The three how’s of digital identity: facts, distribution, and incentives
The last several years has seen increasing attention placed on solving the ‘digital identity’ problem. In developed countries it’s generally expressed as an issue of economic inefficiency or individual privacy, while in developing countries the focus is mostly on finding ways to ensure legal identity can be extended to the circa one billion who do not have access today. Regardless, the prevailing trend driving the need for a ubiquitous digital identity solution is our search for new ways of entering trusted relationships with one another. This is as relevant in global commerce as it is for the Chinese government. Most existing systems are built around the nation state, however these systems are proving inadequate as the movement of people and conduct of business increasingly crosses state boundaries. Similarly, the rapid development of large populations such as China is calling for new systems of trust which has come in the form of the Chinese social credit system.
Given the rapid advancement of identity tech, it is important to carefully examine the “how” of identity. That’s not to say the “why” or the “what” isn’t equally important, but this is a reflection of our point in history. The “how” of identity systems today has the potential to strengthen an authoritarian regime, as much as it has the potential to form the foundations of a new wave of democratic participation. Allowing technological novelty to define our identity systems presents a serious danger to democratic societies. Further, it is the “how” of identity tech that could explain why we havent seen a globally ubiquitous identity solution emerge. Uncoordinated and competing identity solutions has created a fragmented market, making it difficult for individuals and organisations to interface with.
The how of identity could orientate around three aspects: how do we establish facts about each other? how are these facts shared or transmitted? And what is the incentive and governance framework of the system? Only by considering these three questions can we properly evaluate and design future identity systems.
There are many examples of how we have become very good at generating “facts” about one another. But a lack of attention toward how these facts are transmitted has lead to a fragmented identity landscape, and a lack of attention toward the incentives and governance of these systems poses real risks to democratic societies.
Students can take possession of digital university degrees; biometric solutions enable travellers to move freely through airport customs; and at least in some parts of the world, government issued document verification via an API call. And yet a volunteer organisation still requires a manual work flow in Australia to assess an individuals working-with-childrens check, and civil rights groups raise concerns about the use of biometric data.
Commerce is also held back by identity solutions. Cryptocurrency exchanges are increasingly expected to meet KYC requirements by local governments and regulators. To meet these requirements, operators have few choices other than to integrate with the identity verification services in each region they operate; use an aggregation service that does this for them; or some more manual process. This is a costly process that opens up many privacy concerns too. And as people lead more global lives, the question of passing verifiable facts about one another across national boundaries will only grow more complex — and costly using current approaches and technologies. Not to mention limiting innovation and entrepreneurship as we don’t know what new opportunities emerge once identity verification becomes as ubiquitous and easy as PayPal.
There have been some noteworthy attempt to make it easy to share and transmit identity facts. These could broadly be referred to as digital identity platforms. These platforms act as a kind of aggregation service, offering a one touch point for those seeking to issue, verify, or claim identity related “facts”. The utility of these solutions are dependent on them achieving network effects: Issuers want to know that they can reach a sizeable audience, relying parties want to know that by integrating they’ll be supporting a large audience, and individuals want to know that it it’s accepted in a wide variety of circumstances. The downside to these approaches have been that they also build dependency. All parties are now locked into this particular platform. Issuers surrender their control over customer experience; verifiers are dependent on the platform to hold the information they need; and users have little recourse if faced with privacy concerns. And perhaps it’s just bad timing for those who have invested in these schemes, because after 10 years of digital platform strategies many internet rights activists have become wary of centralised technology services and the power that is gained if large network effects are established.
Solving identity for individuals, organisations and governments requires a different mindset to that which has propelled tech innovation and business over the last decade. It will require a coordinated effort across the three concepts introduced:
- Facts: The ability to attest things about ourselves and others;
- Transmission & storage: How are facts stored and distributed; and
- Incentives & governance: How do the incentives of identity providers align with the users and society? How do we govern the identity system?
Coordinating across these three dimensions will ensure the conscious design of an identity paradigm for society, along with ubiquitous identity options for individuals, businesses, civil society, and governments. The key challenge is how to bring people together to work collectively on the transmission and governance challenge, and do so in a sustainable manner.
