The Future of Identity Management Crypto Wallets as Authentication Hubs
Original Publishing Date: Apr 2018
Author: Christine Ferrusi
Wallets began in the cryptocurrency world as a way for individuals to buy, sell and store currencies. The wallets also store the cryptographic keys necessary for those transactions. And typically users will validate their identities to the wallet company before being allowed to use the wallet. Wallets are incredibly popular, and there are many wallet vendors that users can choose from.
But PikcioChain believes that wallets are extending beyond the simple transaction function of buying and selling. Wallets will evolve into a key identity authentication tool for users online. Consider how the functions of a physical wallet are transferring to crypto wallets.
A wallet in the physical world contains multiple pieces of your identity — perhaps a driver’s license that can be used for proving driving capability, of course, but also for buying alcoholic drinks, accessing identity-specific services like opening a new bank account, and in some places to prove your identity before being allowed to pick up your friend’s child after school. Beyond your license, there are probably debit cards that allow you to access funds from your bank accounts and use them wherever you want to make a purchase, with your pin validating your identity to the merchant. Similarly, your credit cards validate your identity also, supplemented by your signature. You may also have library cards, membership cards to some significant associations, and even business cards that you use to show your business identity.
Similarly, crypto wallets already perform the function of the debit and credit cards for transactions, and for storing currency. But more and more they’ll take on the other functions such as allowing you to access identity-specific services. Why? Because crypto wallets already validated your identity and can now act as a third party references of your identity to others. The wallet vendor likely asked you for your social security number and license, or equivalent if you live outside the U.S. And depending on other factors, the wallet vendor may have also performed additional due diligence in alignment with “know your customer” financial services regulations. With this information to prove who you are, the wallet vendor now allows the transaction. And the cryptocurrencies are accepting the wallet’s authentication of your identity. It’s not much of a leap to think of other third parties that might be willing to accept the wallet vendor’s validation instead of conducting their own independent validation.
However, most wallet vendors won’t want to take on this responsibility, especially since it may well bring more regulatory requirements and business diligence than the vendor is willing to perform. We believe there will be a split in the market between vendors who want to take on the identity authentication role and those that don’t. In many cases, this will depend on emerging regulations that govern how data are collected, stored, and validated. That’s where vendors like PikcioChain will come into play. By working with trusted identity validators and with wallet companies (and in some cases, creating new wallets) PikcioChain can authenticate the validated identities and aggregate identity data on behalf of wallet vendors to make online relationships faster to create and smoother to maintain by merging transaction and identity into single systems.
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The PikcioChain Team