IAME and Blockchain Identification
The biggest issue with integration of Cryptocurrencies into the regulated world is the identification of ownership and provenance: who are you are transacting with, and where they obtained the Cryptocurrency in the transaction. These problems were never considered in Bitcoin which still remains the base architecture for all subsequent Blockchain developments. It may have seemed a non-relevant factor at that time, but it is in our opinion that without resolving the identification problem, mass integration cannot gain traction with incoming regulatory opposition. The current regulators perspective that will only toughen with time is that: Cryptocurrencies are a hotbed for money laundering and other criminal activities due to the inbuilt veil of anonymity and ease of creating Blockchain wallets that act as proxy bank accounts.
The IAME perception of identification in general is based on network topology: parties/nodes connected by transactions/edges, and whereby for a node to transact/create an edge with another node, there is a need for each node to identify beneficial ownership and the provenance of the “currency” in the transaction. The archaic method of identification still used by merchants and financial institutions is based on the principle of surrendering wholesome information and their corresponding supporting documentation. This system was pieced together over decades out of regulatory need to fight money laundering but is not suitable for cryptocurrencies.
Should regulators apply the same regulatory principles as they do for bank accounts and fiat transactions for cryptocurrency, we are expecting a natural evolutionary response of either: Cryptocurrencies being hurdled into a niche system for outlaws or a complete slowdown based on the weight of compliance being tethered to each transaction.
The implementation of obsolete identification protocols for Blockchain is inherently incompatible to the underlying ideals of decentralisation while on the other hand the principle of anonymity is existentially conflicting with base regulatory requirement for anti money laundering. A compromise needs to be reached between the technology and the regulators that enables a symbiotic existence between the two sides if Blockchain is to survive this upcoming ordeal, and this must be drawn from the essence of current regulations not the form.
To illustrate the challenge at hand, the Financial Ecosystem must be contrasted with the Blockchain Ecosystem:
In Financial Ecosystems, the topology is rigid and the node creation, node control and node ownership is controlled by regulated financial institutions. On the opposite side the topology of Blockchain Ecosystems is highly malleable, node creation is private, node control is decentralised and node ownership is anonymous.
In a highly malleable topological network where nodes can be added instantaneously and privately, proceeds from criminal activities can be placed, layered and integrated into the system with relative ease. Add anonymity to the problem and you have the perfect tool to conduct to finance and collect the rewards from criminal undertakings. An extreme solution would be to simply force the registration of every single Blockchain wallet with centralised regulatory bodies and restrict the creation of Blockchain wallet to designated regulated institutions. Set aside the financial cost, this would be highly likely to fail given the decentralised nature of Blockchain technology, and the ability for Blockchain to exist outside of a centralised body.
The IAME Solution
To come to a viable solution, the vision at IAME lies in reinventing identification process from wholesome to fragmented and create identified topological spaces that can be used as point of entries for regulated financial institutions. The IAME Identification Network will be built as a built a parallel system that seeks to resolves the conflict of anonymity without interfering directly with blockchain evolution.
By shifting the identification process from wholly to fragmented, we can enable people to validate their Blockchain address without resorting to having to trust every single transactional counterparties with non-essential sensitive information; and with the validation of a majority of nodes in the any particular Blockchain ecosystem, we can support the first step towards regulatory integration for Cryptocurrencies.
For more information please consult our Website and the White Paper. Any feedback, comments, or questions can be asked directly to our team by visiting our Telegram Channel. For updates on IAME, you can follow us on Linkedin, Facebook or Twitter.