The future of blockchain-based identity

There is no shortage of visionary scenarios for how Web3 can unfold, but one of the latest, “Decentralized Society: Finding Web3’s Soul” – an article published in mid-May by E. Glen Weyl, Puja Ohlhaver and Vitalik Buterin – is in close to becoming one of the 50 most downloaded articles on SSRN’s scientific research platform.

The attention, one might suspect, has a lot to do with the participation of Buterin, blockchains’ underkind and the legendary co-founder of the Ethereum network. But it can also be a function of the paper’s ambition and scope, which includes asking questions such as: What kind of society do we really want to live in? One that is finance-based or trust-based?

The authors illustrate how “non-transferable ‘soul-bound’ tokens (SBTs) representing the obligations, credentials and affiliations of ‘Souls’ can code the real economy’s trust network to establish origin and reputation.” These SBTs seem to be something like blockchain-based curricula vitae, or CVs, while “Souls” are basically people – or strictly speaking, individuals’ crypto wallets. However, Souls can also be institutions, such as Columbia University or the Ethereum Foundation. The authors wrote:

“Imagine a world where most participants have souls that store SBTs that correspond to a variety of affiliations, memberships and credentials. For example, a person may have a soul that stores SBTs that represent educational credentials, employment history, or hashish of their writings. or works of art. ”

“In its simplest form, these SBTs can be ‘self-certified,'” the authors continue, “similar to how we share information about ourselves in our resumes.” But this is just scratching the surface of possibilities:

“The true power of this mechanism emerges when SBTs held by one soul can be issued – or certified – by other souls, who are counterparts to these relationships. These counterpart souls can be individuals, companies or institutions. For example, the Ethereum Foundation be a soul that issues SBTs to souls who attended a developer conference. A university can be a soul that issues SBTs to graduates. A stadium can be a soul that issues SBTs to longtime Dodgers fans. “

There is a lot to digest in the 36-page paper, which sometimes seems like a jumble of different ideas and solutions, ranging from restoring private keys to anarcho-capitalism. But it has received praise, even from critics, for describing a decentralized society that is not primarily focused on hyperfinance, but rather “codes of social trust.”

Fraser Edwards, co-founder and CEO of Cheqd – a network that supports projects with self-sovereign identity (SSI) – criticised the newspaper on Twitter. Nevertheless, he told the Cointelegraph:

“Vitalik stands up and says NFTs [nonfungible tokens] is a bad idea for identity is a great thing. The publicity for use cases such as university degrees and certifications is also fantastic, since SSI has been terrible at marketing itself. ”

Similarly, the newspaper’s attention to issues such as loans being over-mortgaged due to a lack of usable credit ratings is “excellent,” he added.

Overall, the reaction from the crypto community in particular has been quite positive, co-author Weyl told Cointelegraph. Weyl, an economist at RadicalxChange, provided the core ideas for the paper, Ohlhaver did most of the writing, and Buterin edited the text and also wrote the cryptography section, he explained.

Recent: Crypto 401 (k): Good financial planning or gambling with the future?

According to Weyl, the only real persistent setback against the paper came from the DID / VC community (decentralized identifiers and verifiable credentials), a subgroup of the self-defeating identity movement that has been working on blockchain-based, decentralized credentials for some years. now, including ideas like peer-to-peer credentials.

A “lack of understanding”?

Nevertheless, the visionary work garnered some criticism from media such as the Financial Times, which called it a “snooped paper”. Some were also concerned that SBTs, given their potentially public, non-transferable characteristics, could give rise to a Chinese-style “social credit system”. Others shot co-author Buterin personally, criticizing his “lack of understanding of the real world.”

Crypto-skeptic and author David Gerard went even further, declaring: “Even if some of this could actually work, it would be the worst idea ever. What Buterin wants to implement here is a binding permanent registration for all people, on the blockchain. “

Others noted that many of the estimated SBT use cases – such as establishing origin, unlocking lending markets through reputation, measuring decentralization or enabling decentralized key management – are already being done in various areas today. SBTs are “potentially useful,” Edwards said, “but I have not yet seen a use situation where they beat existing technologies.”

The Cointelegraph asked Kim Hamilton Duffy, who was interviewed two years ago for a story about decentralized digital credentials, about some of the use cases suggested in the “Soul” newspaper. How do they compare, if at all, the work she has done around digital credentials?

“It’s similar to my thinking and approach when I first started exploring blockchain-based identity claims with Blockcerts,” Duffy, now director of identity and standards at the Center Consortium, told Cointelegraph. “The risks and, similarly, first use cases I found out – limited to identity claims you are comfortable with being publicly available forever – were therefore similar.”

While the Soul article touches on potential approaches to risks and challenges – such as how to handle sensitive data, how to deal with challenges with key and account recovery, etc. – “These solutions are more difficult than they may initially appear. What I found was that these problems required better primitives: VCs and DIDs. “

Weyl, on the other hand, said that there was no intention to demand priority with regard to the proposed use cases; rather, it was just to show the power of such technologies. That is, the paper is less a manifesto and more a research agenda. He and his colleagues are happy to give credit around where credit is to be paid. “The VC community has an important role to play,” like other technologies, he told Cointelegraph.

A question of credibility

But the implementation may not be so simple. Joshua Ellul, associate professor and director of the Center for Distributed Ledger Technologies at the University of Malta, was asked to comment on the practicalities of a company as “soul-bound tokens” to Cointelegraph: “The main problems are not technological, but many aspects. in this domain, questions of trust. ”

As soon as input from the outside world is required – e.g. an academic degree, affiliation or attestation – a question arises as to the reliability of that input. “We can raise the levels of reliability of data through decentralized oracles, but we should recognize that this data is still dependent on the collective reliability of these oracles,” Ellul said.

Suppose a university is a “soul” that issues blockchain-based certificates to students. “People can trust the certificate because they trust the centralized university that publishes its public key,” Ellul said. But then others may ask: “What’s the point of storing SBTs on a DLT when the university has such control?”

Or look at the idea of ​​peer-to-peer credentials, “In the real world, would a company respect a peer-to-peer credentials issued by a person or institution that is unknown to the company? Or would they rather just trust traditional identification? »

It is a question of “changing the mentality of trust” from centralized institutional trust to trusting networks, Ellul told the Cointelegraph – and it may take some time to achieve.

What if you lose your private key?

The paper presents several use cases in areas where very little work has been done so far, Weyl told Cointelegraph. One is community recovery of private keys. The newspaper asks the question of what happens if you lose your soul – ie if you lose your private key. The authors present a recovery method that depends on a person’s reliable relationships – that is, a recovery model for society.

With such a model, “restoration of a soul’s private keys will require a member of a qualified majority of a (random subgroup of) soul community to consent.” These consent communities can be issuers of certificates (eg universities), recently participated in offline events, the last 20 people you took a picture with, or DAOs you participate in, among other things, according to the newspaper.

The thesis also discusses new ways of thinking about real estate. According to the authors, “The future of real estate innovation is unlikely to build on fully transferable private property.” Instead, they discuss degrading property rights, such as providing access to privately or publicly controlled resources such as homes, cars, museums or parks.

Recent: Business Development: How Adoption Changes Cryptocompany Structures

SBTs can provide access rights to a park or even a private backyard that are conditional and non-transferable. For example, I can trust you to go into my garden and use it for recreation, but “that does not mean I trust you to under-license that permission to anyone else,” the newspaper notes. Such a state can easily be coded into an SBT, but not an NFT, which is transmissible in nature.

Setbacks against NFTs?

Inevitably, the speculation is based on Buterin’s motivation to link his name and prestige to such a paper. Some media suggested that the Ethereum founder exaggerated or looked for the next big thing to stimulate a market upswing, but “This does not fit Vitalik’s typical approach,” Edwards noted.

Buterin’s motivation can be as simple as looking for another way to maintain and build Ethereum’s platform dominance. Or, perhaps more likely, the driving force “may be a setback to the speculation and fraud of NFTs and want to reuse them into a technology that is changing the world in a positive way,” Edwards told the Cointelegraph.

In any case, the Soul paper that sheds light on the decentralized society, or DeSoc, provides a positive service in the eyes of Edwards and others, even though SBTs themselves eventually turn out to be non-starters. In the real world, you often do not need a comprehensive, perfect solution, just an improvement over what already exists, which today is centralized control over your data and web identity. Or, as the newspaper’s authors write:

“DeSoc does not have to be perfect to pass the test of being acceptably non-dystopian; to be a paradigm worth exploring, it just needs to be better than the available options. “