Is digital identity the solution?

Regulators come close to breaking the market's functions down into its parts: guardianship, prime brokerage and aggregators, to please institutional compliance departments, which keep regulators happy.

Regulators are slowly tightening the screws, from pushing financial action teams forward with guidance on compliance with travel rules, to the still-evolving regulatory framework for European markets regulating crypto assets, and a US infrastructure bill that has been treated somewhat clumsy. .

I'm afraid this will be the start of a championship match for years, with a market DeFi.

Can a digital identity help?

Whenever I am asked about an app Bitcoin (BTC) The killer for the past ten years, my response has always been “Digital Identity”.

Today, the world stands at a crossroads. One detour leads to ever-increasing supervision and an invasion of privacy after money finally traces information online, and the opposite road sees personal data back into the hands of individuals and out of the massive databases of artificial intelligence, controlled by a range of companies and governments.

This may be a curse for owners Bitcoin The first, but reality affects, fueling the growing debate over digital passports for COVID-19 In this regard, as we see the clouds of a perfect storm looming on the horizon, it will likely become the main narrative for the coming years.

And since central banks everywhere reject crypto-assets, treating them as mere microchips on the “roulette table” in favor of its digital currencies “Innovative” CBDC The excitement is realizing that it can do both monetary policy and control, in concrete terms.

Unfortunately, the cryptocurrency markets have already become a victim of their own success, prompting all the regulators to take action.

The higher the numbers "Market value" This (accessed at 2 trillion dollars earlier this year), regulators have grown nervous.

The Chinese have simply taken the hammer approach, banning everything (apart from their central bank digital currency CBDC (recently launched as the digital yuan) while in the West, regulators (at best) take a nuanced approach, or fight with each other over their jurisdiction.

With the majority of cryptocurrency economic activity still flowing through major cryptocurrency exchanges and offices OTC، The imposition of the financial task force FATF Compliance with travel rules on virtual asset service providers VASPs, may maintain "The Genie in the Bottle" at present.

While these on/off slopes remain easy to locate. But what happens if a self-sustaining crypto economy emerges, where the majority are beyond guesswork and are instead in the game?

Read also: A look at the mechanism of supervisory regulation in the world of decentralized cross-border finance

Exchangeability, transparency, and “polluted” currency

Having spent the past decade or more forcing “material criticism” Anonymous to get out of the system, which requires reporting transactions over a few hundred dollars, can you imagine the concern that should spread a vision Satoshi basic for “Anonymous monetary system”؟

And if you want to know the answer to that, just look at what happened when you dare Mark Zuckerberg, to propose such an idea, by the stablecoin project Diem (formerly known as Libra Libra), which may have ended up in the hands of three billion users overnight.

While that Diem It has (which must be the regulator's dream) a digital identity intertwined with the protocol by design, right from the start!

There has already been an endless debate, over recent years, regarding the interchangeability Bitcoin (or other cryptocurrencies), considering how “contaminated”, or when attributed to outrageous use.

Blockchain transparency has proven to be a useful tool within the reach of law enforcement agencies in any other way, while hackers have often found it not easy to re-securitize their funds. “Useful’, where exchanges blacklist visible wallet address paths.

But it sure is "the money" Himself can not be “clean” or "Read"، "Well" or “bad At the same time, it is certainly just a deaf object (or a database), so is the identity of the transacting party, which can be adopted (albeit subjective) good or bad? You can go back to an 18th century British legal case, and find that it has been discussed (and corrected) for a very long time.

Regardless of the intentions Zuckerberg real towards DiemI wasn't alone in my long-term opinion about the role it might play Decentralized Identity (DID), in both crypto and non-cryptocurrency futures contracts.

Sovereign Self-Identity and Tech Giants

Despite all the excitement on the site crypto Twitter, of great interest in the currency Bitcoin Compared to any well-known technology brand, the fact that Microsoft Boring old fashioned, I started to explore digital identity as the use case of choice for blockchain It gained relatively little attention a year ago 2017.

It doesn't mean that others in the crypto industry, weren't equally aware, that this would become an important part of the infrastructure. projects like Civic (2017) And GlobalID (2016)It really does express a good few years in development and the topic of sovereign self-identity, where the individual maintains own control over his or her identity, and decides with whom it will be shared.

With data protection becoming a major problem for regulators, and a challenge for the majority of companies with an online user base, it was thought that these ideas would be embraced by regulators and companies, alike.

Perhaps regulators will join our side if the crypto industry proves that it can build systems that are more secure and robust, when those systems need to meet regulatory requirements, to identify peer-to-peer payment counterparties.

By doing so, more institutional participants will be able to securely enter the crypto markets with compliance officers. And after all, the Google And Facebook They are the ones who will lose the most if decentralized digital identity prevails.

The opposition is already being heard regarding the responses to the union's invitation World Wide Web (W3C) current, for review regarding Decentralized Identifiers (DIDs) v1.0..

Is it “The roosters will deliberately vote for Christmas.”? Or will they eventually have to find a way to live with the inevitable, in the same way that the major telecom companies of the 1990s had to flaunt, when they were ready for the idea of ​​using Voice over Internet Protocol (VOIP) Like startups?

My hunch is that the masses, once armed with the right tools, will eventually prevail, but one thing is certain: the battle lines have been drawn. It's just getting started and has a few years to go, but when it's over, crypto enthusiasts everywhere may see the global adoption of their dreams.