In chapter 3 of the SelfKey R&D Team’s update for 2020, we take a closer look at Tokenomics and answer some of the most frequently asked questions about the KEY token.
[Chapter 1] Online identity and identity management in 2020 – Update 2020 HODL & BUIDL
The SelfKey R&D team has been working tirelessly to put together a detailed paper which appraises the state of identity management in 2020 and lays out our vision for the future. Read chapter 1 below and keep an eye on our blog for the following chapters.
What is the problem with digital identity?
The SelfKey whitepaper stated the problem: We do not own our identity.
Our identity is represented in the digital economy as data, outside of our direct control – which is constantly sold, lost, stolen, and abused. Databases can and will be hacked, and the mere fact of storing data in a centralized database is a significant contributor to this problem, which distributed technology can potentially solve. The problem and mission statement remains the same: the current, centralized way of managing data is broken, and we need a better, more decentralized approach to identity management, one that is Self Sovereign.
How big is the crisis in identity management today?
The current system of identity management is still flawed, and failing on a daily basis. Billions and billions of records were exposed in 2019 by companies irresponsibly storing data. This problem largely stems from large companies storing data in centralized databases, creating a target for identity thieves. Identity theft is the fastest growing form of crime in the world, inflicting serious financial and emotional damage on millions of people. Another core problem still remains, that proper incentives (and disincentives) are not in place to prevent loss of data. In the SelfKey whitepaper, we referenced the Experian hack, since resolved with a fine that equates to $5 per person who had their social security number compromised.
The problem SelfKey set out to solve still exists: our identity data is inadequately protected, and these problems will continue as long as companies take a centralized approach.
SelfKey exists to find a better way, and provide the technical underpinnings for a better, more decentralized way of managing personal data, with proper crypto economic incentives.
What technical development has SelfKey accomplished?
SelfKey has laid the groundwork for solving the digital identity and personal data security problem. SelfKey developed and launched the SelfKey Identity Network in practical terms through the launch of the KEY token, the SelfKey Identity Wallet, numerous SelfKey Marketplaces, an interoperable DID implementation, an authentication via keys (Login with Selfkey), a business facing Corporate Wallet, and other features for identity management. We’ll explore these in fuller detail, and how these component pieces make up an identity system.
The Identity Wallet
A non-custodial identity wallet is a critical component of any blockchain based self sovereign digital identity, as it provides a base layer where users can control, own, and manage their private keys, and private identity data. Any organization claiming to provide self sovereign (or even blockchain identity) but is lacking an open source, non-custodial wallet should be viewed with scrutiny. A popular saying over the past years has been: “not your keys, not your crypto”. We concur. A company which manages keys or identity on users behalf, is not self sovereign.
The SelfKey Identity Wallet has gone through continuous development since its inception. The wallet source code is open source and anyone can build and test, issue a pull request or perform an audit. After extended user testing with thousands of participants in the private alpha, design iterations and security audits, a public beta and a full public release, the vision for the ID Wallet has materialised into a working, usable product.
Currently the wallet is able to manage private keys including external devices such as the Ledger and Trezor hardware wallets, as well as manage any ERC20 token while locally storing and managing identity data, documents and DIDs. The underlying technology continues to be improved with a dedicated team of developers working daily on pushing new features and improving security, performance and usability on a continuous basis. Wallet users can explore and signup for services in the marketplace, enabling a “one click KYC signup”.
A SelfKey mobile app for iOS and Android is also open source, see the GitHub repository.
The SelfKey Marketplace could be described as the “Amazon of financial services” where users can compare financial products, securely transmit their KYC, signing up with a single click. SelfKey has the technology, team and executional capability to fill this gap in the market.
The SelfKey Marketplace is the “Amazon of financial services.”
SelfKey has made significant progress in securing strategic partners to populate the marketplace with useful products and services envisioned in the v1 whitepaper.
The incorporations marketplace – allows users anywhere to quickly, easily, and affordably setup a new legal entity in dozens of countries all around the world. A user can now ‘one click’ setup a new business and pay with KEY tokens for any associated government and registration fees.
Alongside this development is the bank accounts marketplace. Here, wallet users are able to compare different banking options from across the world, allowing them to pair the newly created legal entity with a real world bank account. Identity owners can pass their application on to a wide variety of banks through the wallet, many of which are crypto friendly.
The exchanges marketplace – allows users to ‘one click’ signup with various digital asset exchanges and pass even the highest levels of KYC. If the exchanges have a full integration in place, the data is transmitted securely from the wallet directly to the exchange, in compliance with global regulatory policies, such as the newly introduced FATF ‘travel rule’. The user may also be able to ‘one click’ login and authenticate throug hLogin with SelfKey (LWS). We envision several levels of integration, from simple affiliate link (which can help generate revenue for the foundation), to passing KYC documents to LWS, our native authentication platform.
Login with SelfKey
In the v1 whitepaper there was an overview of how the SelfKey ID can allow authentication (in addition to identification). During the course of 2018 and 2019 we’ve developed a system to allow any website to integrate a private key signature based authentication system called Login with SelfKey (LWS). LWS uses the newly developed SelfKey Chrome extension to act as a secure communications proxy and user interface. This allows the user to create a bridge between the integrators website and the SelfKey Identity Wallet.
A bridge between the integrators website and the SelfKey Identity Wallet.
The LWS authentication system provides access to an integrators’ website with an OAuth type flow without requiring a central server, API keys, passwords or the storage of sensitive user data. If the user can prove ownership of their private key via the signature creation and verification process, access can be securely granted. We are starting to see several other use cases for LWS, beyond initial authentication, such as compliance with regulatory statutes, e.g. the travel rule, which has sweeping implications for compliance within the digital asset sector.
The SelfKey Identity Wallet is a free identity solution for Windows, Linux and Mac. Get yours today!
Research and Development
SelfKey has setup a dedicated R&D department to research the latest advances in fields including verifiable credentials, biometrics and tokenomics, with the end goal of finding new and better ways to empower our community and identity owners. This department spends most of its time designing, prototyping, and evaluating agent models for the SelfKey token economy with proper incentive structures, researching developments in the identity space, creating prototypes and demos, as well as modeling agent interactions within identity network simulations. Focus areas include the following:
- Decentralized identifiers
- Verifiable credentials
- Mechanism design
- Biometric identification
- Agent Based modelling
- Ethereum smart contract development
- Developer tools, SDKs and integrations libraries
- Simulation tools and infrastructure
- Crypto-economic and Crypto-utility projects
- Computational economics
- Cryptocurrency economics
- AI, Machine Learning and automation
- Technical chart analysis
- Data analytics (predictive and retrospective)
Agent Based Modeling & Simulation
In order to gain insight into decisions and dynamics of an identity based crypto-economic system, experiments with the SelfKey network are constantly modeled as a set of autonomous decision-making entities called agents, where each agent individually assesses its situation and makes decisions on the basis of a set of global and local parameters. This allows modeling the effects of multiple agents of different types (identity owners, certifiers, relying parties, etc.) on fundamental variables such as supply, demand, token velocity, and many other factors.
Decentralized Identifiers (DIDs) are a fundamental component of self-sovereign identity. Broadly speaking, DIDs are identifiers that are resolvable to a set of public attributes including public cryptographic keys and URL endpoints. DIDs are under the control of their owners only and can be used to authenticate digital interactions in a decentralized way.
On April 9th, 2019, the SelfKey DID method was released, which defines how these identifiers are created and controlled by their owners, and it was added to the W3C DID method registry and later integrated directly into the SelfKey Wallet. The SelfKey DID method is based on the Ethereum network and implemented as a DID ledger contract and a set of client libraries for resolution and verification.
DIDs provide an important foundational layer for identity which makes the identity recoverable and interoperable. Within the SelfKey Wallet, we refer to the DID as a SelfKey ID, as we feel this is more intuitive to a non-technical user. Another initiative has been to educate the larger crypto community about identity related topics such as DIDs in the digital identity podcast series.
Verifiable Credentials are cryptographically signed claims linked to a DID that provide some kind of information about the owner of that DID. These claims are to be privately held and shared by their owners, however, KEY tokens may be publicly staked in association to the hash of a credential, without disclosing any personal information yet providing a monetary guarantee of the reliability and reputation of the credential issuer.
Verifiable Credentials are a core component of SelfKey identity network, since they allow identity owners to prove the validity of their attributes and documents to relying parties in a secure and easy manner. Relying parties can trust these credentials due to the strength of public key cryptography and DIDs.