To KYC or not to KYC?
Bitcoin and the blockchain were founded on principles of anonymity (pseudonymity rather but close enough) and privacy. Yet, today, many blockchain applications and token sales require users to provide identifying information that link their online persona to real-world identities.
This process, known as Know Your Customer (KYC), is a legal requirement in many sectors and countries. But Unikname is a SSI solution without KYC, isn’t it? How do we reconcile the two? In this article, we want to clarify what KYC is, what purposes it serves, when it is required, and how it fits into the Unikname vision of decentralized self-sufficient digital identities.
Unikname offers SSI solutions that require no KYC from individuals, though they can choose to link (verified or unverified) identifying information to their UniknameID.
Organizations are required to undergo KYC-like processes (sometimes named KYB for Know Your Business) to obtain their organization UniknameID. These verifications are private.
KYC verifications undergone for the purpose of the token sale are private and will have no link to any future SSI applications.
Identities on Unikname Network
Three types of identities live together on Unikname Network: individuals, organizations, and network organizations. They have different applications and are therefore treated differently. Individuals are guaranteed pseudonymity. Their digital identity does not need to be linked to any real-world counterpart. Organizations, on the other hand, have to prove themselves before they can claim their UniknameID. The management and creation of network-type UniknameID can be set aside for the purpose of our current discussion.
In a previous article (Decentralized Identities without KYC), we have presented two types of digital identity: offline and online identities. The former bridges the material world and digital ecosystems by re-creating real-life identities (or offline identities) online.
The latter is an untethered identity that exists primarily online and possesses intrinsic value in the digital world. Buying a house? You need an offline identity. Heated discussions on a forum for your favorite hobby? You need your online identity.
For individuals, Unikname specializes in this second type of digital identity. Consequently, no KYC verifications are required to use our SSI services as there is no need to associate a UniknameID to a specific person. Anyone can obtain as many UniknameID as they want, forming as many online identities as they like, without the possibility for others to link them to each other nor to the user themself.
Organization-type UniknameID have another role in the ecosystem. They are likely to propose services to individuals (or other organizations), on or off of Unikname Network.
To protect users from phishing and to protect organizations from identity theft, there is a stronger incentive to associate organization-type UniknameID to real-life organizations.
Before they can claim their UniknameID, organizations therefore have to follow an identity verification process that, in spirit, can be assimilated to KYC measures. The goal is to ensure that not any Joe can claim the @Microsoft UniknameID. In turn, users can trust that they are dealing with a legitimate entity. Companies can also be sure that no one is using Unikname Network to pass for them and cheat their customers.
For example, when using Unikname Connect, organizations must have their URL certified. This proves that the organization owns the domain name users will connect to as well as the associated brand. Users can verify for themselves that the website they are connecting to is legitimate. This process increases users’ trust in the organization, in the connection process, and in Unikame as a whole.
If individuals do not need to have their digital identity verified, it does not mean that they cannot choose to do so. Similarly, organizations can choose to volunteer information that will be publicly or privately linked to their UniknameID.
That is what is interesting about SSI. Owners decide how they want to build their identities.
Verifiable Claims (VC) are a very useful tool in that regard. To summarize, a verifiable claim is a claim, made by someone (the Issuer) about someone or something (the Subject), and its origin can be cryptographically verified. This means that no one can create a claim in someone else’s name, but also that claims are non repudiable (i.e. the issuer cannot sign a claim and later pretend that they never did).
What is verified in a VC is not the validity of the claim, but that the claim has indeed been issued by a given Issuer. It is then up to the Verifier to decide whether they trust the Issuer.
UniknameID owners are free to collect such claims about themselves and share them with the appropriate audience, publicly or privately. An organization may choose to certify their own phone number by issuing a VC and displaying it on its website. This increases the trust others can have in this means of contact. An individual may choose to link identity documents to their UniknameID to make it easier to prove their identity when using some online services.
Linking an identity document to one’s digital identity using VC does not equate to a verified identity. The entity that verifies the identity still has to trust the VC’s issuer. This however provides an opportunity for versatility in how to build and augment one’s digital identity. It also opens the door to KYC as an (optional) SSI service.
Token sale and KYC
You have probably heard by now that Unikname is launching its token sale. And that is where KYC requirements enter the scene. Just like any other project, Unikname is subject to rules and regulations regarding fundraising.
If these rules are not followed, fines are incurred. The money raised could also be stuck in limbo as financial institutions refuse to release it. Be it for a private or for a public sale, KYC requirements must therefore be met.
A token sale is usually made up of two main events: a private and a public sale. The private sale concerns a small number of people buying large amounts. The public sale concerns a large number of smaller buyers.
In both cases, KYC processes are required to ensure the accessibility of the funds after the sale. These processes only concern the token sale and are not meant to be persistent. As such, no lasting link will be established between a UniknameID and the KYC-obtained information about its owner.
The Unikname solution does not require KYC to be used. Unikname believes in the power of online identities and in their relevance, even when they do not relate to an outside pre-existing offline counterpart. Consequently, Unikname’s SSI platform operates without KYC.
Using Verifiable Claims, users are free to associate any information they see fit to their UniknameID. This information can be identification documents. There could be use cases for such associations, but they are not currently being considered.
KYC is however required for Unikname’s upcoming token sale. There will be no lasting association between UniknameID and any identifying information that may be collected for the purpose of the sale.
The token sale is now open. If you choose to participate, don’t be surprised by the identity verification process. This is just Unikname complying with financial regulations and will have no impact on Unikname products and SSI platform. Your information will only be used in the context of the token sale.