By Koen Vingerhoets (KBC)
Intro – blockchain and finance
Financial Institutions (FI) invest a lot of effort and hard cash in blockchain projects at the moment. The first real hurdle, slightly tackled by good intentions, is “collaboration”.
I’m not referring to two parties talking to each other on a blockchain congress, but to a real and genuine collaboration backed by MoU, LoI, NDA… A collaboration in line with all the requirements from Procurement, Legal, Compliance, Audit & Risk, so to say. Not to mention IT policies… or do you really want your IT-guys to take liability for code being built and used outside your environment?
Nevertheless, within frameworks provided by companies like R3 CEV or within boundaries determined by the stakeholders, some collaborative consortium-based projects finally are taking form nowadays and even aim for a production environment.
From “what” to “who”
That (positive) evolution however, adds a challenge of a completely different magnitude. Most projects aim to realize a customer need or solve a customer pain. Mark my words: “customer”. A customer is someone you know, but does it make sense to limit the scope of blockchain projects to your customers?
If not, the thing to tackle becomes identity. Online identity is a fickle thing, as “no one knows you’re a dog on the internet”. Bitcoin, the first large scale implementation of blockchain, is built upon this layer of (relative) anonymity. It’s one of the perks of bitcoin and the internet itself, but also one of the downsides as it pushes you in an endless circle of digital liability. If someone vouches for your identity, you also needs someone to vouch for that identity, and so on.
The only thing sure in a bitcoin transaction, is that the sending account has an amount of bitcoin at least equal to the amount and fee being sent. Everything else is… unsure. Is it a device sending BTC to a not-existing address? Are you paying to the right account? Of the right party? Will it uphold its obligations to deliver goods or services? Is the transaction legal on both sides? Do you pay taxes on bitcoin or its profit? No one knows… and most don't care either. But they should.
Financial institutions limit this endless loop of “do you trust…” questions, they’re obliged to be liable, to take responsibility. That’s why procedures exist to onboard customers, to at least have a basic idea of who the customer is.
*knock, knock* Who’s there?
To my understanding, in the enterprise blockchain solutions being developed at the moment, identity is not properly covered. If the first step to access the newly built blockchain app is a login through a bank portal, identity is fragmented between the stakeholders. Despite you being the same person or your company being the same company, you have different identities in the backend systems of the involved financial institutions. Furthermore, you must have at least one identity with one of them or you can’t even use the system. You could also set up transactions with yourself if you’re customer of multiple involved stakeholders.
It creates a confusing (and expensive) circuit of mostly paper obligations to be fulfilled and data to maintain, reconciliate and update.
Identity on ledger
Creating an “identity on the ledger” seems to be one of the most needed projects in the land of limitless blockchain possibilities. The proper way to handle identity is to have one and only one identity for anything or anyone. A unique code, a unique set of features, a complete (or to be completed) description of all core attributes defining an actor in “the internet of everything”. Machines, legal entities, people, every actor should have one and only one unique identity.
As this identity is truly precious, it shouldn’t be part of commercial deals. It’s the sole property of the owner, the one who is “the same” (Latin origin of identity is “idem”) as his/her/its identity. After all, your identity is the most essential thing you have on this planet from a legal point of view. The value depends on how you use it and how “idem” to you it is.
So defining a standard of what an identity encompasses, is the final solution?
Plato and the Theory of Forms
Before answering that question, I’d love to share some ancient Greek philosophy. You might recall SPA (Socrates, Plato, Aristotle) from your history classes. One of the ideas that Plato developed around 400 BC, is the “Theory of Forms”, most known for its allegory of shades in the cave (we don’t see things as what they really are, it’s as a shadow cast by a fire on the wall of a cave).
This theory states that everything exists as a Form, from which different appearances are derived. A dog is not always the same, although if you see a Labrador, you know it’s a dog. So somehow we’re able to discern the universal description of Dog after seeing one Dog.
Describing however how this form looks like, in other words, to answer the question “what is a Dog”, turns out to be quite difficult. Plato assumed that “the object” itself is the true form and that every appearance is merely a shadow of the original Form: momentary portrayals of the form under certain circumstances.
This also leads to the conclusion that a Form is necessarily singular and appearances are plural. Forms are almost beyond this world, pure and essential for everything. Understanding the Form of “Dogginess”, what it means to be “Dog”, shows true intelligence.
Platonic Identity on the ledger?
Back to identity. Just imagine having a set of core data on the ledger. The last thing you want is involving this complete identity in everything you do. The only way to make practical use of it is with identities that are derived from this unique and universal identity.
Combining this insight with the Theory of Forms, leads to the Theory of Identities: your identity is universal but singular and a most precious but complex thing. However, to use it in the real world, appearances are used. These appearances exist under certain circumstances and clearly refer to the original Identity without revealing it.
The striking similarity with the Theory of Forms, indicates we might as well give up finding new, unused names to describe the derived identity. When someone mentions “Identity”, it should refer to one’s eternal blueprint, the ethereal Form of Identity, the Singularity. A real world usable (zero knowledge proof based?) identity could then be called a “Platonic Identity”, one of the many shades of the original Form cast on the walls of our existence.
About the author
|Koen Vingerhoets combines a Master in Law with a sound passion for IT. He caught an interest in bitcoin early 2013 and currently works in the core blockchain team of KBC. He is often praised for making difficult items understandable through vivid keynotes and clear texts.|