The Impact of Blockchain Technology in Armed Services

The US House Armed Services Committee’s latest National Defense Authorization Act (NDAA) draft for fiscal year 2025 includes significant provisions for exploring blockchain technology’s role in national security and defense applications. A committee-approved draft was sent to the full House for consideration, and the Senate Armed Services Committee advanced it to the Senate floor on July 9.

It states,

“The committee acknowledges the potential uses of blockchain technology for broader national security purposes within the defense landscape.”

The first mention of blockchain technology in the NDAA occurred in the fiscal year 2018, denoting the initial recognition of this technology within national defense legislation. During that year, the US House of Representatives added two blockchain-related amendments to the annual defense spending bill. These amendments directed the Department of Defense (DoD) to explore blockchain technology’s potential offensive and defensive cyber capabilities and to report back within 180 days.

The DoD fulfilled this requirement, producing a report examining blockchain’s cybersecurity capabilities, assessing its use by the US Government and critical infrastructure networks, and evaluating their cyber-attack vulnerabilities. This indicated a growing governmental interest in applying blockchain technology for purposes such as cybersecurity and supply chain management.

Blockchain for defense

This month, the Senate Armed Services Committee has continued to explore blockchain technology’s potential for national security and defense applications. The committee’s FY 2025 NDAA report includes directives related to blockchain, recognizing its potential to enhance the cryptographic integrity of defense supply chains, improve data integrity, and reduce risks of data manipulation by adversaries.

The Secretary of Defense has been instructed to investigate blockchain use cases for national security goals, focusing on secure, transparent, accountable, and auditable data related to supply chains. A briefing on these applications is required by April 1, 2025.

This briefing is specifically to cover several key areas:

• An assessment of the benefits and risks of implementing blockchain in supply chain management.
• An analysis of the current state of blockchain adoption within the DoD and the defense industrial base.
• A plan for pilot programs or research initiatives exploring blockchain’s use in national security applications such as supply chain management and cybersecurity.
• An analysis of blockchain research and development activities by foreign countries, particularly China and Russia.
• Organizational recommendations to foster blockchain development within the DoD, including the feasibility of creating a coordinating office or center of excellence.
• Recommendations for legislative or regulatory actions to enhance supply chain transparency and audibility through blockchain technology.

The Department of Defense had already been exploring blockchain applications, culminating in a 2024 contract with blockchain startup Constellation. This initiative marked a significant step in utilizing blockchain to enhance the cybersecurity of backend systems and secure data transfer across Defense Transportation System commercial airlift partners.

Bitcoin for offense

In addition to its ongoing exploration of blockchain applications, the Department of Defense may soon consider Bitcoin as part of its strategic initiatives. Jason Lowery, the author of “SoftWar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin,” revealed that members of Donald Trump’s campaign administration have sought his expertise on Bitcoin.

Lowery has highlighted Bitcoin’s potential for national security and proposed the formation of a “US Hash Force” involving agencies like the Department of Energy (DoE) and the Department of Defense (DoD). Specifically, he suggests that the US Cyber Command (USCYBERCOM) or the US Strategic Command (USSTRATCOM) establish a Combined Hash Force Component Command (CHFCC).

This initiative would involve collaboration with FVEYE and NATO countries to counteract digital warfare efforts by adversaries such as Russia and China. This proposal aligns with the Senate Armed Services Committee’s directive to investigate blockchain use cases for national security, reflecting a broader governmental interest in leveraging blockchain technology for defense and cybersecurity.

Current administration role in blockchain adoption in the military

The recent directive from the Senate Armed Services Committee highlights a growing recognition of blockchain’s potential in military and defense applications. The committee’s proactive stance includes plans for pilot programs, assessments of blockchain’s benefits and risks for supply chain management, analyses of its current adoption in industry and by foreign countries, and feasibility and cost estimates. This evolving exploration reflects a strategic push toward leveraging blockchain technology for improved national security and defense capabilities.

While the SEC has been allowed to regulate through enforcement, the sitting government has played a notable role in advancing the adoption of blockchain technology within the defense sector. Through legislative actions, strategic contracts, and cross-agency initiatives, the government has laid the groundwork for integrating blockchain technology into national security and public service operations.

The Senate’s directive to explore blockchain for military applications, the adoption of military contracts with blockchain companies, and the House’s passage of the FIT 21 bill indicate legislative support for blockchain technology in this area. However, digital assets running on blockchain have a less obvious future under the Democrats than the Republicans following the new RNC platform for 2024.