm, Defense Advanced Research Projects Agency (DARPA), engaged Trail of Bits—a security research organization—to investigate the blockchain. Trail of Bits focused on Bitcoin and Ethereum, the two leading cryptocurrencies in the global market.
Trail of Bits says that it only takes four entities to disrupt Bitcoin and only two to disrupt Ethereum. Additionally, 60% of all Bitcoin traffic moves through just three ISPs. Outdated and unencrypted software and blockchain protocols were also identified by the organization.
Cryptocurrencies and the new era of digital finance
The Pentagon’s report surfaced just weeks after the Luna crypto crash. In May 2022, the decentralized stable coin TerraUSD—pegged 1:1 to the U.S. dollar—dropped to 30 cents when an algorithm running on the blockchain collapsed. Financial experts warn that the Luna crash was an important lesson about the risks of the blockchain.
Since the Luna crash, cryptocurrencies have been in full meltdown with billions of dollars being lost and investors cashing out their crypto assets. Cryptocurrencies continue to be affected by the global economy, supply chain problems, federal interest hikes, inflation and a looming recession. The DARPA commissioned report only adds more concerns about the blockchain and affects investors’ perception and…
