Blockchain: Can It Solve the Identity Crisis?

IBM and SecureKey are partnering on an identity application to help consumers prove their identity to banks, phone companies, real estate rental management and a variety of other businesses and government services.

Mitch Wagner, Executive Editor, Light Reading

March 20, 2017

5 Min Read
Blockchain: Can It Solve the Identity Crisis?

IBM and SecureKey Technologies are partnering to use blockchain to help consumers reduce the hassle and privacy threat of identifying themselves to banks, phone companies and other businesses and government agencies.

"The [blockchain] network will be designed to make it easier for consumers to verify they are who they say they are, in a privacy-enhanced, security-rich and efficient way," the two companies said in a statement. "When launched later this year, consumers can use the network to instantly verify their identity for services such as new bank accounts, driver's licenses or utilities."

An individual would run an app on a mobile device, and when applying to rent a house, or to get a bank loan, or do some other transaction, the person unlocks the app and presents it to the entity they're doing business with. The app vouches for the person's identity, credit worthiness, clean criminal record, and anything else the person needs to close the deal. The app uses blockchain to connect with the organizations that contain the individual's personal identifying information.

"What we do here at SecureKey is we're trying to solve the 'you are you' problem," SecureKey CEO Greg Wolfond tells Enterprise Cloud News. "You show up at the CRA [the Canadian Revenue Agency] or IRS [US Internal Revenue Service], or you show up at the bank, or try to open a new bank account online. You want to prove you are who you say you are. You don't have the right document. And so you can't do it."

Wolfond adds, "What if you could do it all with a couple of clicks on your cell phone, do it in a way that takes the friction out of the process, while preserving privacy?"

Figure 1: Image: By Davidstankiewicz (Own work) [CC BY-SA 4.0], via Wikimedia Commons Image: By Davidstankiewicz (Own work) [CC BY-SA 4.0], via Wikimedia Commons

SecureKey, founded in 2008, runs a service called Concierge, which provides ID services for Canadians doing business with their government, with 7 million people signed up and 250,000 monthly transactions. Canadian banks including BMO, CIBC and Scotiabank invested CAN$27 million in SecureKey in October 2016, with funding also provided by the Canadian government.

SecureKey is partnering with IBM Corp. (NYSE: IBM) to broaden the service to a wide variety of businesses. Blockchain provides an underlying transaction technology, to make transactions immutable -- unable to be changed -- and provide protection against attack.

Blockchain is an open source technology that allows people and organizations to build "distributed ledgers" -- records of transactions that aren't stored in a central server or organization, but where all the participants are peers, with each having a completely copy of the transaction record. Individual transactions are stored as "blocks," and blocks can't be altered; when a transaction occurs, a new block gets appended to the chain and transmitted to all the peers.

Blockchain was developed as a means of keeping track of Bitcoin transactions, but it is seeing a variety of other applications, including supply chain and shipping.

The blockchain stores only the permissions, not the actual credit rating, financial information, criminal backgrounds, identification information, and so on. So the SecureKey application doesn't become a massive pile of personally identifying information (PII) that can attract criminal hackers, Wolfond says.

SecureKey envisions a variety of applications for its identification application. In addition to government business, financial applications and banking, a person could use the application to show proof of age at a bar, or when completing a sale on eBay, or even for ridesharing or homesharing businesses -- next-generation Uber and Airbnb.

Blockchain provides a means for the person to control their own information. Someone using a financial service to pay for mental health treatment doesn't have to let the financial service know what they're paying for. And a person using the SecureKey application to show proof of age at a bar doesn't have to show a driver's license that includes their name and address -- the app would just show a photo and attestation that the person is over drinking age.

"As the worrying dad of a 21-year-old daughter, I like that," says Jerry Cuomo, IBM fellow and vice president of blockchain technologies.

The benefit to business is significantly reduced cost and friction, Cuomo says. For example, a rental management company pays up to the equivalent of a full month's rent to check the background of each applicant; the blockchain application can significantly reduce that cost, Wolfond said.

The identity application is currently in the testing phase, and will go live later this year, IBM and SecureKey said. It's built using the Linux Foundation's open source Hyperledger Fabric v1.0.

IBM also added support for Hyperledger Fabric version 1.0 to its IBM Blockchain, a cloud service that allows organizations to run their own blockchain networks to keep track of transactions with partners. Hyperledger Fabric v1.0 will likely be released by the Linux Foundation within weeks, IBM says. It's designed for building enterprise-grade blockchain networks that can quickly scale and support more than 1,000 transactions per second.

"Blockchain is a team sport, and you have the most value when you have the most visibility among the widest number of networks," Marie Wieck, general manager, blockchain technologies, tells Enterprise Cloud News.

IBM introduced governance tools to make it easy to set up a blockchain network and assign roles to users. And the company released a development toolset called Fabric Composer, to build models of business networks, create APIs to integrate with the blockchain network and existing systems of record, and quickly build a user interface.

IBM says it's working with more than 400 customers on blockchain applications, including Maersk, Walmart and Bank of Tokyo-Mitsubishi. IBM announced a new customer on Monday: Beijing Energy-Blockchain Labs Limited, which is building a Chinese carbon credit exchange using blockchain.

— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Friend me on Facebook Editor, Enterprise Cloud News

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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