Identity for growth — The need for a 21st century global ID

Part of a series on ID and Payments

1.1B people in the world lack any form of Identification in the world. The rest have some form of ID, but most of them are not digital, which dissuades them from availing services and aid with strong SLA’s. Inefficiency and corruption lead to poor distribution of welfare and has been a challenge for most of 20th century.

21st century aims to be different, with rapid growth in internet and mobility, digital & secure ID’s for a the entire 7B population is not a distant dream but a near term reality. The challenge though is proper definition of what a digital-ID means and what vertical it applies best . Digital-ID is not a magic potion which will provide universal solutions to policing-financial-aid-citizenship-Governance and forming governments. Most discussion do get waylaid in this grandiose goal of a be-it-all solution without achieving a Common-minimum-identification.

A centralized database, if hacked/compromised can completely render the scheme useless, as has been proven time and again with US — SSN hacks . SSN was first tried out in 1936 to keep track of salaries, but over a period of time it became associated with insurance, credit ratings, mortgages etc. The challenge of changing ones SSN is an uphill battle with humongous effects on credit availability and employability , aptly demonstrated by $110M extra earnings by Equifax to freeze credit enquiries on a hacked 143M database, which they were supposed to keep secure.

One of the key aspects of Digital-Id is security. Cryptographically secure and with silo’ed access. One of the reasons a database gets hacked is repurposing the intent, which leads to piling up of applications on an architecture which had a very different purpose. Piling up of applications leads to large incentives of hacking. For example when India’s GDP would be around $15T, the UIDAI database will be a goldmine to tap social welfare schemes by nefarious elements. Application driven ID is a thus a must have.

Digital-ID initiatives across the world

UIDAI — India

In defining UIDAI ( Unique Identification Authority of India) Act the government focussed on the purpose which was to deliver subsidies, benefits within the geographical limits of India.

An Act to provide for, as a good governance, efficient, transparent, and targeted delivery of subsidies, benefits and services, the expenditure for which is incurred from the Consolidated Fund of India, to individuals residing in India through assigning of unique identity numbers to such individuals and for matters connected therewith or incidental thereto. — THE AADHAAR (TARGETED DELIVERY OF FINANCIAL AND OTHER SUBSIDIES, BENEFITS AND SERVICES) ACT, 2016

The need for a digital ID though apparent, is not an easy problem to solve, various challenges lie with the amount of data to be captured, for it to be a relevant for different use cases . The usage of digital-ID also varies depending on what applications or services are piled on to the same. Also is digital-ID a one time authentication or it is a continuous one, should an digitalID be connected with most financial/security aspects, as UIDAI intends or should it be multifaceted .

Estonia — Leader in Digital ID

Nearly every one of Estonia’s 1.3 million citizens has an ID card, which is much more than simply a legal photo ID.

Technically, it is a mandatory national card with a chip that carries embedded files, and using 2048-bit public key encryption, it can function as definitive proof of ID in an electronic environment.

Functionally, the ID card provides digital access to all of Estonia’s secure e-services, releasing a person from tedious red tape and making daily tasks faster and more comfortable whether we are talking about banking or business operations, signing documents or obtaining a digital medical prescription.

Estonia provides three different set of ID’s : ID Card, Mobile ID, Smart ID

In Electronic Identity in Europe: Legal Challenges and Future Perspectives (e-ID 2020) ; the author states many other examples such as Pakistans NADRA with 121M ID cards . Pakistans NADRA is applicable to Non-resident Pakistani’s whereas India’s UIDAI is only applicable to Resident Indians. Estonia on the other hand , provides you with a e-citizenship. The mandates are all over the place.

I am very interested in small-payments, deliverance of aid and accountability. A basic ID which is digital geo-fenced, with non-exhaustive biometrics ( lossy biometrics per application, no reason to have all 10 finger’s, face and iris scan for $100 transfer), should be near term focus to create the Common-Minimum-ID . This ID should be a part of a immutable , open , crypto ledger or blockchain. Small Payments, transfer apps can parlay on top of this which provides for ecosystem of entrepreneurship, growth and deliverance of welfare. If you have ideas, hit me up.

Innovating with Cryptocurrency and Blockchain : Global equity investments and small payments.