Disclosure: The views and opinions expressed herein belong solely to the authors and don’t symbolize the views and opinions of crypto.information editorials.
Identification verification is a basic a part of every day work. Folks want it in banks, workplaces, academic establishments, and medical services. Nonetheless, conventional id verification methods fail resulting from error-prone mechanisms, lengthy delays, information silos, and dangers of non-compliance.
abstract
- Conventional id verification is stricken by errors, delays, and disjointed information methods, resulting in elevated id theft and a poor consumer expertise resulting from repeated KYC checks.
- By encrypting information off-chain and storing verification hashes on-chain, blockchain-based methods permit customers to manage their credentials whereas guaranteeing compliance, decreasing friction, and stopping information leaks.
- From startups to enterprises, blockchain id options present an inexpensive, automated and auditable verification course of that will increase effectivity, regulatory reliability, and safety towards deepfakes and fraud.
Corporations giant and small are more and more counting on rising improvements like blockchain to confirm the identities of staff, prospects, college students, sufferers, and extra. Blockchain acts as a privilegeless and immutable ledger to retailer information securely, automating real-time checks and verification methods with cryptographically secured data.
You may additionally like: The subsequent commonplace for blockchain is code neutrality. opinion
Conventional authentication methods have issues
In line with the Federal Commerce Fee, there have been greater than 1.1 million studies of id theft in 2024, leading to $12.5 billion in fraud losses. With the arrival of AI-driven deepfakes, id verification is changing into much more troublesome.
A 12 months in the past, OnlyFake generated authentic-looking pretend driver's licenses and passports from 26 international locations for simply $15 utilizing picture metadata with spoofed GPS places, dates, and occasions. These AI-generated pretend IDs have efficiently bypassed KYC verification of in style cryptocurrency exchanges and monetary service suppliers equivalent to OKX, Kraken, Bybit, Huobi, and PayPal.
The affect of id theft goes far past the monetary realm. In line with a report from the Identification Theft Useful resource Heart, id theft takes a extreme psychological toll, with 25% of victims contemplating suicide and greater than 70% being re-victimized by cybercriminals. With 19% of shoppers dropping as much as $1 million, victims are sometimes weak, indignant, and missing belief.
To regain consumer belief, firms implement multi-layered verification procedures and chronic KYC checks. Customers are requested to add their ID and supply proof of selfies a number of occasions. Though these steady monitoring methods are meant to display screen and mitigate threat, they create new factors of friction between customers and companies.
Alternatively, prospects turn out to be annoyed with “double KYC” checks and abandon the method, and companies lose income. In the meantime, regulators proceed to tighten KYC-AML guidelines, however are unable to reconcile information throughout disconnected methods. Consequently, the stability between compliance and consumer expertise stays elusive.
The issue is additional sophisticated for the two.6 billion deprived individuals who wouldn’t have entry to the web and wouldn’t have entry to e-KYC. In a state of affairs the place there isn’t a id verification system and no method to affirm who one is, the very which means of human existence is being questioned.
Contemplating the worldwide situation, companies are adopting blockchain for id verification. Rising applied sciences equivalent to blockchain permit customers to digitize, encrypt, and share their identities straight with related authorities with out intermediaries, minimizing information theft and growing general safety.
Blockchain for id verification
Blockchain makes id verification extra compliant and user-centric, whereas securely sharing verified credentials and delicate information throughout platforms. Blockchain permits firms to remove pointless bottlenecks and streamline the onboarding course of for workers, college students, sufferers, and shoppers with out sacrificing regulatory obligations. On the similar time, customers can preserve sovereign possession of their information and select what information is shared and the situations beneath which it’s reused/revalidated.
In contrast to consortium-based id verification methods, some blockchain-based protocols take a decentralized strategy, the place delicate information is encrypted and saved off-chain and hashes reside on-chain. Customers can then show that their credentials are real with out having to trip to confirm their id.
Due to this fact, blockchain not solely protects customers' information sovereignty, but in addition permits companies to raised handle compliance insurance policies. By permitting customers to bypass repetitive id verification, companies could make onboarding less complicated and extra accessible.
Blockchain has democratic potential as firms can customise their every day actions primarily based on the dimensions of their operations.
For instance, small companies can leverage blockchain-based options to attain enterprise-grade performance with out enormous prices. Reasonably priced blockchain reduces administrative burden by automating repetitive duties and releasing up specialists' time to concentrate on core performance.
Blockchain additionally streamlines workflow for small groups whereas complying with native regulatory pointers. Blockchain with transparency and auditable verification companies facilitates the screening of latest and present prospects with seamless employment, academic and prison background checks.
Midsize companies that can’t function with primary instruments but in addition wouldn’t have the sources to take care of enterprise-level complexity will even profit from blockchain. This know-how gives a scalable verification system that may develop as your workforce and organizational infrastructure grows, enhancing operational effectivity throughout departments.
Blockchain has complete screening capabilities for high-volume verification and automatic periodic checks, making it splendid for these midsize companies. They equally help enterprise-scale validation with personalized APIs, superior compliance reporting, multi-party audit trails, and real-time disclosures.
American inventor and thinker R. Buckminster Fuller as soon as stated: “Humanity is buying all the appropriate know-how for the mistaken causes.” As the specter of deepfakes and id theft looms, blockchain provides a ray of hope for each customers and companies. They exhibit how rising applied sciences can be utilized “for all the appropriate causes” to verifiably show humanity's true id throughout all realms of existence.
learn extra: Verifiable Credentials: AI’s Antidote to Fraud | Opinion
Zayn Zaidi
Zayn ZaidiMark Cuban, CEO of TransCrypts, a San Francisco digital id firm backed by Pantera Capital and Lightspeed Faction, has been monitoring how AI is reshaping verification. His firm works with greater than 450 enterprise prospects throughout finance, healthcare, and know-how, together with Fortune 100 employers, to authenticate digital information and cease AI-generated counterfeits earlier than they trigger harm.
