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The evolution of identity verification and the metaverse

While it could beargued that Non-Fungible Tokens (NFTs) have been around since 2012 in the form
of ‘ColoredCoins’, the first ‘boom’ was due toblockchain-based virtual game – ‘CryptoKitties’.Ever since, we’ve seen the rise and fall of similar projects across the Opensea marketplace. Although wacky art and meme projects are the firstthat come to mind, NFTs also have the potential to serve as a use-case in the
security domain. However, in the unregulated world of cryptocurrency, this may
be slightly concerning for businesses as there is a lack of central authority.

Similar to how COVID-19 forced vendors tomature their security offerings, the current push for regulation is forcing crypto influencers, like Ethereum’s founder, VitalikButerin, to overcome external verifications. In order for businesses to stay current, they will not only need tounderstand the everchanging landscape of cryptocurrency, but also how ID
verification techniques are necessary and willcontinue to evolve. As barriers totypical verification techniques such as AML (advanced machine learning) and KYC
(Know Your Customer) become stronger, common vendors will need to develop their
current strategies in order to adapt to the new landscape.

NFTs and their potential
Anonymity and privacy are key values formany crypto influencers and investors. In order to maintain privacy, Buterin
proposed the idea of privateNFTs that use ‘stealth addresses’ to hideowners’ identities, essentially hiding the identity of an NFT recipient from
anyone except the new owner.

Since NFTs act as a certificate ofauthenticity for digital assets, it is no surprise they are attractive mediums
for ID verification. Each NFT or token has a unique, original set of
characteristics that cannot be duplicated on the blockchain. However, according
to the recent Forrester report around IDV, the process differs depending on the
type of solution required, whether that be a KYC process or a Business Partner
Onboarding one. Although the first step of Business Partner Onboarding is identical
to ‘consumer digital onboarding’, the second step involves verifying the
verified identity is authorised to open an account to conduct business on
behalf of their organisation. Therefore, it is unclear how NFTs would be able
to adapt to each use case process.

So, although IDverification and NFTs seem to have the same goals in mind when it comes to
security, the lack of central authority breeds questions around trust,
legitimacy, and accuracy.

Customer-first approach is key
Despite crypto’s ability to providesecurity, decentralisation can raise an eyebrow for many businesses. The main
essential when it comes to security is regulation; in the event of a malicious
attack or intervention, the central authority is able to become involved and
deliberate – this is not possible with unregulated systems.

Although there are many potentialsecurity use-cases that will begin to arise, such as ID verification using
NFTs, cryptocurrency’s urge to stay separate from the government and central
authorities makes it an inviable solution. Instead of jumping into these
technologies, businesses need to select an option with effective, accurate and
trust-worthy ID verification. Given the security of their customers and users
must be at the forefront of their minds, regardless of the sector.

Security is the goal
As the scope for ID verificationcontinues to widen, it is important for businesses to assess their identity
verification needs and put their customers first instead of simply jumping on
the bandwagon of new, flashy technology. Without a central authority to confirm
the legitimacy of an identity, businesses may suffer when it comes to
governmental procedures regarding verification. As well as being able to
intervene during a malicious attack, a central authority can provide
organisations, as well as their customers with increased confidence when it
comes to IDV. This is because the body is a central knowledge hub and point of
contact for concerns above and beyond.

So, while new IDVL processes may looklike an easy option at first, problems could begin to arise later down the
line. As regulations begin to take effect, it will become increasingly
necessary for businesses to select a trustworthy solution, which takes care of
verification in a quick and effective manner, whilst staying current against
any developments in the industry. For customer security to truly be depicted as
a concern for businesses, they need to be implementing widely trusted and
approved solutions.

 

 

 

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