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Introduction to Blockchain and Airport Operations in a COVID-19 Environment (2020)

Chapter: Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?

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Suggested Citation:"Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?." National Academies of Sciences, Engineering, and Medicine. 2020. Introduction to Blockchain and Airport Operations in a COVID-19 Environment. Washington, DC: The National Academies Press. doi: 10.17226/26036.
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Suggested Citation:"Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?." National Academies of Sciences, Engineering, and Medicine. 2020. Introduction to Blockchain and Airport Operations in a COVID-19 Environment. Washington, DC: The National Academies Press. doi: 10.17226/26036.
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Suggested Citation:"Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?." National Academies of Sciences, Engineering, and Medicine. 2020. Introduction to Blockchain and Airport Operations in a COVID-19 Environment. Washington, DC: The National Academies Press. doi: 10.17226/26036.
×
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Suggested Citation:"Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?." National Academies of Sciences, Engineering, and Medicine. 2020. Introduction to Blockchain and Airport Operations in a COVID-19 Environment. Washington, DC: The National Academies Press. doi: 10.17226/26036.
×
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Suggested Citation:"Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?." National Academies of Sciences, Engineering, and Medicine. 2020. Introduction to Blockchain and Airport Operations in a COVID-19 Environment. Washington, DC: The National Academies Press. doi: 10.17226/26036.
×
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Suggested Citation:"Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?." National Academies of Sciences, Engineering, and Medicine. 2020. Introduction to Blockchain and Airport Operations in a COVID-19 Environment. Washington, DC: The National Academies Press. doi: 10.17226/26036.
×
Page 20
Page 21
Suggested Citation:"Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?." National Academies of Sciences, Engineering, and Medicine. 2020. Introduction to Blockchain and Airport Operations in a COVID-19 Environment. Washington, DC: The National Academies Press. doi: 10.17226/26036.
×
Page 21
Page 22
Suggested Citation:"Session 1: What Is Blockchain and How Is It Relevant to the Airport Industry?." National Academies of Sciences, Engineering, and Medicine. 2020. Introduction to Blockchain and Airport Operations in a COVID-19 Environment. Washington, DC: The National Academies Press. doi: 10.17226/26036.
×
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3 SESSION 1  What Is Blockchain and How Is It Relevant to  the Airport Industry? John Payne, Pueblo Technology Group, Inc., Moderator Presenters  Victoria Adams, Cadwyn Bloc LLC Nelson Petracek, TIBCO Software, Inc. Victoria Adams and Nelson Petracek introduced blockchain technology and its benefits, presented key concepts, identified challenges and benefits associated with the technology, and noted potential use cases relevant to the airport industry. Adams stated that blockchain is a simple idea with profound implications. Blockchain is, at its simplest, a centralized database structure that allows parties to transfer anything of value that can be represented digitally without the use of a middleman or intermediaries. That structure could dramatically lower the cost of transferring assets while reducing fraud, theft, and hacking. Blockchain can give individuals the right to control their own data, break the monopoly of data brokers, and create transparency and data audibility. It also allows competitive parties to work together and build new governance and business models. Adams noted the contrasts between blockchain and a traditional exchange model, under which all exchanges are transactions of value and must go through a middleman such as an escrow service or bank. These middlemen are viewed as “trusted parties” and are used by parties between which there is limited or no mutual trust. Adams stated that challenges with traditional exchange models include the time and cost associated with transactions, the power the middleman holds, and the multiple records held by the buyer, seller, and middleman. She added that reconciling those records can be time-consuming and costly. This model also creates a “honeypot,” or central data store that is vulnerable to fraud and hacking. Adams stated that blockchain is essentially a shared database across a series of computers, or nodes. Data are stored in blocks linked to one another chronologically in an unbreakable chain. The blocks are validated by computers in the network using complicated

4 mathematical proofs. Nodes communicate, reach consensus (using different systems, depending on the blockchain), decide whether a transaction is legitimate, add the transaction to the block, and add the block to the chain. Each transaction is distinguished by a hash, or string of numbers and letters generated by a mathematical function and encrypted. Once a block is in the chain, it is impossible to change unless the nodes in the network agree to do so. Adams stated that transactions can originate from a human or a machine and that transactions are pseudo-anonymous. The machine knows the originator’s public identity, but no other identifying information or how to access private information. Adams stated that blockchain can also be used to create digitally self-executing “smart contracts,” in which business logic is embedded and cannot be changed. These contracts, once created, use blockchain to tell another person or machine what to do (e.g., specify the conditions around which money would be exchanged between individuals). Benefits of smart contracts could include creating a transparent, accountable record; security; and autonomy (i.e., no human input is needed once the smart contract is created). Smart contracts could be very cost-effective. Adams noted tokens as another common application of blockchain. Tokens store value and can be used to pay people, exchange something of value, allow the holder access to a service, or act as an investment. She added that tokens can also be used to influence behavior. Adams noted different types of blockchains:  Private blockchains, for which a single party manages all chains, including controlling all transactions and conducting validation. This model is very efficient and fast but is vulnerable to hacking.  Consortium blockchains, in which multiple parties coordinate, agree on rules, and decide who will validate the transactions. This model is efficient but does not have all the benefits of a decentralized blockchain.  Public blockchains, which are fully decentralized and very secure. Public validators are compensated for that service. Adams noted several issues associated with blockchain technology:  Scalability: Many consensus algorithms are not sustainable at high volumes of transaction;  Latency: Transactions can take a long time to process;

5  Privacy: Pseudo-anonymity may not be protective enough, especially in an enterprise or consortium blockchain that is controlled by one or a limited number of parties;  Integration and interoperability: Integrating blockchain into existing legacy systems and between different blockchain ecosystems could be challenging;  Governance models: In a consortium blockchain, parties need new governance models; and  Regulation: The regulatory framework for blockchain is still uncertain. Adams noted key questions for determining whether it is appropriate to consider blockchain for a particular application, including whether  A database is needed to record a transaction or state changes (if so, blockchain may be appropriate),  There are many transactions that need very rapid processing (if so, blockchain may not be appropriate),  Multiple parties need to enter data (if so, blockchain may be appropriate),  Parties know and trust each other (if so, blockchain may not be appropriate),  Parties trust a third party (if so, blockchain may not be appropriate), or  A central authority is needed (this will determine the type of blockchain that may be appropriate). Adams noted several potential use cases for airports that will be discussed throughout the event, including customer-facing applications such as baggage handling, security, and ticketing, and operational activities such as cargo tracking, provenance tracking (i.e., tracking the origin and chronology of an item or data), and regulatory compliance. She added that blockchain facilitates sharing by breaking down siloed data systems. Adams provided several examples of specific use cases, including using blockchain to record the location and status of a medical product from factory to truck to plane to truck to hospital. In this case, blockchain secures the information about that product. This approach has been used successfully to track the provenance of tuna from “bait to plate,” using radio frequency identification tags and photo records. Adams noted that blockchain could also be useful in cases in which it is necessary to exchange some, but not all, data between a series of siloed systems. Adams added that it is important to remember that movement into a world of machine learning and artificial intelligence (AI) brings a system that is still only as smart as the data being put into it. Adams added that in a large data storage system, blockchain could be helpful in allowing users to understand the lineage of the data and to identify and remove data that have been

6 hacked, tampered with, or changed. It can also help to identify the point at which the data were changed, how, and by whom. Adams stated that blockchain could also help to track passenger health. In this example, testing results (e.g., for COVID-19) could be secured on the blockchain. Individual personal medical records would be protected, but travelers could share their history of testing and infection with the necessary parties. Nelson Petracek introduced the considerations around using blockchain in enterprise contexts and use cases pertaining to managing data and analytics. He stated that he often frames blockchain as a better way to manage business-to-business transactions. Most businesses have traditionally involved highly decentralized interactions, but businesses are increasingly looking to create partnerships with other organizations and streamline the customer journey. Petracek noted key enterprise drivers behind blockchain, including increasingly highly connected interactions, the need for decentralized business networks and automated transactions, and the need for integrity, security, and visibility across transactions. Airport and airline operations require collaboration, as airports, airlines, customers, passengers, and third parties must share information seamlessly and securely and, to the extent possible, in real time. Blockchain could be an application that allows this to happen. Blockchain could also help to improve the accuracy and timeliness of information, which could improve customer satisfaction. Petracek noted an example of tracking the provenance of parts for an airplane engine. Blockchain could help to identify where the components came from and create a tamper- resistant log for the components. Once the engine was assembled, blockchain could be used to track the life cycle of the engine and its components from engineering through decommissioning. It could also be used to ensure that equipment is properly maintained over time and to help transition from a reactive “fix it when it breaks” model to a more predictive approach. Petracek added that the information in the chain can be provided by Internet of Things (IoT) devices or devices that are connected wirelessly to the Internet and share and transmit data, although there would need to be protections in place to ensure that the devices were not being tampered with. In the example of tracking equipment maintenance, IoT devices could be used to derive insights or a predictive score to anticipate when maintenance or repair would be needed. Petracek stated that blockchain could also be used to help track end-to-end provenance of anything (e.g., people, baggage) and streamline information between airports, airlines, and all parties involved seamlessly and in real time. Tokens could also be used as digital

7 vouchers, for loyalty program execution, for exchange of vouchers for goods and services, and other applications. Additionally, blockchain can be used to distribute data and crowdsource improvements to AI/machine learning models, improve process optimization and tracking, and facilitate payments. Petracek added that in the financial industry, blockchain also could support anti–money laundering and fraud identification efforts by facilitating sharing and updating of whitelists (the universe of trusted entities or devices) or blacklists (the universe of untrusted entities or devices). Petracek noted that identity comprises verifiable credentials, such as a driver’s license or passport. Currently, identification is given freely to third parties to log on to websites, and identity holders have no control over what the third party does with that information. Blockchain places control of one’s identity back in the hands of the individual or organization and decentralizes and distributes the data to minimize or eliminate service disruptions and hacking. Many countries are investigating the use of digital currencies that are blockchain-backed and owned or executed but governed by a central bank. Petracek noted challenges associated with blockchain. The idea of no middleman or third party has not quite been realized. In some cases, there may be a founding member of a blockchain network that is acting as a middleman to, and governing the behavior of, the blockchain. Privacy is also a concern. Data are not necessarily encrypted on the network, so there are issues related to controlling access, managing keys, and preventing breaches. Managing mistakes or errors when data cannot be updated or deleted is another concern. The idea of immutability also depends on the idea that no one person could replace the entire blockchain from beginning to end or introduce a malicious block. However, if one entity owns and controls the network, it will have the power to do so. Other considerations include who will manage and run the network; data privacy; legal and regulatory risks; deployment, management, and logging; and selection of the blockchain platform. Additional considerations specific to smart contracts include programming errors; requiring collaboration across parties to deploy and change business logic; ensuring that nodes can support the running of blockchain, and examining the legal enforceability of smart contracts for which there are no standards or legal history. Petracek noted that blockchain is not designed for analytics. If data are extracted from the blockchain and put into a separate database, the organization must consider how it will ensure that no one is tampering with the data. It is also necessary to control access to the blockchain.

8 Petracek summarized the typical blockchain implementation journey from use case study through proof of concept to deployment. Petracek noted that deployment can be complicated and can involve multiple parties. Governance, legal, and other considerations could be more complicated than the technology itself. Petracek noted that he has had customers deploy blockchain for internal purposes to better understand what the technology can and cannot do before expanding the application to other parties. This may seem counterintuitive to the purpose of blockchain but can be useful. Petracek noted best practices and associated considerations, including  Constantly reviewing security,  Carefully selecting blockchain data,  Understanding the differences between types of blockchain (i.e., public, private, or hybrid),  Establishing a strong and suitable governance model,  Defining performance and scalability requirements,  Mapping use cases to the properties of blockchain networks to identify system needs,  Correctly designing access to and security for the blockchain,  Establishing a legal framework between parties, and  Properly designing the infrastructure. Petracek reported that Forrester Research’s 2020 predictions for blockchain are as follows:  More than 80% of deployments will be hybrid, multicloud (i.e., using services from multiple cloud providers), or both, and networks dependent on a single cloud provider will not thrive in the long term.  Blockchain will not live on a single platform; rather, blockchain networks could be networks of networks.  Interoperability between blockchains, including between public and private blockchains, will be critical.  The battle over which tool or platform is best will continue.  The ties between blockchain and existing business solutions will be strengthened.  Executive teams will be drawn into the permissioned versus public network debate.  Consensus, separate from the ledger, will become a distinct service, to address scale issue. Petracek stated that not every problem requires a blockchain solution. The ability to build streamlined decentralized networks with trust, security, and governance will be more

9 important as technology advances. Awareness of blockchain is built through experimentation. In response to a question regarding how to determine how to insert blockchain as a component of a solution, Adams responded that the first step should be to work with a trusted consulting firm. Adams stated that it is important to start with a discovery session in which key individuals get together to explore potential blockchain use cases and assess whether these use cases can work with traditional and easier to use systems. Petracek noted that, if a decision-maker starts from the point of wanting to use blockchain, that is a concern. The process should start with identifying the use case and then confirm whether blockchain is valid for that use case. A participant stated that airport operating budgets are very tight as a result of the drop in passenger traffic during the pandemic, and capital budgets are being held in reserve. The participant asked whether there are any obvious use cases for blockchain that will provide monetary savings. Adams responded that airports could look for any facet of operation in which there are significant expenditures associated with validating data or working through middlemen (e.g., provenance tracking). Adams noted that the movement of pharmaceutical goods and cargo will be a significant issue for airports in the upcoming year. Blockchain could be a technology solution for managing this increase in movement and limiting liability. Petracek stated that blockchain could also save time and money in cases related to regulatory compliance auditability (i.e., any time the airport is required to prove why something happened or why a specific decision was made). Other potential cost- saving use cases include streamlining the movement of data outside a firewall or exchanging information between different parties in a broader business network in a digital or more automated way. A participant asked what consensus-as-a-service (CaaS) is and what the criteria for using such a service would be. In response, Petracek said that there are 50 or more different consensus algorithms and that selecting and running consensus systems (i.e., the process by which multiple nodes come to an agreement about the legitimacy of a transaction), can be costly. It can also be difficult to determine which algorithm is appropriate. In response, a number of entities have emerged that offer CaaS. CaaS offers an on-demand network of decentralized nodes that can be used to validate transactions between different parties without using a public network such as Ethereum. A CaaS network would be limited to specifically validating external transactions on a subscription or pay-per-transaction basis and would provide an additional trust layer to a private or consortium chain, which by their very nature have a limited number of nodes that can validate transactions.

10 Algorithms vary across blockchain networks, and certain algorithms are appropriate for certain use cases. For example, proof-of-work algorithms are primarily used for Bitcoin and Ethereum. Petracek stated that blockchain organizations are now allowing customers the flexibility to use a different algorithm than that which traditionally comes with a particular blockchain framework. Petracek noted several considerations associated with this choice, including ensuring that the algorithm being used can be trusted and the need for a high level of transparency. Adams noted that outsourcing consensus essentially recentralizes a certain element to the process. It may be better to bring the consensus system in-house and move to a private or consortium system. A participant asked how blockchain could be used to facilitate contact tracing of passengers. Adams responded that an airport can be thought of as a closed environment. If something is true when it enters the system (e.g., data indicating that a passenger has a negative COVID-19 infection status), that person can be tracked with a geocoding system that keeps the data private and secure, except in the cases in which it needs to be disclosed. A passenger could enter the airport and have his or her temperature scanned. An app on the passenger’s phone would allow the airport to see that passenger’s movements. Any time someone encountered an infected person (assuming all travelers have the same app installed), that person could be notified. Adams noted that this use case is entirely theoretical but could be implemented. Petracek noted that much of the scenario could be achieved without blockchain. Blockchain plays a role in the identity aspect of the scenario. Petracek stated that health information cannot be put on the blockchain without violating Health Insurance Portability and Accountability Act (HIPAA) rules.

Next: Session 2: Blockchain in Use at Airports: Customer Facing Applications »
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In the airport industry, potential applications for blockchain include security and identification, flight data management, safety and maintenance, baggage and cargo tracking, regulatory compliance, and more. Promising blockchain applications specific to COVID-19 include passenger health verification and contact tracing, facilitating a contactless passenger experience, and tracking the movement of healthcare supplies and pharmaceuticals (including vaccines) from origin to final destination.

The TRB Airport Cooperative Research Program's Conference Proceedings on the Web 28: Introduction to Blockchain and Airport Operations in a COVID-19 Environment brings together conference proceedings of representatives from the airport sector and the blockchain industry along with other experts engaged in airport operations, information technology, and blockchain.

This ACRP Insight Event took place virtually on August 4–5, 2020. More information is available at http://www.trb.org/ACRP/ACRP-Insight-Events.aspx.

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