And I am, whatever you say I am (Eminem)

Identity is a key legal aspect, next to property. As such, it's of course also a key aspect of your daily life. You have an ID card, a driver's license, a badge from your employer, a bank card,... a whole slew of items to proof who you are, or, as some defend: sufficient evidence to avoid being denied your identity.

These documents are issued by trusted third parties, usually a government or an institution which has to verify your identity (which often results in checking the genuine origin of the documents you already have).

Now, the blockchain itself has quite an issue with "trusted third parties". In our own little context it might make sense, but what's the value of an ID in Syria? Angola? North-Korea? What if multiple governments claim to be "legal"?

Trust - a rational emotion

It all boils down to the amount of trust you can have in the provided proof of an identity and its issuer. I can print my own visit card with "Barack Obama". I could open a twitter account for "realBarackObama". Maybe I can grab his Whitehouse badge...

It might get me somewhere in Belgium, but I doubt the impact in America. Perhaps gathering some fake evidence could work... but as soon as someone asks for an ID card, I'm busted.

Did you know there's a limit to the amount of people you're able to trust? Research revealed it's around 120 people, the size of a tribe in prehistoric days (and of a centurio in Roman warfare, etc). Our brain seems to have a hardlimit just above 100.

Trust is not a binary something, it's the result of a complex process that combines all kinds of info into one emotion. How much do you trust me to be Barack Obama, on a scale of 0 to Prez?

The bitcoin blockchain solution

The bitcoin blockchain solved the trust problem - there is no central party to issue an identity - as follows: everyone issues his/her own identity. You create your wallet, your private & public key and... you're set. Ready to be a unique, identifiable player in the bitcoin network.

The downside of this solution is of course that people can make several accounts and try to hide behind these. The (almost) anonymous identity on the blockchain is seen as an essential element, while it also causes issues.

Identity on a ledger

Financial institutions (FI) are of course not so keen of "pseudonymous" (= almost anonymous) identities exchanging money. That's why a whole lot of effort is put into building an online verified and verifiable identity on a (private permissioned) distributed ledger. Identity is even considered the new gold... but this time it's really hard to dig it up.

I think we're still looking for a solution. I'll give two approaches on how to handle it:

For a FinTech hub, I pitched an idea to bring the result of a KYC process back to the customers. As FI, we publish on the users page the hashes of the documents we used to check their identity. That means we don't disclose the information but only the unique fingerprint. The more the document is reused, the more companies validate the same hash.
Now, we're obliged to do KYC, so let's trust the result of our procedure. But... how is the user page created? Who ensures that a user creates a page for himself?
At a recent conference, I asked this question on a team of banks who just presented their ID solution. Their (imho astonishing) reply "we left that out of scope".
A Belgian city has a project in which they rebuilt society after an apocalyptic event, using blockchain technology. In their system, your identity on the blockchain is validated by your peers. That means the more friends you have, the stronger the evidence becomes that you are who you are.
The loophole in their system: someone has to be the first person, the only one that didn't have anyone approving his/her identity. If this person has no trust... the entire system fails.
The assumption of the project team was that they would survive the apocalyptic event and start their identity program.

Adam & Eve

It all boils down to the Adam & Eve problem (ah well, it's how I call it): someone has to be "the first". Somewhere, some person has to be the first to have an identity without proof on the distributed ledger. There isn't only a Genesis block, but also a Genesis user.

The identity issue is an endless recursive problem. The bitcoin solution with all its genius doesn't work in a world where identity is key. The downside is that somewhere, someone will be the first (and only) person to place trust in him/herself. *fingers crossed*