Blockchain and the Enigma Machine

I was recently attending a casual get together of Business School alumni, and I mentioned (I don’t really remember why) that I had been involved in a Blockchain working group for my line of business (Trade Finance). Big mistake: all of the sudden the ears and eyes of the people whom I was talking to widened, their body language changed, and they wanted me to explain what blockchain was all about and what was it used for.

So, what was going to be a nice evening of casual bites, drinks and chatting (or networking, as we like to say nowadays), ended up with me trying to explain smart contracts, consensus, encryption, proof or work, the current expenses that would be eliminated with the new technology, opening my type of products to more people that could use them… and, most specifically, what Blockchain has to do with bitcoin.

The weirdest thing was that, up until that evening, I was truly convinced of the marvel that a distributed ledger would bring to my industry, my job, my clients. I fanatically say that we were late for the adoption, that in 5 years SWIFT, middle office, compliance tasks and functions would be completely vaporized, disintegrated, and something new, simpler, cheaper, better would be in its place and that we were missing the train…

But that evening, seeing the wonderful enthusiasm of my friends, I tried to make a joke to deflate their interest bubble a little bit “…yes, in less than 5 years distributed ledger will be the standard platform for my products, but it won’t last because quantum computers are coming and will render Blockchain and its encryption marvels quite useless…”

I know, it’s not like that, but that silly comment (by now you have realized that my sense of humor is… unfunny… sparked a memory of another time when technology based on encryption was going to change the course of History.

By the end of the Great War (World War I, after they started to number those) a revolution in the applicability of encryption to massive commercial and governmental uses was starting to happen. For the first time, electro-mechanical devices were able to easily encrypt and decrypt messages in large volumes. By the 1930s, those devices had become affordable (at least by large corporations and branches of Governments), portable (they could be carried in ships, vans, etc.), and easy to use (you didn’t need to know mathematics of be an expert on encryption to encrypt and decrypt messages).

The most famous of such devices was the German Enigma machine. It grew in sophistication during the 1920s, 30s and 40s. The encoded messages encrypted by Enigma, when used correctly, were essentially unbreakable by the available methods of the time. When the German Armed Forces adopted that platform, they were convinced of the absolute security of those messages… actually, they were over-confident.

Enigma was a wonderful state of the art piece of technology, but had its little flaws, that could be compensated by very strict utilization rules… rules that weren’t always followed (the machine was too easy to use, operators could get sloppy, …). But what couldn’t be stopped is the advancement of technology.

During the late 30s, in Poland, a group of cryptanalysts developed another electro-mechanical machine, the cryptographic “bomb”, later redesigned and upgraded by British Intelligence at Bletchley Park and by U.S. Army and Navy Intelligence, known as “bombes”.

The bombes were massive, amazing undertakings that pushed the boundaries of technology applied to cryptanalysis to an extent never seen before, and in combination with the understanding of the way the Germans were using the Enigma machines and its internal works, led to the deciphering of most Enigma messages by the end of the war.

So, the amazing, state of the art, (almost) unbreakable Enigma technology was defeated by another amazing advancement in technology that the Germans knew was possible, but not that it was feasible by the time it happened.

Fast forward to 2017. The last 40 years have seen fantastic developments in the world of encryption and its applicability to so many different fields, in particular the implementation of asymmetric key encryption (like RSA). Banking, Internet, mobile phones, to name a few… these industries are so dependent on current encryption techniques nowadays.

Blockchain is possible, in part, to those developments. Encryption using an asymmetric key is one of the foundations of this technology. Funny enough, even one of the projects by MIT engaged to study the application of this technology for secured decentralized computation was called “Enigma”… (

But what if… encryption, as we know it today, were to be obsolete in just a few years? What if a new technology were to make or our secret communications sent through public channels just as transparent as the Second World War bombes made the Enigma machine messages easily readable for the Allies?

Well, that is what might just happen with the arrival of quantum computing.

Quantum computing might sound like science fiction, but theoretical and practical research has been ongoing for a few years now and the discussion is no longer “if they are possible”, but “when they are going to be commercially available”.

Because quantum computers (or, very appropriately, known also as Quantum Turing Machines) process information differently that current binary digital computers and, in particular, can handle integer factorization much more easily than current computers, many current cryptographic algorithms that are currently used today… may be useless pretty soon. So, what I’m trying to say is, encryption, one of the pillars of Blockchain (and not just Blockchain, but all electronic communications that travel encrypted today), might not be as strong as we thought, at least for certain types of current encryption methods.

But fear not, because an escalation in computing is not without an escalation in encryption methods: a quantum Enigma machine. Last year, for the first time ever, quantum physicists of the University of Rochester in New York demonstrated the practical feasibility of a device that is capable of sending an encrypted “unbreakable” message not relying on public/private keys but in a “quantum” key generated by a true random operation. This builds on existing developments in quantum key distribution techniques that could make messages safer than ever… for now.

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