Blockchain / Distributed Ledger

Is Blockchain The Next Wave For Digital IDs In Europe?

security

At the highest level blockchain proponents say that distributed ledger technology (DLT) has the ability to safely, and immutably, transfer data, payments and … well , seemingly any exchange of value and information that one might envision.

In recent months we have seen DLT deployed, or in pilot phases, for tracking everything from “farm to table” food activities, to freight documentation and bond issuances within financial services.

Now comes the news, as detailed by Coindesk, that in Catalonia the government has said it will develop a DLT-based identity platform that seeks to “give citizens control of their own data when interacting with online services.”

To be sure, the use of digital ID verification methods is becoming more commonplace, as noted in this space, in the August Digital Identity Tracker, the number of individuals using government issued IDs is expected to top 5 billion by 2024.

In the latest iteration, the Catalan effort will be known as IndentiCAT, and through the government, was announced by Minister of Digital Policy and Public Administration Jordi Puignero. According to a statement, the minister said on Monday (Sept. 9) that the goal is to allow citizens in Catalonia to “carry out activities with the full assurance and security in the digital society of the 21st century.”

The effort in Catalonia will be focused not on collecting personal data, but rather on citizens managing their own identities through mobile devices, with the government acting as validator for the network. In terms of mechanics, a user can enlist IdentiCAT to verify that they are of legal age — yet the individual will not have to offer up what might  be thought of as sensitive data such as dates or places of birth.

The project is seemingly in early stages, as underlying tech still remains to be developed, including the very software that will develop and authenticate the IDs. In a wider setting, IdentiCAT is slated to align with a mandate from the European Union that stretches back five years, where standards are being set (under what is known as eIDAS) for electronic identification and trust services for electronic transactions. Under that umbrella, IdentiCAT users will be able to carry out electronic transactions across EU countries.

The move comes after a May 2019 report from the European Union Blockchain Observatory and Forum, titled “Blockchain and Digital Identity” that said current ID verification processes are fragmented across a broad range of services used across public and private settings — and that breaches are a real threat. At least some of these issues can be mitigated by blockchain, described in the report as a “powerful” tool in establishing digital IDs, notarizing credentials and facilitating smart payments. In reference to eIDAS, said the research, blockchain can be useful for timestamping information in an immutable way.

But at least some issues remain in using blockchain for use in public/private interactions, especially between citizens and governments. As noted in the report, there should be clarification on whether credentials can be reused, such as across PSD2 and the Fifth AML Directive (AMLDS). And in an interview with Global Government Forum, Stefaan Verhulst, co-founder of the Governance Laboratory (GovLab) at New York University said that challenges also include a “lack of governance and ethical frameworks that can help scale the use of blockchain” and that “blockchain is still being promoted as a solution in search of a problem.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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