A Right to Exist: Using Technology to Create Better ID Systems

Steven Malby is head of the Law Development Section of the Rule of Law Division for the Commonwealth Secretariat, the executive arm of the Commonwealth of Nations intergovernmental organisation.

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In this opinion piece, Malby explores the challenges in bringing legal identity to the more than 1 billion people who lack recognition from governments worldwide and the steps taken thus far to find a solution.

Out of more than 7 billion people in the world, 1.5 billion officially do not exist. That is, they do not have a form of identity that is legally recognised by governments.
Sadly, it is all too easy not to exist. Simply being born as a member of a nomadic group in a remote rural area where birth registration is sporadic may suffice. Armed conflict, persecution or forced displacement can take away everything, including invaluable legal documentation.
Criminal groups engaged in trafficking in persons or smuggling of migrants forcibly take passports from victims, cementing the process of dehumanization and commodification.
Without legal identity, people cannot access basic health or education services. They cannot open a bank account, rent or buy property, get a job or vote. Those fleeing war or persecution cannot prove their origin. Identity is critical to reuniting displaced children with parents and family.
In the 2030 Sustainable Development Agenda, Goal 16 on peace, justice and strong institutions, recognizes the right of all to legal identity, including birth registration.
And yet, ‘legal identity’ is a complex and nuanced concept. It both empowers and invokes concern over privacy and the risk of discrimination. Legal identity can be evidenced in multiple ways: through a birth certificate, a passport, or a national identity card, all used at different times, for different purposes, and in different combinations.
Across the Commonwealth, a wide range of birth registration, citizenship and even digital identity laws govern legal identity systems.
Identity systems need to provide an official identity for the six-year-old girl in rural Africa whose birth was never registered, has never attended school and been displaced across borders by conflict. Those systems need to do so whilst protecting her right to privacy, and to process information held about her in a way that is secure and reveals only what is necessary to those who need to know.
Delivering legal identity for 1.5 billion people by 2030 is an immense undertaking. It requires new approaches and ways of thinking.
This month, the Commonwealth Secretariat joined forces in a unique summit of private sector enterprises, non-governmental organisations and states at the United Nations Headquarters in New York, to explore ways in which emerging technologies could contribute to this target.
The summit, entitled ‘ID2020,’ explored the realities of life without identity. It considered ways in which digital identity systems based on ‘blockchain’ technology could support legal identity for all, including through public-private partnerships. The Secretariat shared experience of legal identity laws from across the Commonwealth, and discussed the needs of member countries with emerging technology firms.
The ID2020 summit will be held every year to provide a platform for action and dialogue between technology innovators, states and international organisations. As a first step in realising the target of legal identity for all, Commonwealth Senior Officials of Law Ministries will review Commonwealth laws on legal and digital identity at their forthcoming meeting in October 2016.
The Commonwealth Secretariat is also leading the way in testing digital identity systems through its work on development of a blockchain-based app for the Commonwealth network of criminal justice contact points.
ID2020 represents not only a significant step forward towards realisation of Sustainable Development Goal 16, but also Goal 17, on revitalizing the global partnership for sustainable development.
The Commonwealth Secretariat will play its full role, supporting and partnering with member countries, and the global community, to promote the rule of law and ensure for all a right to exist.
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Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

A Framework for Identity

Dan Elitzer is a member of the IDEO coLAB, a shared platform to discover and act on the potential of new technologies, with current focuses on blockchain, digital identity, and IoT.
In this op-ed, Elitzer fleshes out a framework for how a digital identity system should function based on work performed by the IDEO coLAB team.

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How do you identify yourself? Is it your name? Your email address? Phone number? Drivers license? Facebook account?
Last summer, IDEO coLAB brought together 25 students from top Boston-area universities — including Harvard, MIT, Tufts, and RISD — to design venture prototypes exploring the future of trust, transactions, and reputation. Before the program, I hadn’t given much thought to the concept of “identity” or identity systems. But abstract concepts start to take shape and become more tangible when you run into them repeatedly. Over and over throughout the summer, we saw teams wrestle with identity-related challenges as they designed their ventures:

• When you’re distributing digital tokens representing voting rights for community projects, how do you ensure there’s a real person behind each account?
• How can a university issue digital diplomas that graduates can prove are authentic and belong to them?
• In the event of an emergency, is there a way to automatically give doctors access to your relevant medical history, while keeping it secure and private at other times?

You can probably think of some fairly straightforward answers to those questions. But when you go to implement them, you quickly find that the solution either makes fraud trivial or introduces a level of friction that users won’t tolerate.

• • •

Our exploration of digital identity continued into the fall, and in October IDEO coLAB and the MIT Digital Currency Initiative co-hosted a workshop. Students and professionals collaboratively explored how blockchain technology might play a role in solving identity-related challenges in the financial services and health care industries.
To help guide discussion at the workshop, we developed a simple framework of the core functions of an identity system. During a concurrent project, the IDEO coLAB team made a few iterations. It’s not perfect, but we’ve found it useful for organizing our thinking and analyzing where blockchains and other emerging technology might be applicable:

Issue

Whether it’s the US government assigning Social Security Numbers or Google letting you select an email address, there needs to be a way to create new identities and assign identifiers.

Identities need to be created or issued.

Store

Identity data needs to be stored somewhere. Usually this is a private database with administrator-controlled access, but technologies like IPFS and Blockstack are examples of new models for data storage and retrieval.

Identity data needs to be kept in a secure manner.

Authenticate

Individuals need to prove they are who they say they are when attempting to assert their identity. This is done using one or more factors of authentication: something you know (a password), something you have (a mobile phone), or something you are (photo or fingerprint). For example, think of what happens when you present your drivers license at a bar or airport. The person inspecting it looks at your photo, then at you, to make sure you’re the person represented on the card.

Individuals need to prove they are who they say they are.

Authorize

Once they’ve authenticated themselves, individuals are authorized to perform certain tasks. Whether it’s being able to access the transaction history for your bank account or being able to enter a bar, identity systems get utility from enabling you to take actions and interact with people or businesses based on knowing who you are or certain information about you.

Individuals are given permission to access services or perform tasks based on identities or attributes.

Recover

Stolen wallet or forgotten password? Individuals need a way to regain access to their identity data, should they lose it.
(Note: This is often the part of the process where the usability vs security tradeoff is most stark — protecting an account with a random 32-character password and fingerprint isn’t much good if “recovery” can be done using your zip code and the last four digits of your social security number. Conversely, asking the average user to print a recovery key when they create their account is absurd.)

Individuals need a way to regain access to their identity data.

Update

Users or administrators need to be able to add, remove, or edit attributes associated with an identity. Pieces of our identity information change over time: an address gets changed, a new degree is earned, a drivers license expires, etc. Digital identities need to evolve along with the people they represent.

Individuals can add/remove/edit attributes associated with their identity.

Audit

How can someone check that your identity data is accurate?
In the context of regulated industries such as financial services or health care, identity data and the process by which it is recorded and accessed needs to be auditable by relevant government institutions. For user-controlled identity systems like PGP, code is open source and trusted parties that host data (e.g., Keybase) ideally go to great lengths to enable public auditing.

The validity and integrity of identity data should be auditable by specified parties, such as regulators, users, and other institutions who rely on accurate identity information.

• • •

From our experience, these are the core components of any identity system. Each presents its own unique challenges for system design and opportunities for creating better user experiences. How will the system be used? How might it be hacked or exploited? Is a universal digital identity system possible or desirable…and by whom?
We will continue to use this framework within IDEO coLAB as a starting point for our work around the future of digital identity, which we’re pursuing in ways both big and small. One example is the machine shop certification system we prototyped over one week  –  you can read about it here. Identity is also relevant for things, not just people, so we’ll be extending this theme in context of our Internet of Things + Blockchain Fellowship this summer.
We look forward to sharing more about what we’re thinking and doing in this space over the coming months. If you’re interested in learning more, visit our website and sign up for our newsletter.
Graphics by Reid Williams, whose collaboration on this framework has been invaluable. Thanks to Ted Ko, Reid Williams, and Piper Loyd.
This article originally appeared on Medium, and has been republished with the author's permission.
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

Coinbase Exchange to Rebrand Following Ethereum Trading Launch

Bitcoin exchange and wallet service Coinbase is adding support for ether, the native cryptocurrency of the Ethereum network.
The addition of Ethereum comes amid rising interest in ether among digital currency traders and the technology platform itself among financial institutions and other enterprises worldwide. Trading will begin on 24th May.
Further, Coinbase's exchange service will be rebranded with a new name and logo, according to vice president of business development Adam White.
White told CoinDesk:

"In addition to better highlighting the exchange that Coinbase is becoming we’re rebranding as GDAX, which stands for Global Digital Asset Exchange."

Initially, traders on Coinbase's exchange platform will be able to buy and sell ethers. Later this summer, the company will add support for the digital currency to all Coinbase users.
An official announcement is expected to be made Tuesday. In interview, White confirmed the added support for ether after details about the integration began circulating on social media.

Changing landscape

Coinbase's ether integration was, in some ways, largely expected given recent trends in the exchange space.
Since San Francisco-based exchange Kraken announced last August that it would become the first major venture-backed business to offer ether trading pairs, a variety of exchanges worldwide have followed suit in the past few months. More recently, Gemini added ether trading pairs to its exchange.
According to White, members of the Coinbase team have long stayed apprised of development on Ethereum, largely through conversations with the network's creator, Vitalik Buterin, as well as media reports.
Last year, employees took part in multiple Ethereum meetups as part of their research into the digital currency, said White. But it wasn’t until Microsoft Azure entered the fray that the startup begin to look more closely, said White.
The result: Coinbase employees began building services on top of Ethereum, including wallets. At the same time, explained White, the company's customer base voiced "unprecedented" support for the digital currency through email and social media, ultimately spurring this week's announcement.
"We’ve always focused on bitcoin because that’s been the most popular but as other currencies come on line we always evaluate them," said White. "When ether came online it was a no-brainer."

Interest in other assets

White also suggested that the company was paying close attention to The DAO, a decentralized organization built on top of Ethereum that acts as a funding vehicle for related projects.
Specifically, Coinbase employees are keeping a close eye on the tokens associated with The DAO, which are used as both a voting mechanism as well as a method of generating rewards for stakeholders.
"I’d be remiss to say we’re not investigating that," said White. "But there are a number of legal and business questions we’re trying to answer."
White concluded:

"That doesn’t mean we’re going to add 15 new currencies over the coming weeks, but we’re paying attention."

Image via Coinbase
Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.

Russia's 'Bitcoin Ban' Faces Uncertain Future After Draft Bill Withdrawn

A bill prepared by Russia's Ministry of Finance targeting the creation and circulation of so-called money surrogates, a classification that would include digital currencies like bitcoin, has been at least temporarily withdrawn from consideration following comments from the country’s Justice Ministry.

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As reported by regional news source RNS last week, the bill – popularly known as the "Russian bitcoin ban" – received some negative feedback after the Justice Ministry is said to have objected to the bill on the grounds that its comments were not incorporated. The national legislature, the Duma, has been deliberating the bill since earlier this year.
Up for debate is the extent to which those who issue or circulate private monies in Russia will be punished. Reports out of Russia have indicated that some advocates are pushing for multi-year jail sentences and fines, though the latest news points to disagreements among some in government about how to approach regulation for the technology.
Observers have suggested that defects within the bill may have doomed it from the start.
In statements, Nikita Soshnikov, partner at Moscow-based Tolkachev and Partners Law Firm, called the bill "poorly drafted".
Soshnikov told CoinDesk:

"The [Finance] Ministry has not provided [the] appropriate justification for criminalization of cryptocurrencies and its public danger (as an essential criterion for criminalization). The draft is broadly worded, therefore, wide range of activities regarding e-currencies can potentially fall within proposed 'money surrogates' definition."

Additionally, according to Soshnikov, the bill itself was said to have contained redundancies that sparked criticism from the Justice Ministry.
"[The] Russian Ministry of Justice stated that Russian Criminal Code already provides for similar regulations that criminalize illegal turnover of means of payment," he said.

Bill's future unclear

Soshnikov went on to say that it was "unsurprising" that the bill had attracted criticism from the Justice Ministry, a move that he said was likely to postpone further debate or passage of the bill for the foreseeable future.
"It is unclear when the proposed draft will be submitted to the State Duma and hopefully [it] will be subject to further public discussions,” he said.
One other possible wrinkle in the debate, as suggested by comments provided to CoinDesk, is whether digital currencies should be treated separately from non-financial applications of the blockchain. The Russian Finance Ministry has indicated its desire to take this approach in the past, even while other officials, including those from the country’s central bank, have previously indicated it may not support this approach.
Alexey Troshichev, blockchain architect for domestic payment processing services Qiwi, suggested that restrictions on certain aspects of the technology would impair genuine innovation.
"How [will] startups, how [will] other companies will experiment if they won't be allowed to buy bitcoins?" Troshichev told CoinDesk.
He cautioned that those in the global community should realize that the discussions in region remain broad, and that understanding that the technologies are linked is coming gradually.
He concluded:

"This is [at the] very early stage. It arrives at the question that we should unite and discuss them as a whole, not just separately."

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Bitcoin Price Stabilizes at $450 But Forecast Ahead Unclear

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Bitcoin prices fluctuated little in the week ending 13th May, staying largely between $450 and $460 amid lackluster trading volume.
While Craig Wright’s claims of being bitcoin’s founder likely helped generate visibility for the digital currency and was still the subject of some headlines this week, this event has begun to fade from the public eye.
In the aftermath of Wright's re-emergence after months of silence, market observers have once again turned their attention to the fundamental challenges facing bitcoin. Some observers say recent events in the bitcoin development community, particularly as it relates to network scaling, have had an impact on overall market activity.
Until developers create applications “which can successfully change Bitcoin’s fundamentals,” the digital currency’s price “will not fluctuate drastically,” Chen Xin, chief financial architect at OKCoin, told CoinDesk.
Others were more optimistic about the future development of bitcoin, including Daniel Masters, who runs the Global Advisors Bitcoin Investment Fund.
He told CoinDesk:

“I think there's tangible progress on Lightning networks and segregated witness - both of which free up considerable capacity in the network. I think the collaboration being seen is a consequence of Mike Hearn's rage-quit.”

Masters noted that the July halving is approaching, but he also emphasized that at least for now, current conditions are “stable.”
By contrast, ether prices experienced notable volatility during the period, changing roughly 17% amid modest trading volume.

Relative price stability

This stability was reflected in bitcoin’s price movements in the seven days through 13th May at 12:00 UTC, as the digital currency edged 1.4% higher week-over-week, according to the CoinDesk USD Bitcoin Price Index (BPI).
Bitcoin did experience some notable price movements, reaching a weekly high of $464.21 between 15:00 UTC and 17:59 UTC on 9th May and a weekly low of $447.76 between 09:00 UTC and 11:59 UTC on 10th May.
After falling to that level, bitcoin remained largely between $450 and $455 for the remainder of the week. These mild price fluctuations took place as market participants traded 10.4m BTC during the seven days through 4:30 p.m. UTC on 13th May, Bitcoinity data reveals. While 48.35% of these trades, or 5.15m, went through Huobi, 45.10%, or 4.8m, were transacted through OKCoin.
The modest price movements bitcoin experienced recently contrast with the fluctuations of the last few weeks. Even though it has calmed down lately, some say the digital currency is still seeing notable volatility compared to other currencies.
"Bitcoin is still substantially more volatile than any OECD fiat currencies,” Tim Enneking, chairman of Crypto Currency Fund, told CoinDesk.
"It's a lot more stable compared to itself historically, but it is still far more volatile than fiat currencies,” Enneking continued. “Bitcoin will need to become even less volatile to receive the approval that most give to fiat currencies.”
Yet others view bitcoin's declining volatility as a sign of progress. Joe Lee, founder of bitcoin derivatives trading platform Magnr, weighed in on how this relative calm could point to the market’s changing perception of the digital currency.
“The lack of speculative trading around the Satoshi news indicates that more and more people are believing that bitcoin is worth holding as a long term store of value rather than an asset to make a quick buck off,” he told CoinDesk.

Calm before the storm

The current stability could simply be the calm before the storm, as market data provided by full-service bitcoin trading platform Whaleclub on 11th May showed a long-short ratio of 5.1:1, sharply lower than the previous week’s figure of 3.1:1.
“We’ve observed many traders closing out their longs on the bounce from $440 to $465,” Petar Zivkovski, director of operations, told CoinDesk. “Because of the large amounts of long positions that were stacked up in the price run up from the low $400's, we believe there are still many long positions open and in the red across exchanges."
While bitcoin markets have proved to be above prediction in the past, Zivkovski suggested that bigger moves might lie ahead.
"These could serve as good fuel for a long squeeze (further sell-offs) and could depress price to new swing lows," he said.
Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.
Follow Charles Bovaird on Twitter here.

Taiwan Police Arrest Man Behind Alleged Bitcoin Trading Scam

Local authorities in Taiwan are said to have arrested a man believed to have orchestrated a bitcoin trading platform scam.

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Central News Agency reports that a man identified only as Ho defrauded as many as 49 customers out of roughly $300,000 after promising outsized returns on a bitcoin margin trading platform. Reports indicate that Ho told investors in January 2015 that they would receive a windfall after "major market players" bought their bitcoins at a higher price.
Yet, Ho appears to have done the opposite, according to the report, which stated:

"Ho simply changed the company's server settings and turned his customers' bitcoins into his own. He then publicly claimed that his company was being hacked online and shut down his operation, the police said."

The report further indicates that Ho may have faced debt problems, as police reportedly told CNA that he "owed money to loan sharks".
The arrest highlights the prevalence of digital currency scams in Asia that have targeted unsophisticated investors with promises of big returns. Last August, local authorities arrested two individuals tied to the MyCoin scam, which resulted in millions in losses for those targeted.
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Private Digital Currency Founder Jailed for 20 Years

The founder of Liberty Reserve, a private digital currency system shuttered by the US government for its alleged use by organized crime, has been sentenced to 20 years in prison.

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Arthur Budovsky was arrested in the spring of 2013 and later extradited to the US for trial. He was ultimately charged with the operation an unlicensed money transmission business as well as conspiracy to both operate an unlicensed money services business and commit money laundering.
Budovsky pled guilty to the money laundering conspiracy charge in January after spending years trying to fight the US government’s efforts.
Prior to its shutdown in 2013, Liberty Reserve was a private money system that enabled the exchange of a digital currency called LR. The US government alleged at the time that Liberty Reserve functioned as a de facto financial hub for organized crime in the digital era.
The crackdown on the Liberty Reserve network has arguably impacted law enforcement efforts focused on bitcoin and other comparatively decentralized digital currencies. By contrast, Liberty Reserve functioned as a centralized transaction network.
In addition to the 20 years-long sentence, Budovsky was also ordered to pay a fine of $500,000.
"Despite all his efforts to evade prosecution, including taking his operations offshore and renouncing his citizenship, Budovsky has now been held to account for his brazen violations of US criminal laws," Manhattan U.S. Attorney Preet Bharara said in a statement last Friday.
Two other former Liberty Reserve employees, Vladimir Kats and Azzeddine El Amine, await sentencing, and the Justice Department says that charges remain pending against both the company itself as well as two other "fugitives".
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