As the blockchain hype cycle neared its peak, people started wondering if this technology could be applied to industries beyond finance. Imaginations wandered, people thinking where else in our economy or society do we see centralised systems or powers creating issues?

Digital identity was one of these places. Issues in digital identity are great and varied. For example, legal identity or the lack thereof currently excludes ~1 billion people from participating fully in civic, social and economic life. And the monopoly access to the social graph underpinning Facebook provides them with the ability to sway public opinion and earn extraordinary advertising revenue in the process.

These problems challenge us to rethink how data is owned, controlled and shared in society, particularly as it applies to digital identity. To date, most approaches have only focused on interoperability and while an important step it only solves part of the problem. While interoperability enables data to move between systems it does little on its own for expanding who gets to participate in the digital identity ecosystem. If all we focus on is interoperability then all we will get is data bridges between established organisations, maintaining and reinforcing the status-quo. Expanding who can participate is how we will surface the new ideas and solutions required to overcome the digital identity challenges of today.

A digital identity ecosystem that focuses on expanding interoperability and participation allows for more innovation potential, and hence greater opportunities to address the pressing global digital identity challenges.

Rethinking Data Ecosystems

Over the last five years I have observed four different types of approaches to data unfold: Data islands, monopolies, cartels, and ecosystems. Each can be differentiated by the degree to which they facilitate data interoperability and how committed they are to openness; with openness referring to how transparent and easy it is to participate.

As more attention is directed toward digital identity there has been a recognition of the challenges presented by data monopolies, and an attempt to find alternatives to this.

Self-sovereign identity (SSI) has been espoused by many around the world as being a silver bullet to the digital identity problem. But several years in, no SSI solution has made significant traction in the market. Instead, we see cartels forming that facilitate data interoperability between data monopolies using federated approaches and similar.

Data Ecosystems & Self-Sovereign Identity (SSI)

The reason why we have seen less uptake in SSI solutions is because the people behind these solutions fail to recognise the design principles that will be most important to its success. Instead, we see people focusing on technological nirvanas like blockchain or an over-emphasis on governance.

To give some examples, many “blockchain” SSI solutions are centralised business models on a decentralised stack. While the data is interoperable from an end user perspective, all other stakeholders within the digital identity ecosystem are forced to use their infrastructure to participate. This is no better than a data monopoly or data cartel.

Similarly there are several organisations focusing heavily on governance, such as Sovrin Foundation. While Sovrin Foundation has done the digital identity sector a great service, Kim Duffy from MIT captures the problem with these large foundation approaches to digital identity and credentials brilliantly…

"I just want to verify a credential; I don't want to join a cult"

There are good reasons for creating governance mechanisms, particularly when considering the sensitivity of the data we are managing. However there are other mechanisms for managing this sensitivity, such as smaller contained pilots. Governance structures, once built, are extremely difficult to remove and costly to maintain. Governance creates barriers to entry and has the end result of creating exclusive systems rather than the open and inclusive systems the digital identity environment needs if we have any hope in harnessing hearts and minds in order to solve the digital identity problems of today.

Lowering the barriers to entry for those wanting to issue, share and verify credentials should be our first priority, creating fit-for-purpose and light weight governance mechanisms if and when necessary.

For self-sovereign identity to work at scale, it needs to demonstrate that it’s better at scale than the current alternatives. The existing approach to digital identity isn’t working because particular human groups have coopted it for their own interests. We won’t fix this by enabling another group of people to co-opt it for their interests (no matter how altruistic).

The real shift will happen when we can create the necessary conditions for interoperability and full and open participation.

A roadmap forward

The success story of digital identity to-date is that we now have a suite of tools that make interoperability easy. To move to the next stage we need to find ways that enable people to build digital identity solutions using these tools in an open and participatory way.

We might take solace in the fact that self-sovereign identity today looks more like the early days of the internet; while there are several “intranets” all competing for market share, it will take a small group to offer an open approach that will unlock the promise of digital identity.

To move digital identity forward, there are three questions that we really need to address together:

• How do we create incentives for convergence around interoperability standards?
• How do we create a consistent approach for linking identity addresses such as DIDs back to real world identities?
• How do we create an open digital identity landscape that prioritises participation over governance?

Digital identity is an important issue for us to get right, and a problem very worthy of our time. A focus on interoperability and participation provides us with a strong technical foundation along with the greatest change of encouraging the hearts and minds of people around the world to help reimagine digital identity for the 21st century.

Reference

John, Anil “Unknown presentation title” Presentation given at the Identity Expo, Canberra Australia, August 2019

If you can, imagine if a domain name consistently cost AUD $10k. Or imagine if you needed to be granted a government permit every time you wanted to purchase an internet domain name.

What impact would this regime have on our experience of the internet today? Despite the short-comings of today’s internet could we still expect to see the creative explosion of ideas, knowledge, and services present in today’s internet? Would we have Netflix? Would we have the Farnam Street blog?

The reason why we don’t (consistently) see $10k domain name charges or require permits to purchase domain names is because of the open (as oppose to proprietary) internet.

It is easy to take the internet’s openness for granted. As if it is naturally occurring or an innate property of our digital lives, but this is not the case. The open nature of the internet was fought for by internet activists like Aaron Swartz, and protected by governance mechanisms such as Internet Corporate for Assigned Names and Numbers (ICANN). It is still under threat by proprietary actions of large firms and the attempted acquisition of the .org domain name register sale to private equity.

Researchers point out that new technologies often start out open, before drifting toward a more closed or proprietary mode as the mature. This story is often told as a prediction for how technologies will evolve, suggesting inevitability. This doesn’t have to be so, we still have a choice even if that choice is accompanied by hard work.

The open internet deserves to be protected. Openness facilitates the discovery of new ideas and opportunities for us all, captured well by Jason Potts in his book the Innovation Commons. The opposite of this is to assume we have nothing left to be surprised by; that we know where we are going and we just need to align our resources to get there.

As we continue to develop the digital infrastructure that underpins our societies and economy we would do well to remember how we benefited from the openness of the internet and how its protection might serve us and future generations in the future.

Protecting the openness of the internet is an acknowledgement that we still have much to learn and discover. So much to be surprised by. It is to not foreclose on our future. It’s to remain open to the possibility that the best is yet to come.

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We are going about the design and operation of our digital infrastructure in the same way we built water supply systems during the 19th and early parts of the 20th century. During this time the water supply of larger populations of people were guaranteed by big infrastructure projects, like dams, built to survive 1 in 1000 year events. Today, in 2020, we are collecting vast amounts of data and storing them in the equivalent of these 19th century dams, and layering security measures around them to ensure they never fail.

Climate change and the threat of terrorism called into question our approach to civil infrastructure in the latter half of the 20th century. More attention was given to how resilient our water supply systems were because what if that 1 in 1000 year event comes early or more frequently? Or what happens if a terrorist attempts to poison the water supply? Driven by these scenarios engineers started to focus more on how quickly the system could recover from failure rather than preventing failure all together. This approach is referred to as the design of resilient systems.

Similar circumstances are observed in the regulation of pollutant loads in environmental systems such as rivers and the atmosphere. Zero pollution load is rarely the goal, rather minimising exposure to the pollutant becomes the goal. This means setting concentration and duration thresholds for pollutant release. Managing pollutant loads in this way recognises the resilience of our environment and works within these boundaries.

Now, driven by a growing awareness of privacy concerns and security risks people are starting to ask more questions about how our data is collected, stored and managed. And what are the consequences when it isn’t? Some of us are asking questions about whether it should still be considered best practice to centrally collect and store sensitive data, particularly personal data.

Despite all the investment in security, the centralised practices in use today are incredibly vulnerable to data breaches and far from resilient. Once a data breach occurs, millions of people’s private information is exposed. For example with the Equifax data leak exposing 147.9 million people’s records and many others like it (2017 Equifax data breach, 2020).

And this vulnerability of our data systems extends beyond privacy concerns but to economists who are concerned about data monopolies impact on market competition:

Given the importance of data to every industry, data-based barriers to entry can affect anything from agriculture, where equipment data is mined to help farms improve yields, to academia, where school performance and census data is mined to improve education. Even in medicine, hospitals specializing in certain diseases become the sole owners of the medical data that could be mined for a potential cure.

Kira Radinsky (2015)

Settings aside whether it is used in final solutions or not, blockchain technology has provided a renaissance of interest in cryptography and distributed systems that offers moment to reimagine our data systems. Providing an glimpse into what a resilient data ecosystems may look like. One that reduces the threat of data breaches and privacy infringements, and facilitates data exchange in a way that might counter data monopoly formation and promote market competition.

We need more thinkers, leaders and policy makers to start thinking about our data systems differently and resilience could be a good starting point: From a security perspective asking important questions about how we maintain critical infrastructure during times of stress; and from a economic competitiveness perspective, asking how our economies remain novel and competitive during a period where data will increasingly become the source of both economic wealth and market barriers to entry.

It is up to us to meet this opportunity and explore what might be possible. Can we rethink our data systems? Design for resilience, protect our privacy, promote market competition and move more gracefully into the 21st century?

If you liked this, please support my work by subscribing to my substack or adding comments and questions about what you’d like to hear about when it comes to technology, society and the next economy.

References

“2017 Equifax data breach” Wikipedia, Wikimedia Foundation, 2 August 2020, https://en.wikipedia.org/w/index.php?title=2017_Equifax_data_breach&oldid=970871107

Kira Radinsky “Data Monopolists Like Google Are Threatening the Economy” Harvard Business Review, 2 March 2015, https://hbr.org/2015/03/data-monopolists-like-google-are-threatening-the-economy

In the early days of the internet there were fanboys, critiques, and a whole lot of noise that made it hard to discern what all the fuss was really about. But this should be expected. Once new technologies are discovered they go through a trial of legitimation where we collectively work out what it’s good for. People take sides: Either jumping on the hype train, or taking the place of the cynic. A few hold a sober and objective viewpoint, and even fewer seem recognised for doing so in today’s clickbait environment which values extreme views over the more balanced and considered.

Blockchain, like the technologies who have come before is still moving through this trial of legitimation. Although this trial seems more progressed in some parts of the world than others, with initiatives such as the the European Blockchain Partnership formed by European governments (European Commission, 2018) and China’s blockchain services network (BSN) (Manning, 2020) alongside other countries and commentators still focusing on blockchain being a “problem looking for a solution” (Frederik, 2020).

But it’s easy to be the cynic, just as it’s easy to drink the cool-aid and jump on the hype train. What can we take from the how the internet established and grew in order to be more pragmatic in how we think about blockchain?

Looking back on the evolution of the internet with the benefit of hindsight reveals, at least initially, it’s role in democratising individuals ability to generate and share media and information. Prior to the internet, the flow of information was by and large controlled by media monopolies. The internet disrupted these monopolies and enabled anyone to participate in this new media landscape without the permission of a monopoly power.

Before we could say this about the internet, there were no shortage of naysayers. Clifford Stoll wrote a damning article in Newsweek in 1995 outright dismissing claims of a new media and ecommerce environment enabled by the internet.

Then there’s cyberbusiness. We’re promised instant catalog shopping–just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obselete. So how come my local mall does more business in an afternoon than the entire Internet handles in a month?

Clifford Stoll in Newsweek, 1995 (as cited in Zee, 2010)

It was true that in the early days of the internet people could still go to the shops and purchase goods, they could consume news, and they could send letters to friends on the other side of the world. Critics used these observations to lambast anyone who suggests the internet was anything but a novelty for geeks tinkering away in basements.

Which leads us to blockchain where we see the same pattern unfolding. There are those who are (still) on the hype train, and there are not shortage of critics. And then there are people like myself who try and hold a sober and objective middle position. We can critic those who are over zealous about blockchain and point out the flaws in the critics position without taking a hypocritical stance.

This last week Jesse Frederik wrote an article for The Correspondent which did acknowledge the importance of playfulness and discovery but echoed the classic cynical voice repeated throughout our cycles of technological progress.

I’ve been hearing a lot about blockchain in the last few years. I mean, who hasn’t? It’s everywhere.

I’m sure I wasn’t the only one who thought: but what is it then, for God’s sake, this whole blockchain thing? And what’s so terribly revolutionary about it? What problem does it solve?

That’s why I wrote this article. I can tell you upfront, it’s a bizarre journey to nowhere. I’ve never seen so much incomprehensible jargon to describe so little. I’ve never seen so much bloated bombast fall so flat on closer inspection. And I’ve never seen so many people searching so hard for a problem to go with their solution.

Jesse Frederik (2020)

As was true about the internet and technologies that came before it: It did not introduce explicitly new capabilities to society. We were already producing information and media, and sending messages to one another around the world. The internet provided us with an opportunity to reimagine what the world might be like if we generated, shared, and consumed information and media in different ways and ways which were not influenced by those in control of the existing media infrastructure. It rendered obsolete the structures which protected the existing media and information moguls, providing the space required for new entrants to rethink how media and information could be done differently.

And this is where we are with blockchain. It hasn’t introduced an explicitly new capability rather it is providing us with an opportunity to reimagine what the world might be like if anyone could create, share and receive scarce digital things in ways which are not influenced by the current power structures. The overwhelming majority of effort is being directed today toward reimagining money and finance; and in doing so challenging us to think about the role of the institutions who uphold the status-quo system. It is providing an opening for new entrants to enter this industry and explore how things might be done differently.

Beyond money digital identity is an emerging focus for blockchain, driven by the growing awareness of the value of our digital identities and the current high barriers to entry preventing those wanting to start to experiment with alternatives to the existing status-quo. It is providing an opening for new entrants to reimagine what the human experience may be like if we had more options for how we author our own digital identity as well as verify others digital identity.

The premises of the early web — valorizing individual choice, maximalist free speech, and dispersed virtual networks; ignoring institutional power and traditional politics

Alexis C. Madrigal (2019)

Blockchain is another chapter in technological progress. It is lowering barriers to participation by rendering old technologies and the power structures that surrounds them obsolete. Creating a space where people can question the efficacy of the status-quo and reimagine society and economy. It’s just as easy to be drawn into the hype as it is the cynicism. Somewhere in middle is pragmatic optimism, that with new tools comes new opportunities to address shortcomings of the status-quo.

References

European Commission “European countries join Blockchain Partnership”, 10 April 2018, https://ec.europa.eu/digital-single-market/en/news/european-countries-join-blockchain-partnership

Jesse Frederik “Blockchain, the amazing solution for almost nothing” The Correspondent, 21 August 2020, https://thecorrespondent.com/655/blockchain-the-amazing-solution-for-almost-nothing/86649455475-f933fe63

Alexis C. Madrigal “The People Who Hated the Web Even Before Facebook“, The Atlantic, 15 March 2019, https://www.theatlantic.com/technology/archive/2019/03/people-who-hated-web-even-before-facebook/584932/

Landon Manning “China’s Blockchain Service Network on the Rise Despite Split” NASDAQ, 27 July 2020, https://www.nasdaq.com/articles/chinas-blockchain-service-network-on-the-rise-despite-split-2020-07-27

Zee “Newsweek in 1995: Why the Internet will Fail.” 28 February 2010, https://thenextweb.com/shareables/2010/02/27/newsweek-1995-buy-books-newspapers-straight-intenet-uh/

This is because the ad targeting techniques within Facebook and other social networks have not changed since the Cambridge Analytica events came to light. Anyone can still target populations of people with ads, observe engagement rates and sentiment, and adjust their message until they get the desired the result.

What was reportedly unique about Cambridge Analytica was that they obtained large amounts of personality information of US citizens enabling them to create more specific ad creative and aided their ability to refine this ad creative over time: The net result being a much more targeted persuasion campaign. All that separated Cambridge Analytica from others in their field was this personality dataset, and the financing made available by their clients. Anyone who could gain access to similar datasets, and with the money to run social ads could theoretically repeat what Cambridge Analytica did.

Which brings me back to the IBM personality tool. Theoretically, someone could use this today across public datasets to create similar personality datasets. Some obvious public datasets include Twitter, Medium, and some aspects of your LinkedIn activity. Less obvious datasets could be obtained by more motivated individuals through other techniques of social engineering, perhaps befriending people in Facebook in order to gain access to their personal information, before scraping it and using it in their profile tool.

Personality profiling on an individual basis can be a very helpful diagnostic for this individual or a team they work with. However, making this technology available at scale provides the tools to profile populations with great fidelity. This is fantastic news for digital marketers, as it provides the tools to be much more efficient in targetting customer segments, and persuading them to engage with their brand or message. But this same approach can be used by sinister actors to do just what Cambridge Analytica infamously did, offering a rich dataset of individual personalities enabling effective tools of persuasion at scale, influencing specific political views at the individual level and at the aggregate shifting the views of populations, and potentially altering the outcome of elections.

This article isn’t meant as a criticism of IBM: Once technology is available to us, containment is near impossible. If it weren’t IBM releasing this, someone would have. However as the power of these tools grows, we need to balance our “fast thinking” culture of “move fast and break things” by developing a “slow thinking” culture that helps us anticipate how these technologies may be abused and attempting to build in appropriate counter-measures from the beginning. We need a cultural shift in technology teams akin to the agile movement, recruiting the creative energy of entire technology teams and organisations to incorporate “slow thinking” into product design if we are to minimise the unintended consequences of technology, and create space for ethical considerations in technology policy and design.

IBM just made it easier for Cambridge Analytica v2 was originally published in TypeHuman on Medium, where people are continuing the conversation by highlighting and responding to this story.

How do we cut through the hype, and get a glimpse across what’s really happening with blockchain? I looked at investor data across hundreds of blockchain startups published at Coinbase to try and see what trends we could spot.

What I found was that despite investment activity being spread across a range of different startups, there’s (still) a concentration toward blockchain startups working on underlying infrastructure such as enterprise blockchain-as-a-service and fintech plays such as crypto wallets and exchanges.

Blockchain infrastructure serves developers is necessary to be able to efficiently take advantage of this technology. Cryptoasset and financial services focused blockchain projects are positioning aiming to offer banking and payment options to the global under- and unbanked, improve the experience over the conventional system, and offer a service that sits outside of the purview of existing banks and governments.

Where are startups focusing?

Looking at the quantity of startups focusing on solving particular problems or operating in specific industries, we see that there really is an incredibly broad range of applications that startups are experimenting in applying blockchain too. However, there is a significant dominance of attention being placed toward in one of two categories — blockchain startups are generally either pursuing cryptocurrency and financial services related activities or they are working on web3 and blockchain infrastructure.

A good example of a startup pursuing cryptocurrency and financial services related activities is San Francisco based company Coinbase: A cryptocurrency wallet and exchange that allows individuals to buy, sell, and exchange cryptocurrencies. Coinbase was founded on 1 June 2012 and since then has raised $547.3m in investments, including a $300m series E round and is backed by prominent investors such as Andreesen Horowitz and Bank of Tokyo — Mitsubishi UFJ.

Similarly, an example of a startup pursuing web3 and blockchain infrastructure related activities is Tel-Aviv based Orbs: A blockchain-as-a-service startup focused on serving established consumer brands. Founded in 2017, they have reportedly raised $133.4m across two rounds of investment.

After infrastructure and finance, there is interesting activity appearing in artificial intelligence & machine learning (AI/ML), and security. It is difficult to discern between the genuinely interesting startups in this group from those who have added blockchain or AI/ML to their name for marketing reasons. Startup Figure claims to be using AI/ML and blockchain and reviewing their site it appears that their using blockchain for operational transparency purposes, and (probably) using AI/ML to assist in the customer experience — however to call this AI/ML may be more like calling Netflix an AI/ML company after learning of how they recommend the next TV show to binge watch to you.

Ocean Protocol features in the blockchain and AI/ML list, and is a very interesting project. They aim to use cryptoassets to create economic incentives around data marketplaces, hence expanding data access for AI/ML purposes. This is reminiscent of numer.ai, and an exciting project to follow. Ocean Protocol was founded in 2018 and raised $28.1m over two rounds using an initial coin offering (ICO) mechanism.

Where are investors putting their money?

Investors seem to agree that the most interesting and important investment for web3 and blockchain is in the underlying infrastructure. Despite the wide spread of investments, the majority of investment volume has been directed toward web3 and blockchain infrastructure (reflected in ~$9.4b of investment flows), with internet-of-things ($9.1b) and enterprise blockchain ($9b) applications getting plenty of attention too.

Smaller investment volumes are being directed toward financial services related applications (cryptocurrency, insurance, fintech) and real-estate. Each reflecting approximately $500m of investment flows indicating investors see promise in directing blockchain technology toward these sectors.

However, when we shift from looking at total investment volume and try and look at where investment is concentrated we see that the biggest average investments are being directed toward blockchain startups focusing on enterprise, and internet-of-things applications, as well as web3 and blockchain infrastructure.

What companies are doing well?

The web3 and blockchain sector has been fraught with scams and companies dubiously raising millions / billions, so ranking companies by total amount fundraised would be disingenuous. Listed below are the top 10 blockchain companies according the Crunchbases CB rank.

What can we take away from all of this?

Looking at the top 10 performing startups, web3 and blockchain is coming after financial services with force. The main problems startups are looking to solve are:

1. Improving the retail experience so that it’s easier for individuals to purchase, use and invest crypto assets
2. Infrastructure investments (e.g. stable coins, institutional treasury management)
3. Consumer offerings directed towards financial control and privacy

The excitement surrounding this technology has not gone away, the evangelists are busy building new products and organisations. The technology behind these startups is heavily focused on improving the global financial infrastructure, ranging from consumer payment offerings through to institutional tooling to enable cryptoassets to become the new norm for the sector. What’s less clear are the business fundamentals that sit behind many of these startups. Time will tell if many of them can find the business models that support their valuable contributions.

The investments into blockchain infrastructure backup Gartners view that we are still some way from mass appeal. Fundamental infrastructure still needs to be developed before main stream applications can be widely introduced.

What’s driving the focus on finance and payments?

One answer is that we are likely living through an asset bubble and cryptoassets are caught up in this. Which means speculative investment (rather than real investment) is driving capital into the blockchain sector under somewhat false pretenses. While this is true, finance and payment infrastructure globally is insufficient for billions of the worlds population, which presents an opportunity for business.

Some countries, such as Australia, are blessed with a very modern financial infrastructure. Such infrastructure includes near real-time cash transfers and near ubiquitous touch and pay infrastructure supporting Apple Wallet, Google Pay etc. But this infrastructure is severely lacking in many parts of the world to the extent that 2.2b people globally considered unbanked, and 55m people in the US who are considered unbanked or underbanked in the US. So despite the Australian experience, there is much global excitement in making it easier for individuals to access banking and payments infrastructure, along with improving the experience of banking and payments.

Beyond these functional needs of individuals blockchain evangelists also express the unmet need of being completely in control of their money. They are no longer satisfied with banks and governments acting as custodian over their financial life, they speak of the weaponization of finance, and fear the abuse of power that comes from the global shift to digital currencies and transactions. I’m predicting the growth of the “responsible technology” consumer over the next 10 years, which will drive more innovations like this — not just in finance but other sectors too, in defence of personal data and reaction to persuasive technology and the “attention economy”.

When examining the state of blockchain, it’s important to do so through the lens of these unmet needs of the market. The market is asking for the 2.2b unbanked to have access to modern banking and financial services, it’s asking for the banking experience to keep pace with the on demand nature of our digital lives, and it’s asking for the option to be completely in control of their finances.

Follow the money: Blockchain was originally published in TypeHuman on Medium, where people are continuing the conversation by highlighting and responding to this story.

Having attended the 2017 and 2018 NYC blockweeks but not being able to attend 2019, I was eager to learn about how this years event was received by the Melbourne community. This curiosity partly driven by the craziness of last year’s Blockweek as 2018 was an incredible year, highlighting the extremely good and extremely bad aspects of the industry via the fundraising efforts of inspiring entrepreneurs against a backdrop of the peaks of the previous cryptomarket bull run.

What I heard from those who attended was Blockweek continues to be a strong indicator of the global state of blockchain and web3 technology. 2018 was dominated by investment pitches and party’s fit for a movie highlighting the extremes of Wall Street affluence. 2019 seems to have been a more sober conference, with a strong focus on regulation and enterprise adoption: a sign that the technology continues to mature and be taken extremely seriously on the global stage.

This message was delivered strongly from Simon Harman (Loki) and Prof Jason Potts (RMIT Innovation Hub). According to Simon from Loki, the conference was over represented by government (regulators), corporate firms, and service providers compared to entrepreneurs or those building blockchain or web3 products. Prof Jason Potts took this as an optimistic signal, pointing out that this attendance is a strong indicator of technology maturation and adoption.

Overall the message is clear: Blockchain and Web3 technology continues to see extremely strong global uptake. And it’s great to see so many Australian’s front and centre on this technology wave.

Well done to the Flex guys (Alex and Tom) who continue to bring the community together in fantastic ways: And well done to those who spoke, including Austrade, Jason Potts, James Simpson, Simon Loki, Bec Martin.

2019 NYC Blockweek Reflection was originally published in TypeHuman on Medium, where people are continuing the conversation by highlighting and responding to this story.

Given the rapid advancement of identity tech, it is important to carefully examine the “how” of identity. That’s not to say the “why” or the “what” isn’t equally important, but this is a reflection of our point in history. The “how” of identity systems today has the potential to strengthen an authoritarian regime, as much as it has the potential to form the foundations of a new wave of democratic participation. Allowing technological novelty to define our identity systems presents a serious danger to democratic societies. Further, it is the “how” of identity tech that could explain why we havent seen a globally ubiquitous identity solution emerge. Uncoordinated and competing identity solutions has created a fragmented market, making it difficult for individuals and organisations to interface with.

The how of identity could orientate around three aspects: how do we establish facts about each other? how are these facts shared or transmitted? And what is the incentive and governance framework of the system? Only by considering these three questions can we properly evaluate and design future identity systems.

There are many examples of how we have become very good at generating “facts” about one another. But a lack of attention toward how these facts are transmitted has lead to a fragmented identity landscape, and a lack of attention toward the incentives and governance of these systems poses real risks to democratic societies.

Students can take possession of digital university degrees; biometric solutions enable travellers to move freely through airport customs; and at least in some parts of the world, government issued document verification via an API call. And yet a volunteer organisation still requires a manual work flow in Australia to assess an individuals working-with-childrens check, and civil rights groups raise concerns about the use of biometric data.

Commerce is also held back by identity solutions. Cryptocurrency exchanges are increasingly expected to meet KYC requirements by local governments and regulators. To meet these requirements, operators have few choices other than to integrate with the identity verification services in each region they operate; use an aggregation service that does this for them; or some more manual process. This is a costly process that opens up many privacy concerns too. And as people lead more global lives, the question of passing verifiable facts about one another across national boundaries will only grow more complex — and costly using current approaches and technologies. Not to mention limiting innovation and entrepreneurship as we don’t know what new opportunities emerge once identity verification becomes as ubiquitous and easy as PayPal.

There have been some noteworthy attempt to make it easy to share and transmit identity facts. These could broadly be referred to as digital identity platforms. These platforms act as a kind of aggregation service, offering a one touch point for those seeking to issue, verify, or claim identity related “facts”. The utility of these solutions are dependent on them achieving network effects: Issuers want to know that they can reach a sizeable audience, relying parties want to know that by integrating they’ll be supporting a large audience, and individuals want to know that it it’s accepted in a wide variety of circumstances. The downside to these approaches have been that they also build dependency. All parties are now locked into this particular platform. Issuers surrender their control over customer experience; verifiers are dependent on the platform to hold the information they need; and users have little recourse if faced with privacy concerns. And perhaps it’s just bad timing for those who have invested in these schemes, because after 10 years of digital platform strategies many internet rights activists have become wary of centralised technology services and the power that is gained if large network effects are established.

Solving identity for individuals, organisations and governments requires a different mindset to that which has propelled tech innovation and business over the last decade. It will require a coordinated effort across the three concepts introduced:

1. Facts: The ability to attest things about ourselves and others;
2. Transmission & storage: How are facts stored and distributed; and
3. Incentives & governance: How do the incentives of identity providers align with the users and society? How do we govern the identity system?

Coordinating across these three dimensions will ensure the conscious design of an identity paradigm for society, along with ubiquitous identity options for individuals, businesses, civil society, and governments. The key challenge is how to bring people together to work collectively on the transmission and governance challenge, and do so in a sustainable manner.

The three how’s of digital identity: facts, distribution, and incentives was originally published in TypeHuman on Medium, where people are continuing the conversation by highlighting and responding to this story.

Blockchain is going to make it easier for organisations to emerge and offer services where trust is important in their interactions, and where existing services are not delivering on this trust expectation. The NGO and charitable sector are particularly exposed here.

We are already seeing blockchain startups try and compete in these ‘high trust’ industries by leveraging the transparency and auditability feature of blockchain. Blockchain works best where the aim is to remove powerful intermediaries, or where trust is important to an interaction. For most of modern history our institutions (governments, banks, etc) have existed mostly because we had no other way of incorporating ‘trust’ into the interaction. For example, how do we maintain property records? We trust the property records because we trust the government to not alter the records. Similarly, with donating money to a charitable organization, we give money because we trust that organization to distribute the money to the cause they represent, more effectively then if we were to do the research and send the money ourselves.

Blockchain presents an opportunity to transact without large intermediaries, and offer new services where trust is paramount. Substituting ‘institutional’ trust, with trust-in-software and the resulting transparency, auditability, and accountability. This is what people mean when they talk about the ‘trustless’ result of blockchain. It’s not that we don’t need trust, it’s just that we shift as much trust as possible away from humans, and into software.

So any interaction that can be expressed as code is open to being reimagined using blockchain. Anything from educational certificates, property deeds and titles of ownership, marriage licenses, financial accounts, insurance claims, medical procedures, to votes, the possibilities are truly limitless. Further, blockchains open up the global economy to everyone from small rural communities to large communities.

Organisations who are fullfiling their brand promise and still trusted by their stakeholders have nothing to worry about. But those who aren’t, are becoming more vulnerable to being substituted by smaller niche players, who are using blockchain technology in lieu of an established trusted brand.

We are starting to see blockchain startups try and compete in these ‘high trust’ industries by leveraging the transparency and auditability component of blockchain. This is very powerful for services such as direct donations, as it enables donors to witness where their money is being directed, as well as new forms of community governance.

What has blockchain got to do with NFPs? was originally published in TypeHuman on Medium, where people are continuing the conversation by highlighting and responding to this story.

On Tuesday night (10-July-2018) I had the pleasure of sharing a panel with Prof Ellie Rennie, Amanda Robinson, and Prof Jason Potts at the Melbourne Development Circle’s event entitled Blockchain and the Future of the For-Purpose Sector. You can view the recorded video of the talk here.

My motivation for joining the panel comes from a growing sense of urgency to pay attention to the biggest global challenges we as humanity have faced so far: climate change, populism, and forced displacement. The tech sector has not positively impacted these issues, and in many cases even inflamed them. So, instead of accelerating this process, technology needs to align itself with a deeper appreciation of how it can inform and reinforce our collective vision of a ‘good sustainable society.’ Technology needs to help people have a voice, and strengthen how we organise society.

“In the wake of some historic whistle blows, breaches, and let downs, it’s high time that the tech community wins back public favour and proves it can build something truly global that doesn’t surveil, commodify, or marginalise users, but that aligns, enables, and ennobles them.[1]”

The only argument that outweighs this sense of urgency is the fact that we have never been more empowered to take action and positively transform the world. Blockchain technology, for instance shifts power to the hands of individuals that has been historically limited to large institutions such as banks, and governments. Citizens can now take action where our institutions have failed.

We have an opportunity to reset the trajectory of our technology and digital world is taking us. Those working in the social impact sector are best placed to bring attention to the most pressing issues we, the block chain community, need to acknowledge and work through. The blockchain community has arguably established the most traction against two global issues of financial inclusion, and identification.

Financial inclusion and the global unbanked and underbanked

There are two billion people worldwide who do not have a bank account or access to a financial institution via a mobile phone or any other device.[2]

The inability to access the worlds financial system limits economic participation, and hence people’s ability to escape the poverty trap. But banking is not necessarily the answer to expanding one’s ability to participate in economic life either. There’s an assumption here that banking services are critical. People do need financial security, convenience, and potentially access to credit. Blockchain projects are starting to demonstrate that we can offer individuals these services outside of the traditional banking paradigm.

Example projects include OmiseGo, who are looking to “unbank the banked” by providing more accessible and efficient means for individuals to store and transfer value globally. And Maker DAO has introduced us to collateralised debt positions, which allows an individual to be loaned Dai (their native currency)[4] — a very early form of lending outside of the present day centralised banking system.

Identification and the undocumented

“Identity is foundational for political, economic, and social opportunity, yet the World Bank estimates that over 1 billion people are unable to prove who they are. A digital identity that puts the individual at the centre can provide political, economic, and social opportunity.” ID2020[5]

Identity is the building block by which individuals can claim rights, protection, participate in economic life, and participate politically. And it’s importance is reflected in the Sustainable Development Goals (16.9), which states everyone have legal identity including free birth registrations by 2030[6].

The provision and ongoing access to identification services has been historically limited to governments. However, blockchain technology is opening up the opportunity to offer individuals identity that is:

• Personal: unique to you and only you.
• Persistent: lives with you from life to death.
• Portable: accessible anywhere you happen to be.
• Private: only you can permit to use or view data.[7]

There is a great deal of work being done in identity and identification technology. Prior to blockchain, a lot of the identity platforms were being built as ‘platforms’, meaning the design goal of persistent becomes difficult to achieve as data is silo’d with platform owners and vendors. Blockchain technology (along with other technologies such as decentralised file storage) presents the opportunity for users to truly own and control their data. The digital products of the future will merely offer users a window into their data, and not being able to lock users into their platform or ecosystem as a result of data monopolies.

ID2020 is an alliance focusing on the provision of identification services to the worlds undocumented. Projects like Civic and uPort are working on blockchain identity solutions, as is BlockCerts and Learning Machine out of MIT. The blockchain and W3C community are progressing open standards that will enable and protect the user experience requirements of a robust identity scheme (personal, persistent, portable, and private). These standards include Ethereum standards ERC1056 (lightweight identity), ERC725 (identity), and ERC735 (claims). While it is early days, these standards should be viewed as innovation building blocks. We can expect exponential innovation and results to occur once these foundations are in place.

What now?

Blockchain technology will allow us to innovate where our institutions have failed, as it removes the need for the ‘trust’ that our institutions have previously offered us. So for those in the world currently denied access to financial services or identity, we can expect and are already seeing blockchain technology being deployed to meet their needs.

The blockchain community needs to be more intentional about the change we seek in the world. Blockchain won’t necessarily be a positive technological development unless we work hard to make it so. And that the community sector needs to be more open minded towards the potential of this disruptive technology. By bringing the social sector and the blockchain community together we have the potential to create a true step-change in human dignity a human prosperity. This is why Typehuman exists.

References

[1] Erwin, Avery How Blockchain Is Helping Technology Get Its Soul Backaccessed from: https://media.consensys.net/how-blockchain-is-helping-technology-get-its-soul-back-a2d6cf96a272 on 10-July-2018

[2] Hodgson, Camilla The world’s 2 billion unbanked, in 6 chartsaccessed from http://uk.businessinsider.com/the-worlds-unbanked-population-in-6-charts-2017-8/?r=AU&IR=Tviewed 12 July 2018

[3] Wikipedia Unbankedaccessed from https://en.wikipedia.org/wiki/Unbankedon 12 July 2018

[4] https://crypviz.io/knowledge-database/collateralized-debt-position/

[5] ID2020 Why digital identity?accessed from https://id2020.org/digital-identity-1/on 12 July 2018

[6] SDG target 16.9 on legal identity accessed from http://getinthepicture.org/news/sdg-target-169-legal-identityon 12 July 2018

[7] ID2020 why an allianceaccessed from https://id2020.org/partnership/on 12 July 2018

On blockchain & social impact was originally published in TypeHuman on Medium, where people are continuing the conversation by highlighting and responding to this story.