Panel discusses the future of digital identity and blockchain

0:47and host of the Crypto Coin Show on youtube as well as broadcaster on reuters insider financial network and i'm pleased to be joined today with some amazing guests who i will introduce joseph weinberg the co-founder of shift network a credentials verification platform that authenticates sender identities and unlocks economies of trust as well tolley kivnitsky the vp of

1:11growth at truly you which has the ability to iden a verify four billion people in the world over 50 countries and it's a hyper growth startup from vancouver glad to be repping canada welcome tolly and as well rj reiser the chief business development officer of cabin network cabin network empowers users to manage and control their digital identities and their sensitive

1:36data through biometrically secured liquid avatars and kyc and aml validation through their cabin id so i'm very excited welcome gentlemen to the panel great thank you thank you for having us all right guys let's dive right in because we have a limited amount of time and a lot of topics to cover i first want to start out by just talking about digital identity and

2:02cryptocurrency exchanges and then my first question is there's many different major cryptocurrency exchanges that are global for example binance global and their onboarding customers from canada but also from emerging countries around the world in all of these different countries outside of the us now your networks working with these exchanges as well as

2:22vasps which we will probably mention quite a bit in this discussion which is a virtual asset service provider you're helping provide digital identities and verification to these exchanges and each of these countries have different aml kyc anti-money laundering know your customer identity regulations how do you work together with these exchanges when each country has

2:44different regulations obviously canada might be a little bit more uptight than nigeria and these other countries around the world and it's a big kerfuffle so i want to kick it off by asking joseph your you know detail on this situation yeah yeah so we kind of like took this approach in the long view is that like as you know adoption started to come there

3:05would be this co-integration requirement and i think that and we're starting to really see that today in the space and we you know we're doing a lot of work with the financial action task force and trying to define you know what are the rules and how do we make those work and how do you not look at redeveloping swift right and when you think about the

3:24requirements today in the ecosystem that's effectively what's being built and so the way we look at it is that you know in order to solve the counterparty discovery challenges that you have and the ability to onboard identities and users and how you express those you really need to take a blockchain focused approach right so just in the same way as you're

3:43onboarding a user you're identifying that user based on the same key principles which is public addresses represent users counterparties they act as a form of identification and then how you express or translate that across those counterparties is kind of a different you know topic i would say but it's really what you're trying to solve with vasps and so today

4:01we've been working with largest global exchanges that represent probably 75 or more of global liquidity in trying to you know get them through this process understand how this works and it requires a network that is adaptable to global or jurisdictional requirements right not every country is the same as you say and so you need a flexible system which is

4:22really what's just been building allows us to say wherever you are we can discover who you are who your user is and then allow them to conform to those data sharing or data standard requirements based on a gdpr complex as well it's a multi-faceted problem yeah it's quite a large problem and totally do you have anything to add to that because i know you're also working

4:42with a lot of different providers in different areas yeah so you know cryptocurrencies and your decentralized business models i think are the first vertical that we've seen that start global from the get go borderless like from the jump like every other client industry that we work with you know they go country by country you know start with

5:06one go to two while cryptocurrency you know which ones can't we do right you start off with 50 100. so the way that we recommend you know especially to ones that launch with 50 80 countries is highlight a country that has really you know really great guidelines canada is a great example like fintrac really defines what aml and kyc is and it's pretty strict and it's a really

5:31great starting point actually you know just to wrap our canadian roots on this panel so a really good place to start is what is a requirement to verify an identity in canada and where can you replicate that process in 45-50 countries and in our experience you're going to cover 90 plus percent of aml and kyc requirements by picking something difficult and you know and

5:54forward-looking as far as you know government guidelines go definitely yeah right i mean it's lowest common denominator we run all of our process through at a gdpr level every every transaction sooner or later is going to end up back in into one of these countries there's some connection somewhere and they're going to acquire based on the existing regulations that

6:20they go through that standard so we hold everyone up to that gdpr level and just one other thing you know i always try to find an easy way to explain what we're doing with identity in blockchain and the easiest way to explain it like especially to my children is it solves the doubles double spend problem blockchain solve the double spend problem for bitcoin

6:40we're doing the same thing for individuals double spend is the fraud right we solve that's the easiest way to explain it obviously gets more complicated and there's additional things that you got to do but it solves the doubles very well said and now i want to talk about the regulatory compliance and the burden which actually is supposed to fall on

7:03the exchanges and not the customers and the exchanges and basks have to sort of balance acquiring quality information and as much information as they can to verify you know is this person who we said they are while also ensuring that the customers don't have to go through you know two weeks worth of filling out paperwork and essentially ensuring a quick and

7:26painless registration to an exchange or whatever it will be so that they can start sending their funds as soon as they can can you talk about that balance ashton who do you want to keep up with this one let's start with rolly oh sorry i didn't mean to volunteer but yeah sure so let's go as i let me speak from my user perspective not a truly perspective

7:51to start so let's just get out to get this out of the way you know putting like an id next to your face holding up like a signed document doesn't meet aml kyc and it's an awful ux experience so i'm glad to see that more times now exchanges are not doing but when i signed up that's what i have to do and date and sign like you know virtual show of hands if anyone else has had to do

8:14that a couple dozen times yep ditto so and employees do it you know on top of that right so you have a 24 48 hour if you're lucky waiting period to get onboarded so the way that you know users are used to with the ux is forms right information about yourselves and then you know things like i think joseph you mentioned it's like address location you know things things that

8:40we're used to sharing you know whether we're signing up to not that it's a you know apple's tapas comparison but another financial service it's it's still applicable the same laws are applicable to exchanges as well and then if more is needed you know risk-based approaches their flags if shift network is like hey there's something fishy about this one like then

9:01it goes into the manual review process so that's that's how that's how we recommend generally to do it and that's how that's how we help our clients meet the regulations and manage ux on top of that and rj do you have anything to add oh yeah a fast lot so what the approach that cabin took instead of doing one off our kyc enable is constant it's always

9:30on so when they sign up left we're constantly monitoring it and then notifying the exchange or wherever the entity is requested of any issues with aml or when they have to update it the 90-day window or what have you so it's not just one-offs what's interesting is that with the products that we're rolling out is that we're consumer-facing so that now we'll have that relationship

9:56with the consumer lock in their their i their kyc and then they can port that kyc to any of the vendors that are in our ecosystem so the step the number one step for us to approach it we've done a lot of research on this we've had a press release we just went out today that we have joined as the steering committee to the trust over ip which is a four layer

10:21Structure that will provide the self-sovereign identity which we can probably talk to talk about that for hours and we think that's the foundation for moving forward so that it's not always one-off repeat rinse do it again you own your identity you know cabin believes that it's a basic human right to own your own identity online and the days of an anonymous internet

10:47are over right and we're working with this forward there's a large group i mean everybody on this call is it's moving so quickly that i believe it's a new paradigm shift i spent my whole career trying to find a paradigm shift and i think we found him here with his identity joseph do you have anything yeah i mean so like yeah like we're not a verification

11:13you know project you know shift is very much focused on kind of core network layer infrastructure and so i think the work that everyone else on the call does today is really what you know precursors what shift is and i mean i think i agree a lot with both panelists right now in that like i think that this is definitely a paradigm shift and

11:35and what i find interesting is that like we can utilize these regulations and this is kind of the way we've thought about this entire thing is like we can use regulations and we can build protocols and regulatory specific infrastructure that actually does better than how regulation and policy function today and so i would just add that like that's kind of the approach that we've

11:55taken is like we can actually do better than the way that you know the traditional systems function and we can reduce risk and create you know changes in how counterparty dynamics work and that ultimately empowers more identity and credential creation and ownership and collateral control and it also actually is what the exchanges are looking at is i think the

12:13bootstrapping of the potentialized identity system across the blockchain space so how do you use a protocol layer to enable identity and credit and new types of formats and we're kind of utilizing this kind of fad of kyc paradigm as a way to bootstrap a wider kind of conversation so it's very interesting and one of the biggest paradigm shifts it

12:35seems in the industry in the hottest topic of 2020 has been decentralized finance and defy and decentralized exchanges like uniswap i can't go through this discussion without at least mentioning it because you know there's not really any aml kyc on a lot of these decentralized exchanges users can create liquidity pools and trade coins without potentially providing any id or

12:57source of funds so i want to ask you to start joseph are your networks watching decentralized exchanges working towards any potential solutions with regards to identity or more so with regards to identifying black market funds and similar black market activity on these unregulated exchanges yeah so shift was built as an on-chain compliance identity and

13:21compliance primitive routing system and so we started with the exchanges because we recognized that you're a source of identity aggregation and consent we haven't announced this yet but we will be probably in the next month or so that we're working with some largest d5 projects in the space today actually on how you look at effectively the rollout or implementation of a global

13:41white listing system so the idea that d5 applications could allow opt-in compliance requirements to be a function of all d5 applications today and using it as an advantage as opposed to saying it's only to you know solve counterparty risk but it's more about how do you enable new types of lending or credit market creation like the fact that you have an identity

14:03persistent across all of these attributions in d5 is i think one of the most extraordinary things that will come in the next 12 months the idea that you have compliant liquidity pools that are functioning across you know exchanges like uniswap or being able to transmit users across these and building credibility and reputational characteristics across these are

14:23probably i think where the space is going and yeah we're working on that apparently very exciting and do you guys have any other comments on that i have a comment just for joseph i think it's so applicable especially when the travel rule will start to be enforced more and more i think things like this are needed you know without having to re-verify

14:43people over and over again in certain cases so i think it's i think it's good i'm looking forward to the announcements you know my quick two things on it is that everyone will start the new lord to be regulated the minute your net worth gets to a level you're afraid you're going to lose it you're not going to risk the potential of running a any kind of an exchange or

15:08transfer of money that might make you responsible where you now lose your net worth so and it's starting and you don't have you know a lot of net worth you're able to run all these networks it's not a big deal but when you start getting a pretty good capital net worth worth a lot of money you are not going to subject your company to that potential risk

15:28so i think it's all going to come out of it definitely and when you have the more net worth you have the more you care about your personal digital identity and i want to talk about exposing your personal information you know when you do register for all these different service providers you do have to have some kind of verification where you need to show them

15:47your identity and they need to be able to derive that digital identity without exposing the information in a potentially way where it can be you know taken advantage of or at least have the customers know that you know their information isn't going to be hacked by sending it to this service provider so that they can start using their service joseph can you talk about the

16:09balance there where to give that peace of mind to the customers where you're providing information but ensuring that it's not hackable yeah it's kind of a delicate balance right and compliance has this issue where like compliance implies the requirement of centralized control of custody right so like it depends which parts of identity like when you move let's say away from the

16:31compliance side for a minutes i do think things like filecoin and these ideas that you have permanent file storage capabilities or the ability to you know deploy shards of data files across things is really interesting and i think that in highly regulated environments if you're talking about government identity systems and etc you know governments have been i'll call

16:52it fairly okay at storing data and if we can provide you know less you know less data across more places the idea that you can just spread those attributes into more places i think is the ultimate you know goal so that it's yes you know things are still hackable security is kind of an obfuscation tactic nothing is truly secure but the more places we have more things

17:15and the less honey pots i think that you know we have just an easier you know a future ahead of us rj yes you know this isn't an absolute right but it's rapidly approaching and the fact that the government gave you a verified credential that verified credential is supported from you know an id layer on top

17:46a did layer on top of the block chain where you make the data almost worthless to hack or steal the minute i have my credential and ontario is working on this right now the minute i have my credential and they as an issuer issue that credential on top of blockchain to me as a holder and i go to a verifier they point back down

18:13and unless they can see the private key from the issuer and also the holder you can have that information you can't do anything because you don't have the private key it's like just like looking at blockchain i can see your your your bitcoin right but i can't move or touch it or do anything with it because i don't have the private key it's the same with

18:32with that they're moving forward with a verified credential so another open standard is w32 which is a verified credential in the trust triangle that is one of the layers that we're leveraging inside of trusts over ip which is another open source foundation linux foundation and the governments are starting to identify this to say not only do we have to

18:56protect data because there's always data you got to protect so let's put it in a format where it's not worth hacking and stealing you can take my information but you don't have the private key you can't touch it and aries is the agent that's that from ibm that's going to allow you to manage some of those aspects of it so it again i mean it's moving fast exciting there's all

19:17kinds of neat little ecosystems that are popping up and you got to make it so it's not worth trying to hack or steal definitely well so you mentioned a couple things there you mentioned the ontario government and government digital identities which i'm going to jump into but first of all you also mentioned integrating the blockchain and ensuring that you can see

19:40you know you can see somebody's address but to have the private key and the access to actually utilize it is another story and you know i've spoke about this with joseph last year but i want to touch on it in terms of the blockchain part of the digital identity there are people have that thought process where if you put information on the blockchain you know

20:01sometimes if it's an immutable blockchain then it can't be removed and it potentially could be public if it's a public blockchain so can you guys talk about when you utilize the blockchain by also verifying people's personal information is that information actually on the blockchain or you're just using the blockchain as a service but that information can be

20:22removed for compliance purposes and to know that your information isn't on the blockchain forever and it can be accessed by somebody you guys want me to jump in with it just at a high level this is just a high level right is that you're using using the cryptography to prove that you own a credential so let's say the ontario government would write to the blockchain

20:50their dataset so all the data that's on an id so name it wouldn't put any name there's no pii on the blockchain as a verifier you would look at the blockchain to say this is the structure of their data set of their verified credential and i have one of those credentials the pii is sitting in my agent it's not sitting in the block and the blockchain but we're using the

21:16blockchain so that the verifier can point and say these are the items and that there's a signature that says through crypto graph that i have this id and that information is accurate that it's a high level way to put it and so no pii's ever on the blockchain yeah great joseph do you have anything to add to that no i think that's like completely true

21:43like you never put pii anywhere near a blockchain it's really like you're using it as a reference point you're using it as a i have some sort of a reference it's just it's acting as a directory function across a variety of different use cases

22:11okay my next question is from your network's perspective is there a chance of an equifax like hack that targets vasps or exchanges where people's personal information could be stolen in aggregate and how do your networks mitigate that i can i can jump in i can jump in on this one so it is it is definitely a concern and it was a concern when we

22:38truly started our marketplace of identity verification data services so we took the approach that we actually don't store any pii we do the verification we send the encrypted data back to our client and then that's it you know we don't destroy the pii so we probably took the you know a really you know far far uber safe approach to pii but just not touching it nor storing

23:06it and then with their from our clients perspective we don't allow reusability and things like that so if you know if we did something on behalf of a client and they verified ashton you know it's not going to have truly used you know stamp of approval that then gets hacked or anything like that so we don't yeah so we probably take a super privacy focused approach and

23:30and you know lo and behold you know we complied with every privacy policy in the world before they even were enacted so but one one approach on from a security and verification company joseph yeah i mean shift is again like kind of a lower layer like we don't touch any data we implement a concept called a trust anchor trust anchor store data however they choose to

23:58however they choose to manage that data is up to their own requirements and it's only the way that they express that information on behalf of users and how consent permissioning and provisioning works across a set of use cases so we don't touch data or ever know any data that exists that's good rj do you have anything to add to that yeah no it's the key you got to minimize

24:20your risk you don't you don't hold unnecessary pii if you don't need it and you know hashed and cryptographically protected and you put the control in with the owners you don't have the control the actual you here and they can go to the level that they're most comfortable with thank you all right i want to jump into the question about the government which you had

24:46mentioned rj for the people that haven't seen the news starting in january 2021 the ontario government is consulting with the industry which is you guys on how the province can introduce a secure digital identity online or in person and eventually we won't be having to carry around driver's license cards government ids and it will all be online which is pretty cool so how is this

25:13government verification going to be different than working with vasps and cryptocurrency exchanges and the regular bodies that your companies have worked with rj if you could start okay sure so it's not going to be different right i mean verifying it so if you look at a verified credential if you're trying to do business the first step you do is identity so it's

25:37the identity piece is always going to be the same let's let's validate and verify who the individual is then from there you're going to go to whatever the business processes is and you'll build an ecosystem that has its own governance that'll that'll will address it so if you look at all the verified credentials those two pieces identity first and then

25:59what the business case is you need to in my opinion right you need this a technology stack that there isn't one point of failure you need a scenario where there's not a central authority that now is tracking you so when we talked earlier about that trust triangle and what it sits on the blockchain is when when a verifier goes to verify an id

26:25from the issuer the issuer never sees it shouldn't make sen i always make the joke that i don't want the government to know every time i go to buy a drink they don't need to know that i buy drink 365 times a year right so with id will verify back and the issuer of that id will never be able to track it and know how often i use it and that is one of the core foundations

26:53that ontario is looking at is that you want to make sure that the user owns their identity and that nobody's tracking it there can't be a central authority that manages it tracks it or even sells that data to another third party well said joseph do you have anything to add i know you've familiar with the ontario jurisdiction yeah i mean i think it's it's to be

27:19discovered how ontario chooses to implement i assume it will be yes we lost you there joseph oh no there we go my girl back yep oh no sorry guys i apologize yeah if you guys can still hear me

27:50yeah yep yeah so i can say that like on the we've been working on a project with the bermuda government and in and it's really the same implementation standard pretty much everywhere right you run a standard credential you're basically the who is that credential provider is really based on who the first users are but yeah you're running a w3c credential standard

28:12It gives interoperability it gives openness it's probably the right architecture that i think most governments will choose and i think british columbia has already done this as well as alberta actually and i think that they're on a pretty good path towards this so i just see a universalized standard on how this works today so great degree 100 awesome well we're

28:35running out of time guys but i do want to ask you the final question with regards to digital identity industry with exchanges and vasts but also with the government discussion that we've been having here what is your futures prediction for the industry for august 2021 or september 2021 of next year the next 12 months totally go ahead first

29:00yeah i think it's something that joseph said that there'll be a consistent layer of identity across any exchange like one exchange the to the 13th exchange will all start looking the same when it comes to ux and requirements as far as onboarding goes great and joseph yeah i would agree with that i think you'll start to see very naturally increased primitives that

29:24come into the d5 space and really start to make sense from a credit creation perspective and i think that there'll be this unification and kind of co-integration between centralized exchanges and finance and using this kind of compliance layer as a way to start to enable a very wide adoptive capability between c5 and d5 in the traditional world

29:44so that's what i'm excited about exciting times and rj i think there's going to be a consolidation of standards to be able to prove your identity online and you'll see a lot of open source non-profit utilities that will roll out different ecosystems whether it's for verification for doctors when they go into a hospital all the way to you know credentials to

30:13prove that you have a degree from the university i think that's the low route we're going to see those proliferate and really take off in the next six to eight months well we'll see what happens and hopefully i see you guys back here at futurist 2021 and hopefully in person as well in toronto at the nightclub let's all hope for that your dude yeah let's yes thank you guys it's

30:37been an honor to speak with you guys all the best in your industry moving forward thank you so much to the futurist conference and untraceable for hosting day two it's been a wonderful conference and we'll see you guys in the next panel thank you