Common problems with blockchain-based identity proof business models

Comment: It is well known that the characteristics of blockchain make it the most ideal identity authentication and protection technology. However, the isolated technology research and development of different technology companies in the market has brought more complexity and unpredictability to the system. Bitcoin expert William Mougayar has noticed this and raised a series of questions. He hopes that the consensus mechanism group meeting in 2016 can work together to remove this obstacle and create more development space for applications in this field.

William Mougayar is a Toronto-based investor, entrepreneur, and consultant who attended Consensus 2016 (Bitcoin’s flagship conference) and is currently writing a book on the subject, The Business Blockchain.

William Mougayar

In this article, we discuss the consumer, business, and ethical challenges facing blockchain entrepreneurs seeking to innovate in identity applications.

Our expectation is that blockchain-based identity recognition will give users full control over their own identity information.

This vision can transform complex Internet experiences into a direct, seamless or unique login effect, eliminating the complexity of unlocking personal information, obtaining network access services and digital asset transactions.

However, despite the incredible innovations that many startups and technology companies are bringing us, I am still concerned because the diversity of choices may lead to fragmented user adoption and undermine the possibility of widespread adoption.

On the contrary, if we keep it simple, blockchain can provide specialized authentication in an irrefutable and unchangeable way, because the blockchain's key is your identity information. But what happens if multiple keys are required to log in because different services require different keys?

Imagine that you have five keys to your house; then you need to choose a specific key to enter your house according to the entrance and date. Or, you have five houses in five different places around the world, so you need to think about how to keep so many keys. Of course, this is possible, but it is also very laborious.

We've all had the experience of remembering numerous complicated online passwords, while worrying about the possibility of being hacked or forgetting our login passwords altogether.

Therefore, I believe that identity authentication and acquisition solutions supported by blockchain technology can improve existing solutions.

Solution Formation Process

In the blockchain field, I have seen many solutions dedicated to identity authentication and personal information security, including providing data and service portals. Some require new hardware support, some require software support, and some require inter-enterprise solutions.

The specific breakdown is as follows:

First, there is hardware. This is like showing a passport or government-issued ID or driver's license. With these documents, you can travel or drive a car. In the same way, some blockchain authentication combines biometric data. For example, some startups, Case and ShoCard.

The second is software. The closest thing I can think of is the OAuth authentication when logging into Facebook, Twitter or Google ID. However, in the blockchain field, these procedures are reversed. First, you register your identity information and then link it to your social network account. Netki, OneName, BitID and Identifi are some of the startups in this application field.

The last is enterprise solution integration. Different from the first two approaches, the third approach starts with consumers. The first step is to identify the integration requirements of existing enterprise solutions. Proponents of this approach include Cambridge Blockchain, Trunomi, uPort, Tradle and Ripple.

Consumer questions

There are several issues surrounding the perfection of blockchain solutions.

For example, which application services currently use these forms of authentication.

In Facebook and Google, some specific applications gave rise to related solutions (such as social media or document access). But in blockchain, most identity authentication solution providers first proposed solutions rather than binding applications.

We have the following questions about these applications:

1. After digital wallets, can blockchain solutions bring us “digital passports”?

2. What does portability mean in the context of identity?

3. What is the role of smartphones in this?

4. What is the existence of zero-knowledge technology that ensures transaction confidentiality and personal privacy?

5. Are users willing to handle the complexity that comes with higher levels of security rules and access levels themselves?

Enterprise considerations

The question for businesses is, how can they provide this service if regulators are involved?

The questions they need to consider are:

1. Can ordinary users manage data access entrances by themselves just like protecting their own property?

2. Can we configure the information access portal in a more detailed manner, using point-to-point security rules instead of firewalls?

3. Do we need a new certificate authority to provide identity system certification stamps?

4. What should I do if I lose my security card or private key?

5. How does it relate to the existing Know Your Customer (KYC) system? Can the new identity authentication scheme provide a better anti-money laundering and counter-terrorism strategy?

6. Will it generate more consumer or business demand?