'Evolution of Decentralized Identity - Collaboration & Global Impact' - Isaac Patka

next up I'd like to uh invite our next speaker and uh we'll have Isaac talk about the evolution of decentralized identity and just sort of how um it's ready to make a big impact in in our economy so without further Ado please uh welcome Isa yeah thank you very much I'm very excited to be here and share this with with uh with you all today so I'm just going to share my presentation um and Dive Right In um so yeah as as cartic was saying um today what we're discussing is really deep evolution of decentralized identity over the last couple years um and the way that um this community the ethereum hackathon community has really already started to see um Global impact and what we can go and where we can go from here um so uh the first thing I want to call attention to is that there really has been a bit of a you know a Divergence since the 2017 um crypto community at the start of some of these eth Global events um we we're in the beginning we um started out you know building everything as a smart contract making you know uh decentralized identities were just uh Registries of account IDs of ethereum addresses on the blockchain um and in at the same time a lot of other crypto projects were just starting out like all the lending and banking um since then um both spaces have matured but pretty much independently um and I think that's because we're solving very different problems um in the decentralized identity space uh we're solving the problems of identifying everyone um even where data is lacking so the hundreds of millions of people around the globe that are excluded from traditional identity systems need an alternative way to identify them themselves um and just pull in all sorts of uh information that they can use um to gain access to Services um traditional institutions like Banks see these people as very high risk and expensive to onboard um typically with communities like this there's very high rates of fraud the Fraud's very unique there's entire industry is built around um fraud in these markets um and as such bureaus are not equipped to handle these individuals um some of the examples are just like the introduction of the Sasa credit scoring system in Brazil um there's certain dynamics that just don't work uh there that um you know that experient had uh that did work in the US you know there's families that will pull a credit profile and everybody shares the same credit profile um there's also the issues of saso only storing negative data about people um so there's no way for people to pull in um any positive environmental data about them um in their activities um to to strengthen their identities um so this problem is not necessarily solved by putting identity on chain um we have some problems which can be solved by blockchain Solutions like um uniquely identifying individual people or individual families of course public key infrastructure is a great fit for that um but when it comes to sourcing data to strengthen these individual identities um it's not like there's a a load of data that we can pull from uh from contracts to say you know this person is a real person or um or anything about them so when we uh after we onboard people to like a public infrastructure for identity we still have a significant challenge of sourcing data through traditional means um to you know strengthen their profiles um and third as far as complying with legal privacy Frameworks um like LBD is the law in Brazil CCPA in the US gdpr in Europe um there's very it's very challenging to approach storing any of this data um with a smart contract system so I'd argue that they don't really need onchain identities yet um and in addition to that what we started we started out like I was saying is putting all of these identities on chain as like smart contracts and end user um addresses but um it was very expensive and we weren't seeing a whole lot of value out of it so I've pulled this graph um from uh Google big query so this was Bloom's U meta this was Bloom's uh account registry contract uh in mid 2019 so every single person that signed up and downloaded the app as soon as they signed up we you know added a cue to broadcast a transaction that says okay we have a new user um this didn't really end up helping anything because these people weren't transacting on chain they didn't need to have their identity uh you know registered as part of a smart contract all they really needed was a public private key pair um to prove who they were so you can see exactly when we realize hey we don't need to be spending this much every day registering every single new user on chain uh that's not to say that uh identity is you know completely independent from the blockchain it's offchain but it really is adjacent to the entire ecosystem um everything in the decentralized identity space is being built using the same blockchain fundamentals as many other projects so under the hood uh a decentralized identifier is typically just a wrapped um ethereum wallet or Bitcoin wallet um and it's using the exact same message signing capabilities that are used for sending transactions but it's only used for signing messages and doing things like updating Keys um and other you know did operations so I I pulled the trust wallet in here because um I mean the the same trust wallet libraries that you can use to make a fund holding account you can use to make an identity wallet and indeed many identity wallets do use this under the hood the space has matured a lot as I was saying since 2017 um it's not just a collection of smart contracts and account Registries like it was in the beginning um there is quite a bit of maturity here so the w3c decentralized identity Foundation trust over IP Foundation within the Linux foundation and more um we've all started really aligning on what the terms are for referring to not just individual but also Enterprise identity um there's the concept of an issuer which issues a credential to a user or a holder a holder can register a did or a decentralized identifier all the data that they get associated with their public key is stored in a Data Vault or a hub um and then that can be accessed by applications um when the user consents to share so the concept here you know we we heard the we heard from eui about the concept of attestations um and indeed when we started out we were referring to everything as attestations but now just to get you all familiar with the terminology we're talking about dids for individuals verifiable credentials for data that we're associating with dids and verifiable presentations when users are sharing data with thirdparty applications um these are the important terms that you'll see coming up over and over again throughout the decentralized identity space now how does it actually look to have data routed through a user's wallet um so this is just an example of you know on the left I have an identity wallet on the right I have an application that is requesting data from me um so inside of the QR is encoded information saying who is requesting data from you um and exactly what are they requesting so in this case this website on the right is requesting information about my watch list status um and my you know ID document verification um and my email so this information as I was uh you can imagine back on the previous diagram the data comes out of the Data Vault it gets packaged and it gets shared as a presentation to the third party all data gets routed through users and all recipients can verify that it came from the issuing party um as the space is becoming standardized enough that um you know as so that big Tech is even getting involved so verifiable credentials aren't just something you can do in the crypto space But even on the Azure platform now you can pull in an oidc credential that you would use for a traditional authentication and you can turn it into a credential and Associate it with a bitcoin-based did um so we heard a bit uh two presentations ago about Microsoft's involvement in the space um and indeed they have adopted and are supporting a lot of the standards here um you know big Tech involvement is not always a a huge Plus in the decentralization space but it is great for you know at least pulling in massive amounts of data that we'll need if we really want to see adoption here uh I wanted to uh talk now about some places that we're already seeing impact from decentralized Identity um in in the global Spa in you know around the world so goodw worker is a company that is is just launching that they launched earlier this year and they're a job and skills Marketplace based out of India um in the short term their goal is very simple there's a ton of inefficiencies in the seasonal worker blue color Marketplace for Indian workers um say that you're an individual with experience in the textile space and you and you need a job for the next six months or so um right now that uh Market is full of a lot of uh inefficient Brokers and uh and just overall challenges and high costs so in the near- term what this platform is doing is using dids and verifiable credentials to give people reusable verifiable data about their identity where they live what their skills are and what their income is um in the near- term this will allow them to find better jobs but in the long term it allows them to get instant access to any adjacent service using the same data you can use the same data that you would use to get a job to get a loan or to get a home um the so this is an example of how you know decentralized identity is already having an impact on you know on the ground for seasonal workers um in India who you know they don't have eth or crypto or anything but they what they do have is dids and verifiable crypto Cals on the Enterprise side we're also seeing adoption so Tristana is a company based out of Southeast Asia um offices in China and Singapore where they're building a crossb trade Network so here it's not a data that is being associated with individuals but when When Buyers and suppliers transact on this platform they're actually building up a rich decentralized identity profile um containing information about what they're qualified to trade who they're trading with their volume of trade and they can use again all of this same reusable verifiable Rich data to get access to adjacent services so a you know a shipper might or a supplier might want to get access to uh financing on their invoices even before their goods arrive in the next Port all of this is possible if we have this decentralized um Rich data ecosystem a third place that we're already seeing a lot of global impact is in the health field so again in Southeast Asia we're seeing uh a lot of travel restricted for workers that are trying to travel across Borders or get into job sites um so governments and labs are already working together to see um how can we use decentralized identities and verifiable credentials to give people the ability to cross borders get onto job sites um and open up uh borders that have that are currently closed due to you know risks of infection so this is a something that is of course very helpful right now but what's more interesting to me is Imagine now that we have these doctor's offices that are equipped to give you uh portable verifiable health information about yourself that you take custody of what are the possibilities that you could do with that type of information to me anything reol involving um the research space where I can actually consent to give my data for different medical studies or just making it so that I can move between doctor's offices quicker um making this data uh reusable has a lot more implications than just the near-term benefit of improving crossb travel uh the as I was saying that this is all really possible due to the eth hackathon community uh I've been working with people in this space primarily that I've met through hackathons my first uh when back uh you know a few years ago when I quit my normal job to become a solidity developer it was be it was after I joined the fdev subreddit hackathon um soon after that I was at the eth San Francisco hackathon where you know I met all the people that I ended up working with for the rest of for my career until now um same with eth Berlin and Devcon and eth Denver and eth New York so there's many more eth events than just the ones on the screen these are just all the ones that um you know I have specific memories of and Partnerships that have grown out of this ethereum hackathon community um to me it's absolutely the most important thing um you know in my career and also in this space the it's also true that the decentralized identity Foundation companies um many of the people that are working there and that you'll find in the decentralized identity Foundation slack uh met each other through this community as well so a lot of the companies that are listed here on the right um these people started out in the straight ethereum space um but have now branched off into building you know decentralized identity technology um and this really brings me back to my original point point of this Divergence so we have the 2020 crypto Community which is you know incredibly mature tons of value locked in it and we have the 2020 decentralized identity Community which similarly is onboarding tons and tons of individuals but these two aren't really talking to each other defi doesn't have necessarily a big need for identity yet it's more of a nice to have um but it's not essential to how these Protocols are functioning what I want to understand is like what can we build together so we have all these people that were on boarding the unbanked the underemployed the people that can't travel and on the other side we have all of these def5 products that are that people are locking value into what can we do if we can uh bring these two concepts together by Bridging the decentralized identity and the decentralized finance spaces I want to call out two of the project submissions we actually got from this hackathon which were particularly exciting to me so the first one is uh traffy guard uh they call themselves an inclusive supply chain uh trade Finance tool um this you'll notice is pretty is directly analogous to that Tristana use case that I um that I mentioned a few slides ago um the goal of this is to make it so somebody can take their verified identity through a decentralized identity platform in this case they were using the bloom application to prove the person's creditworthiness um on on the platform so first they uh first an individual can um say that there's a seller that um has Goods that are on their way to a buyer's location but they want to unlock some funds before the goods have actually been delivered they can provide all of the verified documents to this platform to say I uh I have this credit score I am this person and these are some verified documents showing that I have Goods on the rate of the destination they can then actually lock up um they can actually then lock up funds in a compound contract and borrow against it at a variable rate depending on their credit worthiness so this is really only possible if we can bring together the data from the industries and the data from in the individual people at the companies together with the dii protocols to allow for this type of dynamic lending one other one other submission that we got during this hackathon that I'm really excited about is called molecule so this protocol um is making it so that people can prove their kyc status in a privacy preser way again using decentralized identity um what they get in return is an nft representing their kyc status what you can do then is bake into certain exchanges or D5 platforms uh things that will only transact with you if you are you know holding a certain nft um very simple Concept in theory but like the idea that we could Bridge um all of the data from the decentralized identity ecosystem into something that mints nfts and then restricts people's ability to um to to interact with certain platforms based on those nfts um to me seems you know incredibly powerful what other things can we build together um this is really a question I have for this audience in particular I've spent a lot of eth online understanding how can we actually compose uh all of the building blocks from defi um with all the building blocks from decentralized Identity um can we provide even more widespread access to stal crypto assets for individuals that are that live in very unstable markets maybe there's exchanges that want to work with these individuals um but there is no traditional way to gather the data uh to do business with them um are there other um sophisticated di5 products um that could use this type of decentralized identity and just decentralized data in general to make decisions um what can we build using this type of data um and third some sort of safer defi on-ramp for you know CI users there's all sorts of people that have seen a lot of the hype around defi over the summer um and want exposure to these systems but they would prefer to have a platform with training wheels is there some sort of kyc platform opportunity that can pull in um you know can pull in the the best of the decentralized identity Community um to make defi a bit more approachable some of the specific things that I was exploring even today um is the concept of you A's um delegated credit faults so this is something that I would love to see built um where can a delegated can a delegated credit Vault holder um who has deposited money into it can they be doing their proprietary risk assessments offchain and only Whit list um you know borrowers to draw from a line of credit onchain um so combining so just a very simple thing where you take the decentralized identity on-ramp with like a with a delegated uh credit vault and then you actually have an unsecured fully integrated lending product um many more ideas like this but this is what I want to hear from you so if you want to build something at the intersection of identity and crypto um you know please reach out and we'd love to hear from you thank you so much that was an awesome talk um we I actually did not know that that everything started in San Francisco for for you so so this is amazing to hear and uh and I want to gu thank you for giving back to the community uh Bloom has been a big part of uh past you Global event so this is really awesome to hear um we have a few questions coming in from from the chat but uh one question I have for you is just in general sort of uh you sort of touched on this thing but I guess I'm just curious to hear more thoughts on how do you kind of think about introducing a decentralized Identity or rather on on the blockchain side of it uh for geographies where there isn't sort of a government issued um identity system and a lot of countries are in that position kind of how do you think about that transition happening do you think that the government needs to sort of standardize that process for all the Citizens first and then we move it to online or do you think a peer-to-peer approach will just work at scale like what kind of yeah well there there certainly both of those approaches right because there's a lot of countries that are a lot more sophisticated with um digital identity Solutions which can plug right in like you know adhar has its faults with data quality but it's actually very simple to you know transition an Adar ID to a to like a to like a did with verifiable credentials or similarly in Singapore you have like sing pass where you can have all this verified data about you already um but in so in in those cases um I've been I've actually been surprised to learn that there is fairly sophisticated um digital ID solutions that we can turn into decentralized identity on-ramps in many countries um the alternative to that the approach that I would love to see is how can um in my day-to-day life when I'm transacting say I go to the same shop every single day um and I'm buying the same groceries from the same person every week um can we in some way enable like a point of sale type solution at that vendor to say like I'm giving you a credential that says you clearly have stable enough income that you buying from me groceries every day for the last five years why isn't that good enough to form the basis of an identity so it's not just peer-to-peer staking but it's like enabling the people at the edge is to be issuing these types of credentials to each other and so just to clarify is there a difference in this being called identity versus calling it issuing a credit um or I guess does my question make sense it's more about like I feel like in this scenario it's like oh can I just pay you back later and you get a sort of that Assurance but does that help with the identity piece as well uh yes so the the when you would really want to extend credit to somebody right if you have a if you're pretty sure that they're a real person that has like a steady income flow so to me like these credentials form the identity that would make it so that you would actually want to extend credit with to this person um so you know using and then having just a very generic on-ramp where you know this is somebody that I feel comfortable doing business with then perhaps I could you know whitel list them on my you know credit you know delegated credit Vault and they can take loans for me got um and I guess like the last question I have for you is sort of what have been sort of surprising things as you've uh tried to make this work for Bloom and and kind of what of things you found out that work uh I guess across the world but not in the US and vice versa and just sort of some interesting tidbits from there oh sure um so some of the early surprises were um let's see I I'll I'll go back to the E an experience I had at eth Denver which is the shirt I'm wearing on purpose um it's when we arrived at eth Denver as a sponsor we had to register at the sponsor table with the uport app I was thinking like oh that's interesting I can get my credential from um I can get my credential from uport and I can sign in and I can you know go to all the eth Denver Parties by using the uport app um for for some reason that that experience sticks out in my mind as like interoperability being very important up until that point I thought okay we'll just make the bloom account a smart contract and people can interact within the bloom ecosystem but um we're but then we're not really benefiting from the fact that the folks like ort and and all of the you know 60 plus other companies in the space are out there working with governments working with Solutions um if we position ourselves as more of an interoperable solution then anyone could just use the bloom identity wallet in any case where they could use another one um so one of the yeah one of the early surprises was like you know I didn't pay enough attention to interoperability perhaps in the first six months um but you know after that you can really benefit from from The Wider industry um and then I guess the other surprise doing this stuff abroad like in in Asia or in Latin America is um in in Asia I think a big thing is like just how robust the government infrastructure is for some of this stuff the willingness and ability to adopt technology and identify all of their citizens um with digital technology seems much more advanced than we have in the US um and then in markets like Brazil seeing just all the ways that uh fraud is an entire industry so seeing the way that people um you know understand how to game systems it's very it's a very similar um idea to how you have to design smart contracts because when you when you design smart contracts it's very ad it's almost adversarial where you're thinking like what are all the ways somebody could try to exploit this um it's the same way that you actually have to design like a banking or identity Solution on the ground for real people um in in a company like in a country like Brazil no that's awesome I think it's a really good point I until you just point that out it was not obvious to me either but uh yeah you don't want to set up where everybody's competing for the same audience and is there is some game if everybody's G up with a come up with their own identity solution and interoperability is a is a key differentiator here so awesome uh well with that I want to thank you for uh giving us your time today and an amazing talk