Extending Blockchain Technology - a Novel Paradigm and its Applications to Cybersecurity and Fintech

Scientific Objectives and Innovations: Fintech applications are massively distributed and need to process a large amount of data. To support these applications, multiple cloud service providers and network service providers need to collaborate with banks, financial institutions, and other entities. This introduces several management and security challenges since the network is open, entities do not trust each other, and compete with each other for same businesses. To resolve the problem, third-party trusted brokers are used to manage the resource exchanges between each pair of entities. For example, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is used for international transfers worldwide including Qatar. These third party brokers introduce extra cost and latency and become the single point of failure. Blockchain technology eliminates the need for such trusted third parties providing a way for totally decentralized transactions that are fast and lower cost. This is why the financial institutions are rushing to use the blockchain technology. Blockchains provide a way for a global consensus among entities that do not trust each other. All parties can agree whether a transaction is valid or not valid. That is, the validity of a transaction is either 1 or 0. However, there are several situations, where a probabilistic consensus would be more appropriate. For example, whether investing in a particular stock will be profitable. Given a number of financial institutions, each will have its own answer. The overall consensus can be best expressed as a probability between 0 and 1. We plan to extend blockchain technology to help reach such consensus. [**Standard blockchains return binary 0/1 results for the validity of a transaction. Our proposed probabilistic blockchains will return a probability that is most suitable for risk evaluation.**] Numerous other applications will benefit from the probabilistic blockchains. Financial institutions make risky investments. These investments need a probabilistic consensus, not a binary agreement. Insurance, currency exchange, commodity trading, oil and gas exploration are just a few examples where the investing partners would want to agree on the probability of success rather than on the certainty of it. Cybersecurity is another application that needs probabilistic consensus. Public Key Infrastructure (PKI) uses certificate authorities that are the single centralized point of failure. Blockchain technology can provide a distributed approach. Multiple institutions will have a different view of whether a particular email is a spam or whether a particular traffic represents an intrusion. These questions need a probabilistic consensus. The national security of countries now typically involves a collaboration of many different countries. These different entities may not always agree on the certainty of a threat. A probabilistic consensus using a distributed blockchain would help immensely. The examples mentioned above are just a tip of the iceberg. But these are sufficient for Ministry of Defence Qatar and ST QSTP LLC (a disruptive tech start-up) to co-fund and actively join our international academic collaboration between Hamad Bin Khalifa University in Doha, Qatar, and Washington University in Saint Louis, USA. Methodology: We plan to integrate several cutting-edge research fields, including blockchain, distributed systems, network security, cloud computing, and deep learning. First, we plan to design a framework for evaluating the suitability of currently available blockchain platforms in Fintech applications. We then plan to develop the probabilistic blockchain concept to achieve non-binary consensus in an efficient fashion. We will integrate this with intelligent and adaptive IDS agents, built using deep learning techniques. One problem in any large distributed system is that some systems may be compromised by attackers and may try to move the group consensus in a wrong direction. We propose to develop ways to identify such entities and to adjust their trust level. Intellectual Merit: 1. Creative, Original and Transformative: Our approach is creative, original and transformative since it consists of several novel ideas. The distributed, decentralized probabilistic consensus can benefit many applications. Investigation of new deep learning and deep reinforcement learning approaches for building intelligent, adaptive, and collaborative IDSs is novel. Weight assignment and misbehaving node detections are other novel ideas that can benefit any blockchain approach in mining node selection and spurious node elimination. 2. Timeliness: According to a Gartner 2017 report, the scientific and industrial community still lacks both efficient and effective blockchain evaluation frameworks that could potentially pave the way to its success and widespread adoption of blockchain-based applications in the near future. 3. Importance: Our probabilistic blockchains will extend blockchains’ applicability beyond simple distributed ledger applications being investigated by the Fintech industry. It will be helpful in all risk-based investments that form the bulk of the Fintech business. Expected impacts and outcomes: The outcome of this project will be several papers, patents, and reports on the probabilistic blockchains mechanisms for reaching consensus. The software developed will be open-sourced to encourage its adoption and rapid development by multiple organizations as was the case of the original blockchain developed for Bitcoin. Qatar National Research Foundation (QNRF) is already aware of the importance of blockchains. This project is a true innovation to extend that dream beyond traditional blockchain applications. This will put Qatar at the forefront of next-generation Fintech and cybersecurity applications. With the technology being locally available, Qatar would be able to enhance and differentiate its economy and lead other countries.

Hamad Bin Khalifa University (HBKU)