Polygon ID - Intersection between Stablecoins & Digital Identity

here we go good afternoon my name is veran I'm the technical sales director at polyone ID and today I'm gonna speak about the intersection between the stable coins and digital identity so actually there are two very different concepts as you as you can imagine and as you can see so firstly before even talking about the intersections I think the most interesting thing would be to start understanding a bit better what are the main features or purposes of stable coins what are the main purposes and value proposition of the digital identity and then let's see what they have in common right so to me um stable coins are the state of the art of cryptocurrencies that's a personal opinion right since I am a bit a person a bit adverse risk so to me the stable coins are the state of the art of uh of cryptocurrencies um just because um needless to say uh stable coins um are offering stable value right price stability and since they are usually packed to to fiat currency or a basket of assets then they minimize their price fluctuations making them very reliable medium vaccines on the store of value and in some cases almost comparable to the traditional currencies traditional Fiat currencies right another characteristic of stable coins is that they are also a quite good risk mitigation instruments so and they serve as means of hatching against cryptocurrency Market volatility in that manner for instance uh investors or Traders could convert their their cryptocurrencies or their um their investments into stable coins during a periods of high Market volatility uncertainty and in that manner they reduce their exposures to price fluctuations another feature of stable coins is that they provide efficient transactions with that I mean they are super fast transactions compared to the traditional Finance industry of payments for instance there are also cost efficient rights and by leveraging blockchain technology stable coins can enable um almost across cross-border transactions instantaneously and since so we are removing interminaries in the process then there are also very cost efficient transactions and the last but not the least is the sorry the decentralization and and restlessness that they provide so in some cases the stable coins are based on on undeveloped on on using blockchain technology right decentralized networks and that eliminates Central points of control and provide transless transactions so in addition when they are developed using smart contracts and leveraging also cryptographic mechanism um they in that manner ensure transparency auditability and verifiability without the need of of central authorities interacting no relying on Central authorities so that's that's in in my view the main features that the stable coins offer nowadays and if I would speak about what would be the state of the art of digital identities so let's see if we can move to the next slide nope it's not I don't know if it's locked can you help me strange yeah thank you well so now after having resolved this technically so let's continue with what in my viewers the state of the art of digital identities and in my view the state of the art of a digital identity is a decentralized self-sovereign identity I don't know if you are familiar with the concept of cell Sovereign identity but this is providing a shift between uh or from the account based identities the ones that where you had to put always your username on the password or the ones that are also controlled by Third parties like Google accounts or Instagram accounts to accounts or identities that are really created managed owned and controlled by by the by the user right that's really a fundamental change moving into the digital identity space so in that self Sovereign identity space you will find that the users as I said really own their identity T control their data and this data and identity is usually stored in the user's mobile phone right and that is also giving the user further self sovereignty of the identity so if you would start destroying your data in a in a in a cloud space that is controlled by another party when you somehow are losing part of yourself so identity in here right so an important aspect and some of the solutions providing such alternatively some of the developments provide themselves over analytic Solutions um I also providing privacy features and that's where we are really focusing in polygon ID so privacy is super fundamental for us you will see later on how we offer that using a leveraging ZK Technologies CK proof technology and we try to keep the information as private as possible and only share minimal information whenever the user really is accepting to do so right and last but not the least also another important feature is that data is portable and reusable that means since you own that data that data is in your wallet in your identity wallet you will be able to use that data whenever you want without having to ask to a third party right to give you access to that data and later on reuse it whenever you need it we will see examples of that so now I have this covered quickly what the Stables coin offer what a digital identity offer so where is the intersection between them right because they are two completely different concepts right um but um there are some some areas of commonalities well they they could not always but they could use dlts or distributed Laser Technology they offer certain decentralization aspects not always but in some cases depending on how they are implemented um and the accessibility in terms of in some cases having access to stable coins provide you or unbanked people access to to the the financial services that couldn't be done before for them right the same happens for people without own documentation so that digital identity would give these people without having documents issued by the government the possibility to own a digital identity but actually in my view what is more important is not what is the intersection between stable coins and digital identities to me it's what they together right what can they deliver together what synergies can create and maybe the synergies are new opportunities and also applications in the decentralized financial space when they work together uh you can find really how things become a bit smoother interacting in the decentralized financial space and I'm gonna now go into into the details of some cases where one in combination with the other are really bringing value right let's go uh so in my view one area where we can where we can improve uh tremendously nowadays is combining security and privacy so usually when when you want to have something super secure then your privacy is compromised right um before even going into the topic I really want to show you this this quote from Uma and the European commission vice president that said contrary to what we sometimes hear we don't have to choose between on the one hand the protection of personal data and on the other hand security or economic well-being rather than involving such false trade-offs privacy is a prerequisite for allowing citizens to embrace innovative solutions without fear and it's super powerful I like it because it's the first time I see someone in the European commission really fighting for this privacy right and saying well no I I understand security and this is coming more in relation to the implementation of anti-money laundering regulations but privacy is also key for for citizens and now then you know where in which direction I'm going right uh so the direction that this goes is well uh in in the world of stable coins you will not be able to get the stable coins if you don't interact with what we call a Casp a crypto asset service provider or exchange right and the extenders as you know are being regulated so now uh people are not really keen on on going through kyc and so on so forth right giving away personal data so as I said with the with the transpose of the financial action task force the travel rules can that was in the European Union passed into what we call now the travel so the transverse funds rules it's now converted into a low together with Mika and it's gonna probably uh become enforceable by January 2025 this is this is gonna of like so to say the crypto asset service providers to really ensure that they know with whom they are the links or going through qyc anti-money laundering so uh sanction checks and so on with all the clients and they are operating with them with amounts Beyond 1000 Euros so as soon as you want to buy sell crypto stable coins in one of the exchanges you need to go through qyc now we'll head qyc right I don't want to give my data away so that's where we come with a solution a self-serving identity solution like the one we are offering in polygon ID and and before going into the details I want to to tell you how this triangle of trust in the digital identity space works I don't know if you are very familiar with the self-zone identity how it works but we always paint a triangle of stress in that Trend and triangle of thrust we always have um the identity holder that's the user right we have the issuer that's what we call the source of trust that is the one that is giving the DraStic to the verifier so there is a real trust in the real world between the verifier and the issuer and that purifier is the application in the digital world you want to interact with it could be the exchange it could be the D5 platform it could be your bank right and whenever you you interact as a user with that centralized exchange or uh crypto asset service provider what did that cast would like to know is whether you are eligible to operate with them right whether you are who you say to be that you are not in a sanctions list and so on and so forth so now um that verifier is gonna send the user to that kyc provider right the issuer to home the verify address could be your feed or the ones of the the qac providers you know of this world and that issue is gonna ask me to go through the qybc process and after going through that QSC process the difference to that current processes is that the issue is gonna issue what we call a very firewall convention right this is our credential is kind of a card an electronic card right additionally suggestion of the format that is going to be given to me as identity holder and in that card it's gonna that card is gonna be signed with the cryptographic keys of the Israel that is gonna that is gonna say I say I I prove that I have said this about this this person right and with that card later on I can interact with that verifier and start proving things about myself right and you will say well but where's the Privacy here and and I don't know if you can read it but in here we say ZK proofs so that interaction what we are doing in polygon ID is ensuring that that interaction could be done in a form of a zero knowledge proof so that prevention is gonna be used to answer questions from the verifier so the verifier maybe is gonna ask me please prove to me that you have gone through a qic process successfully and please prove to me that you are not including the list of sanction countries with this CK proof I will be able to prove based on the information included in those credentials that the qac provider issued to me that I actually comply with all their requirements that the file platform or centralized uh exchange is requesting to me right so as I said using CK technology we managed to keep private information really private which is really cool right another thing as I said before that credential is stored in my in my wallet and then I can reuse that credential like running when I interact with another centralized exchange that is going to ask me again to prove the same thing so I I will save all the process of going through qyc because I have already gone through that before I have that credential in my in my wallet and I can say it again with the other with the other exchange if they actually really trust the issue of that credential right that real trust in the real world is really essential well um another cool aspect of our our technology is that we can even ensure that this interaction between the identity holder and the verifier can happen on chain right so we are transforming of chain information that was created by the issue in the form of a verifiable credential and with that of chain information then we can generate a ZK proof that will be shared with the verifier unvalidated on chain as I said um this can be this interaction can be done in a private manner but in some cases the verifier might need to know my my username my address because certain authorities are requesting that information and the technology also um supports and that I can reveal this data um with a feature called selective discussion so I will selectively disclose part of the information right well another nice use case I I believe we support combining stable coins with digital identities is financial inclusion so I like this very much because with the evolution of Technology we really need to ensure that the gap between developed economies and Emerging Markets really get reduced instead of wider right so and this is an area where we are making this Gap reduced allowing people without access to traditional Financial Services to be able to really get access to those um interactions in the digital economy so as I said we are helping to bank the unbanked right so uh leveraging stable coins uh we can enable uh individuals without access to traditional banking services to start interacting in in the digit in the digital economy and having access to financial services without even in some cases having a app official documents issued right unavailable or without being in possession of these documents which I think it's a really really interesting case and there are some other cases right where we can combine um digital identities with uh stable coins and here I just put three of them and I'm mentioning also what are the main the main the main advantages of this combination of of cases so cross-border remittances are ampere to peer payments to me peer-to-peer payments are almost the same than crossbody remittances with the with the fact on top that and this paid pay is going to be done across borders right and it's going to be done on a much faster way on a much cheaper way and um minimizing fraudulent transactions since uh here we are the the the the point of uh having the possibility to identify with whom you are transacting and then you minimize uh the risk that you are transferring your money to uh let's say a bad actor right uh decentralized Finance um as I said before um with the digital identities or decentralized digital identities we are supporting um the parties to be compliant and Regulatory compliant but there are some other cases quite nice like being able to get some reputation in your digital identity based on the assets you hold in the real let's say economy also in the decentralized economy and with that you can get a kind of a scoring that is attached to your digital identity and with that scoring you can start proving things to that D5 platform that then can lend you money without having to be 100 collateralized and another another point the interesting point is the minimization of intermediaries here um another very nice use case and this is coming I know that there are people already working in this Arena and it's um using uh digital identities for supply chain Finance Android Finance so in this world the goods have interact all parties in both need to be kyc trust is super important because fraud usually is is difficult to detect so with digital identities we can we can have identities attached to Goods attached to ships adapts attached to invoices and all these would help to to secure and and make more transparent transactions more traceable transactions reduce the fraud and then enhance trust among supply chain parties right and of course payments don't need to work go through the traditional payment rails that banks are offering payments can be done with the stable coins well I think we have covered quite so many use cases interesting use cases combining these two different concepts right Technologies but there are a lot of challenges also to be considered so the Technologies um or the the challenges that these Technologies face nowadays are common I would say we have on one hand usability and adoption right uh this is not yet adopted by everyone we haven't activated yet the point of mass adoption we need to work a bit on a bit or a lot on education and there is always certain reluctance to adopting new technologies right and in some cases that comes also in hand with the other challenge I'm saying so the user experience sorry the user experience sometimes gets hindered because these products in some cases are not super easy to to use right so we need to work a lot on making more intuitive interfaces reducing uh the the complexity on on the processes needed to to work with these Technologies so there's a lot to work to be done but I know we are working on that already which is good that's another challenge but I think we are already addressing it so we are getting at levels of throughput of transactions transaction volumes that are comparable to to the ones in the banking system so we are getting there it's not the challenge that most worries me the one within the interability and standards that's that's another important one because in digital identities you will see a lot of uh different approaches to how to uh resolve um digital identities um they are not talking to each other so to say so some level of a standardization it's gonna help to reduce that fragmentation or to find some common points to work together right and the last two are very much connected to each other Regulatory Compliance and legal Frameworks across during this jurisdiction so if we would like to ensure compliance with regulations when we are verifying parties right we also need to know what are the rules to be to be to be applied depending on the location that we are really transacting so to ensure that we are we are fulfilling the regulatory requirements on the identity verification processes we then need to know the legal framework the legal framework to which we need to adhere and there is a bit of work to be done in this in this area to try to converge also um the regulations around how how to identify identities I think the European Union is doing a good a good job in this respect well I don't want to finish the presentation with the challenges right let's at least look at how the how the future look Outlook and opportunities of this Technologies looks like um it's a very personal opinion what I'm I'm just adding to the next slide is my my thoughts about how this is gonna look in the future and I would say the filter looks good right uh I think we are doing a good job in managing all the challenges I have just mentioned before we just need a bit more time to work on them so I expect to have by far wider adoption facilitated by multiple factors I know we are already working on the regulatory aspects uh regulation providing common ground and this is needed so until until uh certain um actors in this in this industry don't see regulations supporting functioning with stable coins and how how to also ensure that we prevent antimonial money laundering and and easy transactions then then this is not gonna fly right but we are already moving good in this direction uh I I need to say that over regulating is not good either right but some level of Revolution and standardization is good and we are we are getting there um introduction of similar offerings in CV says although we we can't say well if if there are cvcs then what what role will play uh stable coins I would say they will coexist and the introduction of cdcs probably will help The Wider adoption of stable coins because the people on the ground the general public so to say will start accepting this type of Technologies a stable coins or or uh and this type of digital currencies since they will be already be given by parties they they trust right uh and finally um the the we are already moving to improve your user experience uh we we have heard about accountab section I think this will help a lot in moving into allowing certain parts of the population to to manage their their currencies and identity without their need to use um um um wallets that they control not everyone is prepared right to manage their own keys and well um I think that's part of the user experience that we need to be able to offer and I think we we will see also new use cases uh appearing involving also the traditional Finance sector so at the moment most of the traditional Finance sector cannot uh do much in relation to cryptocurrencies regulations around in Europe and the US are not allowing that but I believe uh once we started into the CVC Arena and we have some cdbcs in place um that movement between CDC is a stable coins and then allowing a traditional Finance uh sector to to get involved with them will will come I think that's that's something coming around well um for the ones that are interested on on knowing a bit more about polygon ID or digital identity and they want to experience what what uh what digital identities and self-oriented this can offer I just want to say that we have not only in a product that we are shipping we have a wide ecosystem that we are integrating a lot of companies that are already using polygon ID and in different areas so our seizures as many fires as World providers so there are wallets that are integrating our sdks in order to facilitate users to be able to manage their identities from that wallet right so that wallet then will not only manage assets like nfts and crypto but also identities and another thing I wanted to mention is as you know our solution is open source so there is a bunch of um a bunch of code that is available in and and we can make available our tutorials there's a lot of uh a lot of information useful information and material available so please don't hesitate to contact me in case you are interested on knowing how to how to implement uh polygon IV right and well here is a view of how it looks like a wallet that has integrated our SD case and is already containing certain certain let's say credentials about the identity like proving that you are the owner of a specific to the account or with certain followers in Twitter so creating your reputation or even being able to prove your age right having your qach credential which for gaming is quite useful so you you can then make use of those credentials to prove things about yourself in the digital space well with that um I just want to say thank you very much to everyone for hearing for listening for for attending and if you like let's make something together just let me know right thank you very much and I don't know if you we have time for questions well super Mutual any questions no thank you very much everyone goodbye