In a Gold Rush, Sell Shovels
Recently reported from Business Insider, a start-up called Onfido that provides Know-Your-Customer (KYC) and ID verification saw a 10x increase in business in Q4 2017.
Selling shovels in the gold rush made you the utility for the capitalists, you weren’t going to find gold without it. Creating identity solutions that are legally compliant will make Bridge the utility for all exchanges that want the best standards and operations for their platform. Being in a space that is the “Wild West” will change soon, the writing is on the wall. Governments are literally creating the Bridge customer base by mandate and the demand will continue to grow.
The recent interest in crypto has caused some of our favorite exchanges to hold back on taking new customers, as well as long lines to onboard customers that can take months! Businesses that are legitimate are awaiting guidance from regulating bodies, but still need to continue operations. Adhering to the highest standards can be costly, some businesses may take the risk and ignore the costs for KYC. We believe this is a detriment to their customer, but also puts the business in jeopardy if acting extremely negligent in their care.
Bridge saw first-hand the cost for KYC. The standard starts with a retainer of $30–100k USD for access to their APIs that checks simple public databases and watchlists. Each record check can then cost $1–6 USD. You can see for ICOs and exchanges that this cost can be millions in a few days, depending on user volume. Bridge breaks down this cost; though we can’t eliminate all expense, we can reduce it greatly.
John Smith participates in ICO A, ICO B, and ICO C. Each ICO required KYC and he had to submit his passport to each one, not sure how safe it was. Instead of each ICO verifying John, taking the risk of obtaining his sensitive information and paying big fees; John can go to Bridge and get his ID verified. Then he takes his public address and unlocks it for only what he allows the business to see. Most ICOs only want citizenship, age and money laundering/terrorism checks done for their token sale. John signs into ICO A and they check the data on the Bridge private chain. Now the business is compliant and John’s data is not at risk. A pessimist might say the costs will be cheaper by simply shopping the KYC market, but unfortunately the KYC space is controlled by a few players with monopoly on fees.
As we patiently await clear guidance from regulators; Bridge will be rolling out their MVP this month and will start testing with exchanges and blockchain platforms that need our help. This will help us learn what the market needs while helping to serve our customers efficiently!
