The case for a blockchain Universal ID

Governments have been floating the idea of a universal ID around for a while, but haven’t come to any conclusions. The case for having such a thing as a universal ID is that it would increase national security, help with counter terrorism and prevent, or at least deter, identity theft. This would all make people’s lives easier it is argued.

Naturally there are problems with the concept. There are countries like the United Kingdom that don’t believe in a national ID, and in countries that do have ID databases, like the USA, the information is held in a centralised national database, which may not be as secure as they should be.

To give you an example: in the first six months of 2018 there were 668 data breaches in the USA in sectors including banking, business, education, government/military and health care. There are weaknesses in the databases that leave them exposed to cyber attacks. And, as the cyber criminals become more sophisticated, the national ID database’s security systems simply don’t seem to be able to keep up with them. So, imagine how fortunate the cybercriminals would feel if there were a universal ID database set up on a centralised system — it would be the biggest gift they ever received.

Blockchain solves the data breach problem

The most obvious solution is the use of blockchain technology. By using a distributed ledger, each person’s ID information could be held in a decentralised system that is more secure, because it uses cryptography. For example, a wide range of identity documents could be stored on the blockchain in a single place — let’s call it an identity wallet — and each wallet could have its own form of encryption. The information would be decentralised on the distributed ledger, which makes it far harder for cybercriminals to get access to it.; it would certainly make it much harder for them to undertake the kind of mass scale identity theft attacks that they are capable of right now, because they would have to hack into each individual wallet.

Using the blockchain would also give us a s citizens more control over our data, because we would have the ability to update out data in a single space and decide what data we share with certain individuals.

Companies are already working on identity blockchain technology, however it is still in early stages and will have to be proved before presenting it to governments. Of course, even these projects raise questions, such as who is developing it, how will they monetise it and how will they maintain it. Legally, there is also an issue about who owns the information once it is uploaded to the blockchain; each individual or a government?

Although we’re not quite there yet, it is to be hoped that blockchain technology will make data breaches a thing of the past, although whether we ever see a universal ID system emerge is another matter altogether.

Crypto buyers need to take the long view

Are you a crypto investor? Perhaps you bought in during the later part of 2017, or even early 2018, hoping the wave of euphoria around cryptocurrencies would keep carrying on. Unfortunately for those people it didn’t, and even those who bought in earlier will have made some losses.

A number of people thought the downturn in the market was temporary; it would be moving upwards again before Christmas 2018 some market watchers said, with a some of the bulls, like Tom Lee, predicting a bitcoin value of over $20,000. It hasn’t happened, but that doesn’t mean that it is the end of bitcoin or other cryptos. What has happened is that the technology needs to catch up with the enthusiasm for digital assets, but technology is still too new and complicated, most consumers see it as too risky. Plus, there is the not inconsiderable matter of mass adoption being some way down the road.

So, what should crypto investors do, or have done in the past year. Some are holding on, waiting for the return of a bull market, while others are looking for an acceptable moment in which to exit the market.

Crypto investing has been a bit of an education for those people who have never put money into stocks, bonds or securities before. It offered an opportunity for those with a few hundred, or a few thousand, to become involved in a market that up until now has been reserved for approved investors; those with millions and billions in the bank. However, newbie crypto investors didn’t perhaps realise that all markets are a dangerous place to be in unless you do your homework and have certain ‘safety jackets’ in place.

If you look at the established investment markets, they all have a swathe of regulations in place that give the investor specific ownership rights. By contrast, the crypto market is uncharted territory. There have been some moves by regulatory bodies to create a set of regulations and guidelines, but they are still sketchy, and the judicial system has not yet weighed in to give its approval of regulations in a number of jurisdictions.

For that reason, cryptocurrency investors have few, or no, rights until a government and its legislature says so. There are investors who are hoping the price of a crypto can be pumped, which would be a disastrous move, because manipulation will lead regulatory bodies like the SEC to deem a token is a security, and if it is, then the project issuing the token must go through a lengthy and expensive process to register it as a security, at least that is the case in the USA. For many projects that would spell the end.

People buying into crypto need to be patient and think in the long-term, because there are no instant wins now. As Joseph P. DiPasquale writes: “Now more than ever, cryptocurrency purchasers need to support projects with strong fundamentals: competent, capable leadership; a track record of meeting roadmap milestones; unique technical goals and achievements; a broad potential user base; and a relatable vision of the future.”

How to hold an ICO in 2019

Once upon a time, people holding ICOs didn’t give too much thought to regulations, because there weren’t really any to follow, but in 2018 and beyond, they need to keep rules and regulations at the front of their minds.

ICOs started in 2013 with Mastercoin, swiftly followed by the Ethereum ICO promising smart contracts and the ERC20 token standard, both of which encouraged investors. Things were fine it seemed until 2016 and the DAO ICO, which raised $50 million, but then had its funds hacked. The US Securities and Exchange Commission (SEC) announced that DAO should have been considered a security and it wasn’t long after that that China banned ICOs, calling them illegal. However, what happened in China wasn’t followed elsewhere and ICOs continued to flourish, reaching their zenith in January 2018.

However, as 2018 passed by, we saw ICOs decrease, and a more regulated environment is one of the most likely reasons for that. We also saw a shift to a different type of ICO investor. Whereas in previous years, ICOs appealed to the man or woman in the street who would take a punt on a new project, this group dropped away and the institutional investors started to take their place. Old venture capital also made way for new crypto and blockchain-related VC firms that were focused on projects using the emerging technology. One report by

Autonomous Next indicates that VC funds invested $1.6 billion in blockchain projects in August 2018 alone. Meanwhile, funds raised by ICOs has been falling throughout 2018 and in Q3 the number of ICOs raising over $1 million had halved compared with the end of Q2.

Where is the best place to hold an ICO?

Places where there are clear guidelines for ICOs and favourable regulations are obviously the ones to choose if you’re planning a new coin offering. The two most important things to consider first are:

1. How can we safely conduct an ICO?

2. Can the project operate legally after the ICO and will licences etc be needed?

Europe is one of the regions most favourable to ICOs as it isn’t rushing to impose regulations. As long as projects follow KYC and AML rules –until some other rules come along –these are the most important regulations in Europe. Switzerland is one of the more friendly environments in Europe and in February 2018, the Swiss Financial Market Supervisory Authority, FINMA,issued a set of guidelines for ICO projects, which stated, “Each case should be decided on its individual merits.” Gibraltar is also high on the list and the UK has not really made a decision about firm ICO regulations yet, and looks at ICOs on a case by case basis.

To put it in a nutshell: if you’re planning an ICO, look for a favourable jurisdiction, make sure you comply with its regulations plus KYC and AML, and if you need a special licence because you’re in the fintech space, make sure you put yourself in a good position to get one.

Why security is more important than speed

If you have read much about blockchain technology, you will be aware that there is an obsession about transaction speed within the community. Indeed, it is possible to conclude that every problem the blockchain and cryptocurrencies are curently experiencing comes down to the issue of speed.

But this obsession is blinding us to the fact that speed isn’t everything and it certainly isn’t going to be a deal-breaker that ends the future of blockchain projects. Certainly most people working in the fintech sector don’t believe it will and for good reason. If you use PayPal as an example, there is an average of 193 transactions per second. Blockchain-based platforms are aiming for one million transactions per second. However, that is a long way off happening. Still, even if PayPal is ‘slow’ compared to what blockchain developers believe they can achieve, nobody thinks the lack of speed is going to be the end of PayPal forever.

Ethereum is the blockchain network most used for transactions and scaling has presented an issue for it. People using the ethereum platform would like to see it scale faster, but there is something else that is more important to them, and that is security. As James Halladay writes at Hackernoon; “Of course, rapidly scaling the Ethereum network would be fantastic — no one’s disputing that — but making it the goal seems misguided.” He calls the obsession a smokescreen and a distraction.

And here is why: do we really need the kind of transaction speed that blockchain enthusiasts have set as the “holy grail”? No, because for fintech platforms security and stability are much more important than being fast. And, the obsession with speed is off-putting to the more conventional financial institutions that might be wooed over to using blockchain solutions if there was more focus on security and stability.

Security is the major advantage that the blockchain has to offer, so if we talk about a ‘Three S’ blockchain, it should be Security –Stability- Speed in that order.