Decentralized IDs are key to tokenized economies

Disclosure: The views and opinions expressed here are solely those of the author and do not necessarily represent the views and opinions of crypto.news editorial.

Pro-digital asset President-elect Donald Trump said at the Bitcoin Conference in July that the U.S. government would create a Bitcoin “national stockpile” in addition to its existing holdings of approximately 203,000 Bitcoin (BTC) and forfeit assets. Protecting from high-profile criminal operations to ensure the United States becomes the “crypto capital of the planet and the Bitcoin superpower of the world.”

To lead the US Treasury Department, one of the most influential roles in the government that provides sweeping control over tax policy, public debt, international finance and sanctions, Trump nominated a former George Soros after announcing he would launch a US dollar-backed stablecoin. On September 16, 1992, returning macro hedge fund manager Scott Bessent shorted the fiat currency sterling from the European Exchange Rate Mechanism. [Information based on my interview of Scott Bessent at Soros Management in year 2000.]

Since the US elections, the price of BTC has increased by 40%, reaching a record high of $99,121 on Thursday, November 21, approaching the $100,000 milestone (it reached $100,000 for the first time in December). While whales were selling and guppies were buying the historic BTC rally, some BTC whales, taking a cue from Scott Bessent, also shorted MicroStrategy shares, BTC ETF shares, and BTC mining shares. “As the use of cryptocurrencies gains popularity for investors, criminals are using increasingly sophisticated tactics to deceive and exploit the public,” warned Wayne A. Jacobs, special agent in charge of FBI Philadelphia. He continued:

“We urge consumers to use caution when navigating this environment and to report suspected scams to the Federal Bureau of Investigation (FBI) through the Internet Crime Complaint Center at ic3.gov.”

According to the 2023 Cryptocurrency Fraud Report, the FBI’s Internet Crime Complaint Center has received more than 69,000 complaints from the public regarding cyber-enabled crimes and financial fraud involving the use of cryptocurrencies for all schemes, including data breaches/identity theft, government impersonation, and more. fraud, SIM swap-enabled crypto theft, tech support, trust and romance, investment and business fraud resulted in over $5.6 billion in reported losses. As a result of increasing cybercrime, more and more people are becoming increasingly wary of handing over private personal data to centralized businesses due to security concerns. For example, when downloading or signing up for an internet service, users will likely need to register a combination of the following: personal name, email address, home address, telephone number, etc. But these centralized businesses and applications failed to achieve this. To keep this personal information permanently secure against attacks by hackers.

Recently, the FBI charged five people, four US citizens and one Briton, who were reportedly members of the infamous hacking group called Scattered Spider (aka Octo Tempest, Muddled Libra, 0ktapus, UNC3944), which has been linked to massive data breaches/identity hijackings. The often infamous Black Cat/ALPHV ransomware group against some 100 multinational companies in gaming, outsourcing, telecommunications and cryptocurrency. Scattered Spider became particularly infamous in September 2023, when community members hacked into the networks of casino operators Caesars Entertainment and MGM, locked themselves out, and demanded hefty ransom payments. According to reports, Caesars paid approximately $15 million to rebuild its network, but MGM did not and suffered a $100 million loss in profits.

Scattered Spider seems to be everywhere? Scope of intrusions since March 2022 @CrowdStrike The perspective is quite broad. They use social engineering, off-roading, and RMM tools before distributing ransomware or extortion. pic.twitter.com/fP3Z1Mj0mW

— adam_cyber (@Adam_Cyber) September 15, 2023

The quintuplets, all in their early 20s, are charged in connection with a series of sophisticated identity theft/phishing schemes to deceive targeted company employees into accessing company systems using stolen information, seizing intellectual property, according to the FBI. and employees’ personal data were then used to hack employees’ cryptocurrency wallets, collecting millions in stolen funds. “We allege that this group of cybercriminals carried out a sophisticated scheme to steal tens of millions of dollars worth of intellectual property and proprietary information, stealing personal information belonging to hundreds of thousands of people,” said US attorney Martin Estrada. He continued:

“As this case shows, phishing and hacking have become increasingly sophisticated and can result in huge losses. If something seems broken with the text or email you receive, or the website you’re viewing, it probably is.”

DDID networks protect against identity theft and data leaks

More than 100 countries use national IDs, and many countries are exploring operating decentralized digital identity (DDID) networks. Because identity affects almost every aspect of a person’s life, such as using online services, going to school, opening financial accounts, voting in elections, receiving medical services, purchasing property, finding a job, and buying concert/plane tickets. Vitalik Buterin, co-founder of Ethereum (ETH), pointed out at the Devcon 2024 event in Bangkok that DDID networks with “Ethereum” are the key to the global economy moving towards tokenization. [becoming] world computer, an incredibly large and diverse on-chain economy, and an incredibly large and diverse global community… all at the same time.”

Digital identity is one of the world’s most important technology trends, and the total addressable market for reusable identity is estimated to be between $133 billion and $533 billion globally by 2026. Governments around the world are recognizing the strategic advantages of moving away from traditional physical identification to more adaptable digital identity systems that include reusable identification designed to keep data under the control of the owner, reducing the risk of unauthorized access and preventing identity theft. These systems allow individuals to securely control their personal data, store it in a digital wallet on their own device, and only share certain information with verified entities when necessary, eliminating a central point of vulnerability from which hackers can steal large amounts of data. As more governments adopt DDID networks, traditional document-based authentication, which is subject to identity theft and data leaks, will become obsolete.

CountryBlockchain-based digital identity systemArgentinaBAAustralia myGovIDBhutan First country to join the Global Acceptance Network (GAN),BrazilNational Civilian Identity Card” (ICN),CanadaPan-Canadian Trust Framework (PCTF), developed by the Digital Identity and Authentication Council of Canada (DIACC)ChinaBSN, Red Date Technology, China RealDDIDDenmarkMythIDEstonia e-Estonia The Taiwan Digital Identity Wallet TurkeyE-GovernmentUnited Arab EmiratesUAE Pass,United KingdomDigital Verification Services United StatesMyGovID, National Strategy for Trusted Identities in Cyberspace (NSTIC), W3C “TruAge” for digital age verification based on DIDs China launches RealDID system

At the DID-Based Cross-Border Identity Summit held in Hong Kong on November 8, 2024, Red Date Technology successfully launched a national-level blockchain-based identity solution together with China Mobile, OpenWallet Foundation, IDA, Flare and Terminal 3. The system signals a turning point for privacy-focused blockchain-based identity solutions with four groundbreaking cross-border usage features:

Track #1: China RealDID for entry control at the Hong Kong border. The unique relationship between Hong Kong and mainland China has spurred innovation in blockchain-based decentralized identity systems. Launched by China’s official identity management authority last year, RealDID is a national blockchain-based decentralized identification system built by Red Date Technology, a decentralized cloud infrastructure company of China’s state-backed Blockchain-based Service Network (BSN). .

Source: Red Date Technology

Using real-name verification for cryptographic keys for both online and offline interactions, while ensuring zero exposure of personally identifiable information, the RealDID system allows Hong Kong residents to enter Mainland China and Chinese residents to enter China without providing physical entry documents. The RealIDID system is expected to issue 5 million IDs by 2024. “China RealDID represents a tremendous shift in managing government-issued digital identity, and we are proud to lead the first implementation trials outside Mainland China,” said CEO Yifan He. Red Date Technology. He continued:

“This milestone establishes a solid foundation for bi-coastal anonymous authentication and verification and reflects the international potential of Chinese blockchain technology to protect user privacy without compromising compliance.”

Tim Bailey, Red Date Technology’s vice president of global business and operations, told me in an interview.

“Chinese RealDIDs can be used across different platforms and services, enabling seamless authentication across borders. Currently, China RealDID offers the only practical and cost-effective approach to achieve privacy-preserving authentication and verification, with each country establishing its own national DID system and identity data exchange could be a blueprint for worldwide adoption where it promotes both local and cross-border anonymity.”

Track #2 Anonymous registration to a regulated stablecoin wallet app and Track #3 purchase of token-based financial products with built-in tax compliance was conducted by blockchain firms Flare, IDA, and Red Date Technology.

Source: Red Date Technology Source: Red Date Technology

Tim Bailey said: “These two use cases demonstrate the ability of the Chinese RealDID system to verify identities across borders while maintaining anonymity in the know-your-customer and tax compliance processes. By authenticating through China’s RealDID platform and without submitting passport or ID information, users can obtain regulated They can sign up for stablecoin apps and purchase tokenized financial products.”

“The trial showed that we can blend compliance with privacy,” said Hugo Philion, CEO of Flare Labs. “We are excited to lead the way in bringing decentralized solutions to new markets, especially China, where the potential is unparalleled.”

Track #4: Anonymous “Travel Rule” compliance among financial institutions.

Source: Red Date Technology

“Travel Rule compliance has been implemented for anonymous stablecoin transfers between financial institutions via RealDID.” Tim added:

“Each of these four trials addressed a real-world scenario of privacy and authentication using Chinese RealDID. A Chinese visitor to Hong Kong had to enter Hong Kong and perform KYC, using the Chinese RealDID instead of a physical travel permit.” demonstrated how it was able to leverage this encrypted identity, represented by a random sequence of numbers, to complete tax compliance procedures. During these four trials, the Chinese visitor’s identity remained completely anonymous and protected against any data leakage or hackers; authorities were able to link the visitor’s DID to his real identity after going through legal processes.