As the blockchain industry continues to grow in leaps and bounds, permeating various sectors with its decentralised framework, there is an increasing need for compliance and regulatory tools to be put in place for smoother operations.
Blockchain technology has gained its popularity globally among top organisations and individuals alike. The tech comes at a time when there is a strong increase in demand for data security, transparency, and decentralisation. For instance, today, the internet-based industry is largely centralised, with goods and services must be obtained through a third party, such as Amazon, Uber, or Airbnb. In addition, a substantial number, if not all of these internet platforms, require individuals’ sign-up information which consist mostly of very details. Examples of such services are Facebook or Google.
The flip side to this is, these data provided by the individuals are controlled by the centralised parties making them vulnerable to unauthorised use and hacks, like in the case of Cambridge Analytica or Equifax.
The demand for data protection and privacy among internet users is constantly on the increase. The reason for this is certainly not far fetched; you would want control of your own personal data and also need a high level guarantee that the data you have provided will be kept secure and not distributed to any third party access or used without your consent. However, cases like the Google+ scandal clearly show that data security and privacy cannot be guaranteed by centralised platforms.
Thus, the increasing popularity of blockchain technology. Given its decentralised feature, it provides a trustless framework that eliminates any form of control by centralised parties. Data generated on the blockchain platform is completely decentralised and transparent, which means all parties have access to the data can track each activity carried out. With blockchain, there is a next level data security which increases the difficulty of being hacked or data manipulated. The distributed ledger technology keeps record of each transaction or activity in blocks which becomes visible to all parties involved however, making it difficult to manipulate.
Top organisations such as IBM have begun integrating blockchain with their business operations for efficiency and effectiveness. The financial sector importantly, is another that has shown keen enthusiasm in integrating blockchain technology. The sector has invested well over US$550 million in blockchain and there is no sign of backing out.
Blockchain technology has also catalysed the rise of cryptocurrencies which invariably birthed decentralised exchanges. These digital currencies allow users to trade mostly via the numerous exchanges currently existing.
However, as mentioned earlier, the blockchain industry and financial institutions integrating blockchain require the support of compliance tools. One of such tools is the know-your-customer (KYC) – a method for blockchain service vendors to confirm the identity of their customers. This setup will streamline the accessing of blockchain services for users and drive down compliance costs for blockchain merchants, who are facing ever-increasing regulatory demands.
The KYC procedure however, requires that each new user verifies their identity in order for the exchange of financial institution concerned to verify that the user is not engaged in any criminal activity. Users will typically be asked to upload a photo of their passport or driver’s license (some also ask for proof of address) before they are able to enjoy the full benefits or services of the exchange or financial institution. This means for each different platform a user decides to patronise, a KYC process needs to be undergone. Implication of this is, longer onboarding time for the exchanges and tedious procedures followed by the user for every exchange they decide to engage with.
Also, users who create online identities for different reasons require platforms that will guarantee their identity data security and will give them control over their own data – the liberty to choose where such data should be used.
Self-sovereign identity solution
A comprehensive solution that would effectively address this would be a platform that provides a universal identity framework that is secure and can be used across different blockchain platforms – a “once for all” verified identity.
One of the blockchain organisations stepping up to this is Blockpass. The platform has designed an identity application for regulated services and the Internet of Thiings (IoT). Blockpass provides an identity solution that allows users to establish (verify), store, and manage identities. The self-sovereign identity platforms also lets users establish, store, and manage identities whilst maintaining full control overall data involved.
Blockpass creates user-centric identities, integrating a KYC procedure that involves data deletion at each step of verification, and that allows data to be stored only on the user’s personal device. Blockpass identities can be authenticated because a root hash, derived from a Merkletree composed of encrypted versions of the user’s data is stored on a private blockchain, for comparison with the data stored on the user’s device. Importantly, the hash data can be deleted from the private blockchain at the user’s request.
Benefits of such comprehensive identity verification platforms is that it eliminates the tedious KYC procedures which most times takes several days or weeks, by reducing the signup processes since the identity has already been verified by the Blockpass identity application. Users also will no longer need to go through multiple KYC checks as they get approved and whitelisted once for near immediate access to multiple merchants and service providers.
Importantly as well, Blockpass claims to be a self-sovereign identity verification service that only stores a cryptographic representation of customers’ verified identity on a blockchain whitelist. Their data is stored on your mobile device and shared only with those who they choose. This simply means customers have control over their own data.
Organisations such as Korporatio, GoSecurity, Ethfinex have announced the integration of the Blockpass Identity solution with their services for easier and faster user onboarding. Recently, Waves announced its collaboration with Blockpass to integrate the Blockpass KYC connect with the platform.
“Waves is a pioneering platform for Web 3.0, and identity will no doubt be the underpinning pillar to support that growth of decentralisation,” said Adam Vaziri, Blockpass CEO.
In a world where blockchain technology is rapidly advancing and several blockchain services being developed, it is only laudable to embrace solutions that will foster interoperability among the various platforms and services. A comprehensive identity verification framework is one of such solutions.