Ride the Lightning

NIST Issues Draft Report on Blockchain to Help Businesses Decide When and If to Use Blockchain

January 30, 2018

In January of 2018, NIST issued a roughly 60-page Draft NIST Interagency Report (NISTIR) 8202: Blockchain Technology Overview. The report offers a straightforward introduction to blockchain, which underpins Bitcoin and other digital currencies.

"We want to help people understand how blockchains work so that they can appropriately and usefully apply them to technology problems," said Dylan Yaga, a NIST computer scientist who is one of the report's authors. "It's an introduction to the things you should understand and think about if you want to use blockchain."

A blockchain is essentially a decentralized ledger that maintains transaction records on many computers simultaneously. Once a group, or block, of records is entered into the ledger, the block's information is connected mathematically to other blocks, forming a chain of records. Because of this mathematical relationship, the information in a particular block cannot be altered without changing all subsequent blocks in the chain and creating a discrepancy that other record-keepers in the network would immediately notice. Thus, blockchain technology produces a dependable ledger without requiring record-keepers to know or trust one another, which eliminates the dangers that come with data being kept in a central location by a single owner.

The blockchain idea has attracted enough supporters that there are now several hundred digital currencies on the market. Because the market is growing so rapidly, several stakeholders, customers and agencies asked NIST to create a clear description of blockchain so that newcomers to the marketplace could enter with the same knowledge about the technology.

When is it appropriate to use blockchain? The report outlines some possible use cases, including banking, supply chain management and keeping track of insurance transactions.

As blockchain has exploded, we have seen a quick escalation of interest in it by law firms. While blockchain is the shiny new toy of technology, there are cautionary words in the NIST Guide. Read carefully – an expresso (or two) is probably the appropriate drink to accompany your reading.

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