We live in a digital world, one where the risk of identity fraud has never been higher. For many digitally-centric ventures, this underscores the importance of having a verification protocol in place to mitigate nefarious acts that can lead to public distrust and scrutiny.
In the crypto world, people want peace of mind and confidence that no one can access their profile and data. They want to avoid being victimized by what seems like endless gangs of digital doppelgängers.
The aim of identity verification is to ensure that there is a real person behind the profile — proof that people are who they claim to be. Successfully executed, this reduces the likelihood of someone usurping another’s profile for the purpose of creating a false identity.
Identity verification has long played a crucial role in terms of consumer protection for a number of different industries, including banking and financial services, retail, government, and e-commerce. There are myriad reasons why a business may need to verify identity, the biggest of which being the prevention of fraud.
Today, exciting new developments in the blockchain world are fueling robust solutions to myriad identity verification issues. Advancements in these technologies show promise as a more efficient and cost-effective mechanism for boosting identity trust and governance.
The rapid emergence of NFT communities highlights the growing need for these identity-based solutions as it’s a space that’s rife with nefarious actors, bots, and other nuisances that diminish trust among buyers.
Until now, there have been limited tools available to ensure that users are able to remain digitally connected in a frictionless way without having to jump through necessary yet annoying identity management hoops.
Enter Civic, a provider of blockchain identity-verification technology that launched in 2016. According to Director of Risk & Compliance and Compliance Officer Chris Harding, the company’s bread and butter are in delivering identity-related services to the crypto community.
“We focus on crypto. We have quite a number of solutions out in the market right now. Our primary focus at this point is supporting the NFT community. So we have a free service that we’re offering right now for any NFT founder or new NFT project that’s starting up.”
Harding says that Civic used to be more direct-to-consumer focused before pivoting to a more B to B business model. Explaining the verification process, Harding notes:
“We basically dox (search for and identify information about a particular individual on the internet) in order to verify identity. And we verify that the project actually owns the website, Discord channel, Twitter account etc. that they claim to own. All in all, it’s a pretty involved verification process of identifying the team members linked to the projects, as well as the various accounts that they use.”
Civic’s overriding aim, he asserts, is to promote some visibility and some safeguards into this ecosystem. He cites a number of scenarios where“rug pulls” and loss of money impacted project teams “that weren't being as transparent as they should have been in the beginning.”
He adds: “So it’s effectively a free kind of community service that we’re providing.”
The company has created Civic Pass to combat against bots that have the ability to take over some of these projects.
Laments Harding: “We see it quite often in the NFT space, where someone will release a project and all the sudden a bot would come in and just sweep the floor completely. So effectively what we’re trying to do is implement controls upfront to ensure that whoever is entering or participating in the actual sale or purchase of an NFT is a human. That’s our solution to fight this growing problem.”
Then there is the next step up in terms of an authentication process solution that clients can engage in which includes a very light touch KYC, AML, and Sanctions Tech tools. Harding says that this is similar to what a traditional financial institution would use while keeping the whole concept of project team decentralization intact:
“The reason why this is so important and the reason why we’re really pursuing this direction is in light of the coming regulation around this space. We are looking at the lay of the land and saying, hey, you know, regulation is inevitable; it’s going to come; it’s probably going look and feel very similar to what it does in the traditional finance world, particularly when you look at some of the regulations that were just released by the feds.”
He predicts that identity is going to be a critical aspect to any of these projects in a regulatory framework:
“What we’re doing is we’re effectively creating an end solution that will support projects that want to operate in a fully-regulated environment. Doing this will allow project teams to remain on the sidelines without having involvement in the project on a day-to-day basis."
Elaborating on this latter point, he says that this would likely call for an on-chain solution, thereby allowing project stakeholders to walk away or at least be on the sidelines of these projects. The objective — to ensure that the project is as decentralized as it can be within a regulated environment.
“The goal is to have effective controls in place to ensure that, number one, they can comply with regulations, and number two, there are safeguards and security built for all the investors that are participating in that product.”
Asked about some of the emerging trends that are informing Civic’s strategic direction at present, Harding had this to offer:
“The critical trend we’re focusing on at present is two-fold, namely, the evolution and the rise of the metaverse along with everything that goes along with it. We believe there’s a critical play for identity in that space and that different projects are going to start integrating with one another."
As the metaverse evolves into a joint universe where people integrate and operate, we think identity is going to be a vital aspect of that space.”
Harding says that while users will continue to be able to adopt whatever public face and identity they want, there will still need to be a robust protocol verifying one’s real-world identity on the backend, even if that just means verifying that they are a human being and not a bot.
As Civic’s Director of Risk & Compliance and Compliance Officer, the thing he says he’s critically focused on right now, on a day-to-day basis, is keeping his ear as close as possible to the ground to determine how the regulatory space is going to evolve both here in the U.S. and abroad.
He and the project team are also busily launching a new solution called Civic Pass with the end goal of allowing institutional and participation in some of these things that retail investors are starting to engage on a day-to-day basis, right. He cites DeFi as a prime example of this:
“If you look out on the landscape today you’ll see that there’s really no real institutional participation in this blockchain space. One of the core reasons for this is they don’t know how to legally go about even engaging with these projects, right. There are just so many unknown risks. So if we don’t start addressing some of these risks for the institutions, we will never see them come on board and participate.”
