Cyber Pioneers in EU's North Open Hacker-Proof Digital Highway

(Bloomberg) -- In this age of social media leaks and foreign election hacking, the ability to transmit sensitive personal information securely across borders is more valuable than ever.

Finland and Estonia, two of Europe’s most digitally advanced nations, are about to achieve just that.

Finns who cross the Baltic Sea to visit the former Soviet nation will soon be able to pick up their doctor’s prescription at any local pharmacy without worrying about prying eyes. Likewise, the around 100,000 Estonians currently employed in Finland will be able to have their paycheck sent to their home country’s tax authorities for quick and easy filing.

What makes applications like these possible is the first secure international data highway in the world dedicated especially to the needs of ordinary citizens. Based on open-source code, the so-called X-road has plenty of other potential applications, from the sharing of driver license data and death certificates to company data on the trade register.

Russian Threats

Security was a key consideration in its design. The two nations both neighbor Russia and are prepared to the teeth to counter modern hybrid warfare.

Estonia’s capital, Tallinn, hosts NATO’s cyber defense center, while Helsinki is home to a research facility that specializes in hybrid threats. After Russia’s annexation of Crimea, in 2014, Finland quickly amended the law to allow its defense forces to engage “little green men” -- a term used to describe masked soldiers in unmarked green army uniforms, allegedly pro-Russia, who were spotted in Ukraine during the crisis.

The data-exchange is secure because of its fragmented nature. When a party joins, it is able to share encrypted data with all other trusted users over the Internet, without the need to build new connections. Linking hundreds of databases, instead of relying on a centralized system, helps avoid a single point of failure and makes the cost of breaching the system excessive.

Estonia, which has been using the system domestically since 2001, was able to largely maintain data exchanges throughout the massive denial-of-service attacks of 2007.

Uuno Vallner, one of the Estonian X-road creators, says the system also protects from a potentially greater threat to citizen’s privacy: the misuse of data by officials.

Blockchain Technology

The X-road “leaves traces of their actions,” Vallner said in a phone interview, meaning abuses can be easily identified. Vallner also argues that the X-road is one of the first instances in which blockchain technology has been implemented on such a big scale.

More Resources

Read more on Estonia’s digital government
Weighing security against privacy
Check out the QuickTake on cybersecurity
Watch this X-road introduction by the Estonian government

Now that the two countries’ systems are talking to each other, data between Finland and Estonia can begin to flow as soon as the relevant legislation is finalized.

Citizens won’t notice any difference, said Maria Nikkila, senior adviser for information management at the Finance Ministry in Helsinki. “It’s like driving a car: if the engine is running and the car is moving, no one cares about what happens under the hood.”

The X-road isn’t particularly expensive. Finland spent about 70 million euros ($86 million) on the project, while developments and maintenance costs on the Estonian side run at around 20 million euros per year.

In theory, X-roads could facilitate European Union plans for electronic prescriptions to be shared across its member states. The main stumbling bloc is that many national authorities would need to de-centralize their network of servers for the system to work.

That requires “a change of mindset,” Vallner said.

©2018 Bloomberg L.P.