The Swiss Federal Council announced that Switzerland will provide digital identities (“E-ID”) for their citizens in the future. This is a clear commitment to stay ahead of the curve in the process of digitalization. Switzerland is dependent on a well functioning tertiary sector — being an early mover attracts business and institutions likewise. The process of formulating an “E-ID-Gesetz” (law for E-ID) started in 2015 and has the goal to provide electronic/digital means of identification for everything from online shopping to e-government use.
There is a debate about who should provide such services as E-ID or E-Voting. The Federal Council is open to private solutions — e.g. allowing existing services such as SwissID (private), Swiss Pass (SOE/parastatal by Swiss Federal Railways SBB) or even AppleID (private) to become official. They shall be certified as “Identity Providers”, have to fulfill certain minimal standards and are under state control. The data within the E-ID is checked and verified on a regular basis to make sure it is accurate.
Below I will summarize the debate about the issuers of E-ID, formulate an idea of how to conquer the risks of (technically) centralized solutions by blockchain technology and give an idea about what ecosystems could take up the task.
The pros and cons of a private solution
Those in favor of a private solution argue that the state should not intervene with its authority and let a more agile private sector find solutions that are supported by the state. (Source in German: NZZ)
Those against a private solution, favoring a state solution argue that citizen ID is something too valuable and sensitive to be handled by the private sector. Arguments include disappearance of private companies over time, stigmatization of citizens due to their provenance of their E-ID and commercial interests by private issuers of I-ID (egg. forcing citizens to consume certain services with the issuers company). (Source in German: NZZ)
First movers are already testing E-ID
The Canton of Zug is a first mover within Switzerland already allowing their citizens to register a digital identity. Zug, being a global HUB for blockchain technology, is also known as “Crypto Valley”. Due to a very open minded government it attracts blockchain companies from all over the world.
Their digital identity works with an app in which citizens can register their identity, which is then verified by the Citizen Services Department of Zug. (Source Stadt Zug in German)
The risks of centralized solutions
Centralized solutions for E-Voting and E-Citizenship bear the immense risk of man in the middle attacks or massive data leakage in case of malicious attacks on servers handling the highly sensitive data. Current developments within the field of blockchain technology have created new secure possibilities to store data distributed and thus very safe. E Voting or E-Citizenship are predestined subjects of blockchain solutions. The burden of maintaining highly secured data storage is lifted from the state, security of the system is auditable by everyone capable or interested and there is no single point of failure in the system.
Is blockchain the answer?
For an E-ID solution two blockchain ecosystems come to mind: NEM and Ethereum. Both are able to assign distinctive addresses to users, both are very secure and both have a corresponding currency.
The NEM blockchain (originally named “New Economic Movement”) has a very lively and innovative community. The corresponding cryptocurrency (currently in the top 10 in market cap according to coinmarketcap.com) is very stable and transaction costs are super low. NEM also has a built in Multi-Signature function, which makes it very safe to use without elaborate technical infrastructure. It has a very easy to use wallet that includes an easy to use voting module with almost no transaction costs. The organization behind NEM, the “NEM foundation”, has already collaborated with big companies globally and invests in R&D to further develop their ecosystem.
NEM is the public blockchain whereas mijin provides private version of the chain, already used by multiple large-scale companies. Mijin and NEM (later on) are updated with Catapult, transforming the blockchain to a C++ development platform.
A detail that might come into play when mass adoption is the goal: NEM uses a POI (“proof of importance”) protocol. Proof of importance is very energy efficient compared to proof of work mining that most other blockchains use. Importance scores are measured by the stake and interactions with the network from a specific user. Nodes are very cheap to run and don’t consume much power (e.g. a Raspberry Pi).
The Ethereum-blockchain provides smart contracts, those are programs running on the blockchain — therefore Ethereum is also called “the world computer”. Everyone can develop and establish a smart contract using the specific programming language “Solidity”. Those smart contracts are public and auditable and can be checked for defects.
Unfortunately smart contracts have one big problem: once the smart contract is broadcasted to the blockchain it cannot be edited. Recently two big smart contracts for multi signature have failed and caused major problems for companies using them including millions of funds lost.
A major upside of Ethereum is its widespread use and stable blockchain, the very high acceptance by the market and their very active core development team. Many of today’s ICOs are conducted on the Ethereum platform making the ERC 20-tokens widespread with many wallets available and easy transfers between users.
In connection to Switzerland it is important to note that the “Ethereum Foundation” is based in the canton of Zug and has strong ties to the crypto valley.
Judging from my knowledge (which is not primarily a technical one, but rather focusing on usability and communities within the ecosystems) I would prefer NEM/mijin to pick up the task. But hopefully more than just these two come up with solutions. It is vital that healthy competition brings forth the best solution for the Swiss citizen.
Is blockchain technology here to stay?
The first generation of the digital revolution brought us the Internet of information. The second generation powered by blockchain technology is bringing us the Internet of value: a new, distributed platform that can help us reshape the world of business and transform the old order of human affairs for the better. — Don Tapscott
Developments in the realm of blockchain are still in a very early stage and it is hard to foresee what tricks developers pull out of their sleeves within the coming months. Rapid development and technology adoption by companies and private users likewise definitively make blockchain a technology to stay.
I had the honor of interviewing National Councilor Marcel Dobler about the subject of E-ID and what blockchain could provide for Swiss citizens. Mr. Dobler is very outspoken about the digital future of Switzerland and has a strong background in ICT. Read it here: “Swiss National Councillor Marcel Dobler on E-ID and blockchain”
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