We all know the mere mention of the words ‘Papers Please’ or ‘KYC’ (know your customer) conjures up an uncomfortable image of a pile of documents provided by individuals as proof of identity. This picture does not get any better with Financial Technology (FINTECH) and Regulatory Technology (REG TECH) firms investing significant money, effort and resources in verifying, validating, storing these identity proofs. Furthermore, duplicate records are maintained across the transaction lifecycle. Keeping information consistent and up-to-date becomes a big challenge and is a constant source of frustration, with extreme risks relating to loss of PII and identity fraud.
Smart Identity is being looked at as a viable option for individuals, corporations and governments, as it helps introduce efficiencies into the process lifecycle of identity management and expedites verification and validation outcomes.
First, let’s look at what Smart Identity is and how it works. Smart Identity (Smart ID) is the digital identity of an individual created using smart contracts based on Ethereum’s blockchain – one of the most well-known blockchain technologies. A smart contract, in layman’s terms, is a software program that is executed when defined conditions are met. To create Smart ID identity artefacts, known as attributes, such as birth certificates, driving licenses, addresses, passports etc., they are added by the identity owner to the blockchain and stored within the smart contract in the form of an immutable hash. Identity endorsement is performed by storing a corresponding endorsement hash against the attribute’s hash by the attesting authority, which normally is a third-party. Endorsements can be revoked by issuing authorities, if needed. Endorsements act as a notarised record of attestation by a third-party in relation to a specified attribute, stored with the attribute, within the identity contract. Attributes can be added, deleted or modified by the identity owners, but only while endorsements are added using the required public keys…Click here to read full article.