Space Summary
The Twitter Space RWA Vault #1: Tokenizing the Future hosted by _WEB3M_. The RWA Vault #1 Twitter space delved into the transformative world of real-world asset tokenization. Experts shared insights on the impact of DeFi, NFTs, Metaverse, and unique projects in reshaping the future of ownership. From blockchain interoperability to AI advancements, the discussion highlighted the key role technology plays in revolutionizing asset tokenization processes.
For more spaces, visit the NFT page.
Questions
Q: How is real-world asset tokenization impacting DeFi?
A: Tokenizing assets in DeFi allows for greater liquidity, transparency, and accessibility.
Q: What role does blockchain interoperability play in asset tokenization?
A: Interoperability enables seamless transfer and use of tokenized assets across different blockchains.
Q: Why are unique projects essential in the tokenization space?
A: Unique projects push boundaries, drive innovation, and attract new investors to the tokenization ecosystem.
Q: How does NFT integration enhance digital ownership in the Metaverse?
A: NFTs provide secure ownership and unique experiences within the digital realm of the Metaverse.
Q: What benefits does AI bring to asset tokenization processes?
A: AI streamlines tokenization, enhances security measures, and improves asset management efficiency.
Highlights
Time: 01:25:16
DeFi and Asset Liquidity Exploring how DeFi platforms are leveraging asset tokenization for increased liquidity.
Time: 01:35:42
Innovative Tokenization Projects Showcasing groundbreaking projects that are redefining tokenization standards.
Time: 01:45:59
AI Integration in Tokenization Discussing the role of AI in enhancing security protocols and operational efficiency in asset tokenization.
Key Takeaways
- Tokenization of real-world assets is revolutionizing industries like DeFi and NFTs.
- Innovation in unique projects is driving new possibilities in the tokenization space.
- The intersection of NFTs and the Metaverse is reshaping digital ownership models.
- AI integration is enhancing the efficiency and security of asset tokenization processes.
Behind the Mic
Beginning of the Dialogue
Just lay down, turn my side. Do you feel my heat on your skin? Take a few clothes blow out the fire. Don't be so sight. You're right, you're right. Take off my clothes. Hold my shape I've been coming. Can you feel my heat in your head? And I'm laying down by your side. I taste the sweet of your skin. Take a few clothes, take my clothes don't be white. You're right, you're right. And my eyes just raised much faster. I draw myself in water and both my eyes just got so much brighter and I so got oh yeah, so much pose. I see your smile. Do you feel my heat on my skin? Take a fear close. Don't have the fire don't be so sad. You're right, you're right. Take off my clothes. In my heart I draw myself in your eyes and once Friday.
Welcoming Remarks
Hey, what's going on, guys? How's everybody doing today? Pleasure to have you. Excited to talk about transforming finance and beyond the impact of reusable KYC, of course. And we have some awesome companies that are going to be joining us today to talk about that very thing. So as we wait for a few guests to join us, we'll kind of start getting this moving. I'm excited to talk about what we have today and get some insights. I'm going to learn a lot, I think. So how we doing, everybody? Frazier, how's it going today, my man? Good, good, yeah, looking forward to this one. It's something that's been around as a topic for so long, but it's, yeah, finally actually changing, which is really nice to see. So yeah, looking forward to it and thanks for having us, as always.
Discussion on Industry Progress
Nice, man. Pleasure to have you. And yes, this topic has been around for quite a while and it's really starting to see some interesting applications and usability. So super stoked to get into it, man. Thank you. And Brian, what's up, Brian? Hey, thanks for having us with Argos identity and just excited to kind of speak on this topic. We've been in the space for five years and partnering and trying to work more and more towards this whole reusable KYC that's on a larger scale. Nice, man, nice. Well, pleasure to have you. Thanks for coming and what you guys are building over there at Argos is awesome. So can't wait to get some insights and learn a little bit about what you guys are doing. So awesome. Wonderful.
Engagement with Audience
See if we have any more requests here and just to kind of give everybody a little bit of summary of the space today. We have Argos, we have Checht, we have Hinkle joining us all in the KYC space and we're going to be giving away, there's going to be five winners today, $10 each in USDT for the prizes. So in order to get a chance to win the prize, you must be in the space and of course follow the comment a question to enter. So those are the requirements for the $10 in USDT. And then of course checked, I think is going to announce another portion of what they're doing today. And Frazier, did you want to tell everyone, everybody about that or did you want me to mention it?
Sharing Responsibilities
I think it might have to be you because I've been stitched up by my team and not told about this. So I think you strangely have. I think you actually have more context than I do, which. So, yeah, good, go for it. Awesome. Awesome. Well, that's what I do. I'm the host, so I'm happy to do anything like that. So during the space, the participants are going to be able to receive a cred. And this cred, if you guys join and I could actually bring, I could probably just see, just so everybody can see the account because I see the accounts all the way down at the bottom of all the participants. So I'm going to ask creds to come up here and speak. Of course, you don't have to speak, but I just want everyone to see the account and learn to see what they're doing.
Introduction to Creds
So creds is a reputation credential in the web three space and checked is the one who developed it. And please correct me if I'm wrong, but Czech developed the creds platform and usability. Yeah, absolutely. And to be honest, hopefully we'll all become clear as we go through KYC. And I think some of the questions later on around where we see the space going, I'll get a really good chance, hopefully, if we get to those questions to talk about where creds has come from, where we think it's going, and how that relates to kind of KYC credentials, all this kind of stuff and reputation, which is ultimately where we think this is all going. But yeah, we can get to that when we get to the questions.
Transition to New Topics
Nice. Okay, perfect. Sounds good, Fraser, thank you for that. And Adago, please excuse me if I'm not pronouncing your name right. What's up, man? How are we doing, Adagio? Hi. I'm representing Henko. Glad to be here. Happy to join this great AMA and looking forward to the questions. Oh yeah, I can't wait as well. I'm excited. Thanks for joining and pleasure to meet you guys. I'm Eric web three m just a little bit about how we got together today. Web three m created a platform called the Collabhub. It's for cultivating organic collaborations.
Promoting Collaboration
One of the collaborations is joining Twitter spaces. So if you have a company, if you're building, if you're a professional, check out the collab hub, reach out and start collaborating with other companies. You know, that's what it's all about. So thanks everybody for coming today. And what we're going to do to get this space started is just kind of go around the room, talk to each speaker and get a little information about what they're doing. So Frazier, if you like to start, that'd be awesome. Introduce yourself and what checked is doing, please. Sure, I'll be super quick so we can get into the interesting stuff.
Overview of Chechd
So, hi, I'm Fraser, CEO of Chechd, where we've also built creds, which hopefully will come up later on. So we obviously like reasonable. KYC is an industry in an area for us where we work with partners to go and solve that problem. But under the hood, what we're focused on is payments infrastructure for credentials. So just seeing some of the other partners there speaking about issuing reasonable KYC records, where we fit in is checked itself, doesn't issue those records as a network. What we instead focus on is whenever those credentials get reused, if they're using checks, whoever issues them in the first place gets paid.
Expanding the KYC Framework
So our big focus there is just making that process as easy as possible. But for KYC it's making whoever issues credentials, making sure they get paid whenever those gets reused can be used for KYC. Could be receipts, insurance, healthcare, you name it, can be used for any of that kind of stuff. And then creds hopefully will come up later on. But is a kind of decentralized reputation platform where you can aggregate all of your different reputations from different communities into one place and then use them however you need to. So, yeah, that's a bit of a whistle stop on both checks and creds.
Transition to Hinkle Protocol
Killer, man, killer. Awesome. Can't wait to get more into it. Thank you for that. And Adago from Hinkle, please introduce yourself. And Hinkle, please. Hi everyone. So Hinkle protocol is a revolutionary privacy protocol. At Hinkle, we are building the future of web free privacy. We currently have over 26 million total value logged, millions of dollars, tens of millions of dollars in transaction volume every month. We are building a compliant privacy pool, which allows people to swap, stake, yield, farm, liquidity, provide, yield, trade, and do all sorts of things like transfers that you could normally do.
Privacy-Focused Solutions
But the difference is that with Hincal, you're able to do this privately. So we are a decentralized, permissionless protocol. Essentially, the smart contracts are non-upgradable. So it's a trustless mechanism where you're able to interact with our protocol, with our smart contracts through our DApp, or you're also able to implement our SDK within your DApp to obfuscate and not to show your transactions on-chain. This has many use cases and applications, and there's a future of web free. And so essentially you're able to swap, trade, fund, new wallet, send money to anyone, sell whatever you want to sell.
Maintaining Transaction Privacy
So the benefits are you can, for example, trade as an institution, as an individual, without revealing what you're actually trading to others. You can sell your vested tokens in the same way because nobody will know that it was you who sold, because this is done through our set of three layers. So what is visible is the only inputs and outputs of the whole protocol. And we have currently over 26 million in the liquidity pool. But this will greatly increase in the next couple of months, I think 100 fold, maybe even because we're entering the restaking game, you'll be able to stake h tokens without KYC to increase the liquidity pool.
KYC Integration in Privacy Pool
We call this shared privacy. However, where reusable KYC comes into place is at the entry of the privacy pool. So you cannot use the private features if you don't go through some kind of a zero knowledge KYC procedure. So we essentially don't know the names and surnames of people who trade in our privacy protocol. That's kind of the point, right? Since you want to stay private, but what we do know is that you're not on the sanctions list, not from a sanctioned jurisdiction, you're not a sanctioned individual or business. We use multiple KYC and KyB companies and integrating more as we speak.
Encouragement for KYC Providers
So we are big fans of zero knowledge and reusable KYC credentials as Henkel, and we highly encourage you to check us out. See our Hinkle Farmers program, Henkel lords, and for the KYC providers here. Also, take a look if it's something that you are providing that we could use to increase the user base of our protocol. Thank you very much. Awesome. Wow. Can't wait to get more into that privacy. All while being, you know, KYC. That's very interesting, you know, combination. So excited to get into that. Thanks for that intro, man.
Introduction of Argos Identity
And Brian from Argos, please. Brian, introduce yourself at Argos. That'd be great. Please. Thank you. Perfect, yeah. So, Argos identity. I'm Brian with Argos identity, and we offer advanced eKYC electronic know your customer solutions, really designed to verify user identities quickly and securely, where the IDV layer before these verifiable credentials or reusable KYC gets started. But the system uses facial recognition AI machine learning to really ensure accurate and efficient verification, preventing fraud and ensuring compliance. That's at a high level. At a high level.
Introduction to KYC and Its Importance
Fairly quick, man. Awesome. Thank you so much for that intro. I can't wait to get more into that. And this space is growing so fast. There's so many companies building, there's so many new users joining, and there's so many different areas on earth that you need to stay compliant and, of course, secure. And what you guys are doing is the future. So this is exactly why we're here today, to talk about the future. And I'm going to ask the questions and you guys are the experts. And so let's get right into it, guys. You just want to raise your hand or jump in and answer the question, please, whichever you prefer. So my first question is, we're going to start at the ground floor and we're going to learn what is KYC and why is it important in web three?
Understanding KYC
Oh, I like Brian. Go for it. No worries. I mean, KYC is. It's. It's the identity layer of any platform that you're using. The company itself has to know who their customer is. That's the main goal here, is they can't just work with anyone. They have to ensure that you're not on a watch list not known for money laundering or illicit activities. We know that there has been that stigma in the web three space. I think I call it more of a stigma than the real life, but that's my personal opinion. But it's something that we need to protect the web three space against. Go ahead, Fraser.
KYC Process in Retail and Web 3
Sorry. No, no. Absolutely. I think the way, one of the ways I tackle answering that question is, for retail and end users, a lot of what they see is that whole like scanning an id document, doing a selfie, whether that's like scanning a passport or scanning a driving license, an id card, whatever, and then doing that selfie check. A lot of people assume that is what KYC is, and that's just what that process covers. In reality, there's like various, all sorts of variations on that process, and some of them don't require document scans and selfies at all. Some of it might just be in the background using name, date of birth, and then doing like sanctions checks, doing credit score checks. There are some banks in the UK where you go, what is definitely a KYC process, but you provide basically very few details at all because they're tapped into so many other data sources, they can just do it all behind the scenes.
Risk Assessment through KYC
So I think there's this almost misnomer that is the only way of doing things as KYC for a lot of people in retail or individual users. I think in terms of the importance Brian was touching one side is obviously understanding who you're working with, and that's almost currently a proxy for what is the risk of this individual. I think probably the most tangible example I can give in web three is rug pulls, anonymous rug pulls. So in a weird way, like, obviously they're massively preserving privacy of the devs who are sat behind them, but they have absolute, like the. I think it's something like 50% of all fraud in crypto is rugs. And the last time I checked, I think it was like half a billion a year in the US. I need to double check those numbers. But it's wild the size of it. And all of that is because you're trusting someone who is completely anonymous that you have no information on whatsoever.
The Importance of KYC for Trust
So where Brian and Adagio, I think, were describing not being on sanctions checks, not being on AML risk registries, you're getting an additional level of assurance beyond like, oh, I just know that they've been through this process. They've also passed some level of due diligence, which shows that they're trustworthy. So part of that is just like explaining, I use more KYC from a user experience perspective on what's going on behind the scenes. But the second part of that is just why it's so important is it is, if not the identity layer, the trust layer of the Internet, that is just kind of the solution that everyone has landed on at the moment to try and make things work. Absolutely, yeah.
Infrastructure Challenges in KYC
And I can attest with the infrastructure that is in place now, well, really, before what you guys have created, what I've used for doxxing myself to companies overseas, you know, it was extremely tough and I actually had to mail a piece of mail to the institution for them to ensure that was me. And so that there is a massive issue in that space that I think that you guys are really tackling and overcoming those issues. So, like, what would be like, the advantages, the major advantages for a company or a user to be able to like KYC? I'm sorry, Brian, it's like a shootout. No? Yeah, I think it goes back to that of what I just said around risk.
KYC and Risk Reduction
Risk and trust to use like a really low level of KYC. As an example, if you go to, let's say you're buying something online, currently they're asking frequently, they're asking for obvious credit card. Then they're asking for an address and a name and such. And realistically, all they need is if they could guarantee that you're 100% trustworthy. Realistically, all they need is a delivery address and payment and that would be enough. The reason that they ask for more information right now is the risk that if you're selling something via credit cards. So like you're eBay or you're a merchant on Amazon or eBay or whatever, you're selling something via credit cards. There is the chance that someone picks up a credit card either off the dark web or the floor, uses that card or skims it off, someone buys something, gets it delivered, and then they also do a chargeback via the credit card company where basically they dispute the claim or because it's someone else's card, they just don't care.
Fraud Prevention through KYC
So you end up in a situation where like you have paid for the goods. So the merchant has released the goods. So that's like a sale gone, the inventory is left, and then they get a charge back for the same thing because of the credit card. And basically, so the reason they're going after more information is because you have this level of scamming and fraud even in just like online retail. And so really where kind of KYC is coming in is to try and de-risk transactions in the absence of better information. So if you could see someone's full transaction history or at least like better signals that they are a trustworthy individual, you would see less requirements for massive amounts of data as part of KYC.
KYC Necessity in an Evolving Space
But that's from my point of view, it's basically there to de-risk transactions in the absence of a better alternative because unfortunately, scamming and fraud are just rife and probably getting worse right now, unfortunately due to things like chat. GPT. Wow. Yeah, KYC sounds like an absolute must in this space. Oh, please, Brian. No, that was perfect, Fraser. A perfect way of kind of summarizing that is for the business side. It's helping comply with those regulations and reduce fraud, building trust with users. But at the end of the day, it's that the main goal is de-risking those transactions.
User Benefits and KYC
And then from the user perspective, it's providing a truly safer environment and protecting against identity theft and facilitating smoother transactions from the business side for the user experience. It's the end goal. And that's why we're here to talk about this whole reusable KYC, to make that process less friction for the users themselves. Oh, awesome, man, awesome. And you basically just said it. And I'm going to go right into the segue into what we're going to talk about today primarily is what is reusable KYC, and what are the major differences with that opposed to just the standard KYC?
Understanding Reusable KYC
Standard KYC is like, we all know it's centralized. Your data is housed in a platform somewhere. They're holding on to that data. For us, one of the things we do is we encrypt it immediately. So that's what's one way of dealing with that information. But the whole goal is to get to this. I don't want to call it zero knowledge proof quite yet. I know that's what a lot of the companies in the space are starting to work on and working heavily on, but they're working on this reusable KYC so that you're in control of your own data, you're in control of what data someone can see. That's what a lot of the reusable KYC vendors that we've spoken with and worked with, because we're trying to add all of that into our solution offer so that we're not just an ID verification company.
Advantages of Reusable KYC
We have access to create these reusable credentials, and then you can use them wherever you need to use them so that, you know, it's not just a you have to go through it every time you sign up for a new platform, because that's the number one issue, I would say with KYC is just, it's friction. It's creating friction to sign up for a platform, to create an account, perhaps even to just take money out of the platform, because I know we've worked with companies to just do. On the front end, we ensure that you're just a unique user, simply taking a selfie. And then on the back end, when you need to move money, that's when you have to go through a full KYC process.
Future of KYC Processes
So there's different options in this space right now that are available, but the whole reusable KYC will make this process so much better, so much smoother, and save you time, save the user time. And that's pretty much the number one goal, because the more time you save for a user, the more time, you know, there's. I don't. Not the more time, but the. The quicker they can just check out, or the quicker they can set up everything and the less chances of losing a user. I think that last bit. Bye. But Brian, that is almost a key benefit for businesses.
Integration and Effectiveness of Reusable KYC
For reusable KYC is just like, reducing that friction means that you just get higher throughput or higher conversion for whatever service you're offering. I think there was a study somewhere, and this is like either a second or milliseconds, maybe 100 milliseconds. So 0.1 of a second. Just that delay on a website means that people start tuning out if it's up to a second. Like there was a marked, like, time where people start tuning off a website over service. If there is a something like maybe some 0.1 to a second just lag. The higher that lag is, like, the more friction there is, the more likely they are to drop off.
Economic Aspects of KYC
So when you're putting something, someone through as something as high friction as find the document that you need to provide, go take a selfie, get the lighting right, and then we'll start serving you. It just becomes a massive headache, and you see loads and loads of people drop out as a result. And that's obviously worth money. And the other side of it as well, which is one of the bits that we focus on, is if you're doing reusable KYC, the other part is KYC. Every time is a somewhat expensive transaction to enter into. So, like, maybe a couple of years ago, this was costing companies maybe $10 a shot to KYC someone.
Cost Efficiency with Reusable KYC
Which then means that whatever service you're providing them, you have to make your, whatever you wanted out of profit, plus your $10 to make it even worthwhile, that number has started dropping. So I think KYC, depending on the level you're doing it to, can be somewhere between like dollar 50 to dollar five, depending on how deep you're going. KYC is way more expensive. But the benefit for companies is not just like reduced friction it is with reusable KYC, you are not having to pay that transactional cost every single time. You could start paying a fraction of that cost because that single KYC instance or credential can get reused multiple, multiple times.
Long-Term Benefits of Reusable KYC
Obviously, that's the bit where we fit in, which is why it's a bit of a passion project for us, is just enabling people to reuse KYC. We want to focus on enabling those payments back from future consumers of that KYC to whoever paid for it in the first place. But yeah, it's those two sides, like massively reducing friction, but also reducing the cost to the business because historically it's been pretty chunky. And the lower we can get that better, like, better conversion, lower cost, better user experience, as long as we maintain, like, minimize the risk to both sides, both the consumer, the customer, and the business.
User Experience Transformation
Like, it's all upside all round. Wow. So not only, you know, is it great for businesses, obviously, because they're helping their users out, like what you just said, but for users, you know, you can take, take advantage of so much more instead of just like having to KYC yourself with every project or everything that you want to accomplish in the space. So that's absolutely amazing. It sounds like we've came a long way since KYC in this space has really been implemented.
User Hesitation and Security Concerns
So, KYC, there's so many users in the DeFi space that want to keep their information secure, and they want to have confidence in this, of course, but they also want to participate in these amazing opportunities that are currently around. So when using KYC and reusable KYC, is your information shared or is your wallet doxed? Or how would you say, what would you say? Please dock up. Yep, if I may. So, you know, I just wanted touch upon a couple topics that weren't really touched upon yet, because reusable KYC per se, if it's a particular vendor, doesn't really change the centralized nature of the data, because you may encrypt the data in your reusable KYC protocol.
Data Sharing in KYC Processes
But when you're sharing the data, coming to your question, you actually give all the data to the provider. So here, there is another solution for this, which is called fractionalized identity. Also sometimes using zero knowledge proofs. And there are already solutions on the market which allow this. The zero knowledge proof fragmented identity by polygon ID is available as an infrastructure layer that you can implement your protocol into. We developed on chain attestations for sanctions at the project that I was working on previously.
Exploring Identity Verification Technologies
And what's also possible is the centralized identity credentials given away by people. What it all means. It all means one of two things. First, traditional fractionalized identity means that you can have a confirmation that you indeed went through a KYC check, let's say, with Argos but then you're only deciding to share your birth of date using a zero knowledge proof with the third party, which means that they don't have to get your document, picture, name or surname, and they can still know for sure that you are at least 18 years old, for example.
Practical Applications of KYC
Or you may decide to go to a club party and the bouncer wants to see your ID. Well, the bouncer sees way too much information, right? He doesn't need to know if there's an address on your document. He doesn't need to know your personal security number if it's on the document, and so on and so forth. All he or she needs to know is some kind of a unique identifier, so it's possible to find you later if anything bad happens. And if you're 18 or likely, sometimes it's just the letter.
Ensuring Compliance without Overexposing Information
So it's just the 18 year old or 21 year old in the US verification. So what's important about reasonable KYC, I believe, is not only to be able to reuse it, because this is only a marginal improvement, but to be able to prove you are who you are without revealing the data points that you don't have to review while staying compliant and being able to tell the full picture. Since probably the reusable KYC code should be open sourced such that it is possible to verify that indeed, an ID document verification aliveness check sanctions checked and across check is done in order to get the correct data out.
Final Thoughts on KYC Evolution
So to my understanding, all KYC or reusable KYC, not each, let's say each application might require different pieces of information. What, like you just said, like the person has got to be, in the end, that's the only piece of data that is held within, like just like your age, just to ensure that somebody is 21 or 18 or whatever. So it sounds like there's a lot less data that someone's giving up whenever they do. Indeed, KYC, because for me, you know, like I've always in DeFi, you know, it's nice knowing that you are anonymous and, you know, with whatever you're doing with however you like to do things in different fashions, of course, but with KYC, people in DeFi, I feel like, are a little hesitant, you know, to KYC themselves in certain scenarios.
User Concerns on Information Security
And so what would you tell users that, that feel this way? Because it sounds like there is literally like your information is completely secure, there's zero potential with your information being leaked, is that right? Well, theoretically, except for the smart contract risk. Fraser, you want to take this one. I was going to. Thanks. I'll make a start. I'm sure I won't get all of this, but I think it's a classic. It depends. Yeah, for me, it's always the classic. It depends. I think in the future you're going to have, let's say it's a DeFi protocol. They need some information, they'll explain what they want from you, and then it's your decision on whether you engage, whether you go somewhere else, whether you share that information with them.
Personal Experience with Compliance
My kind of background was at one point working with governments on borders and international travel, and they have a set requirements, and if you want to stay anonymous, you just don't travel. Like that is your way through, so. Or you're going to have to do it illegally. But if you're crossing into the US as a really good example, they are going to expect your passport, they're going to expect your biometrics, they're going to expect. Now, if you're coming on a nester, like details of your social media accounts and your travel history, they set their requirements out and you decide whether you're going to meet them or not. And I think with going into more defi, other services, it's just going to be a spectrum.
Shifts in Information Sharing Protocols
It would be like, okay, we need x, y or z from you, and it's up to you whether you're willing to provide that in kind of to gain access to that service. Now, probably the good thing to Adagio's point is what's probably changed from before is it's no longer just a binary choice on, okay, you've got a passport or an id document, a driving license. Historically, if you are having to kind of provide KYC or go through KYC, you'd have to provide all of that document. Where it's shifting to now, like inside the EU, it's called selective disclosure, is you could just pick and choose the elements of a document or not that you want to provide.
Improved Privacy Measures in Identification
You still need to meet the policy of whoever is providing that service because they're setting the boundaries. But at least now you can be a lot more granular about it. Like Adagio's example around going into a bar in the bouncer. Really good parallels at the moment are both Strava and Uber now won't show an Uber driver a full home address anymore, especially if you're female, because I think they've had enough cases of drivers following women home and they now know it's a massive privacy issue. And basically, I think there's going to be the similar equivalent in.
Technological Advances in KYC Processes
So you get the same thing with the concept of bouncer, seeing your home address on a driving license. So I think the really good thing now is we've got the tech both on sharing off chain and on chain, where you can just share the key bits of information that are relevant to that transaction. You don't need to be providing superfluous stuff that is just irrelevant. So, yeah, for me, it's a classic it depends answer as an ex consultant. So, yeah, but I'd love to know what kind of adagio and Brian have to add to that.
Challenges in Reusable KYC Implementation
I just wanted to mention that what Brian was saying regarding reusable KYC in the traditional sense is still a big user experience improvement for everyone. Imagine you're logging in with Google, right? Anywhere you could log in the same way with your full identity profile. Of course, the problem is that you'd need to be a vendor big enough with market power such that a lot of other apps would implement your solution as a trustworthy KYC provider, which sometimes they don't want to do, not because they don't trust the company, but because they're just such huge penalties in some of the markets, especially in crypto, for not complying with AML, that people just tend to like to do it themselves.
The Impact of Mass Adoption Concerns
But I feel like it's changing because there's so much overhead with implementing those systems, running those systems, so it's just easier to implement a third party. But I would be curious to hear more from Brian about how he sees it. Definitely. I mean, I couldn't agree more there. Adagio, in terms of the issue with reusable KYC is mass adoption. And there's no easy way to kind of combat that because, you know, Uber might accept what's been done at a bank, but the bank's not going to accept what's been done at Uber.
Navigating Compliance with Invalidated Data
So that's like an easy example. They're going to accept what, the bank's gonna accept only. And it's. It's gonna be always a tough decision for a bank to even accept anything or a financial institution. But from a DeFi perspective, the biggest scare is the. The penalties and the fines if. If they're found uncompliant or out of. Out of compliance and not following the regulations correctly. Interesting.
Future of KYC in Identity Verification
It sounds like KYC reusable KYC is going to replace our current infrastructure of, say, in the us driver's license, you know, things like that. And I didn't realize, you know, just presenting, you know, like, you don't even think about it. In web two, you're like, you're walking up to a bar and they asked for your id. You just give away your id. You just give away all your information without even thinking about it. But with reusable KYC, you just literally have just a tag or some, some sort of reference to show that you are you and you meet the criteria of that specific bar or application or whatever.
Efficiency and Security in Identity Sharing
So KYC is much more secure and much more effective and efficient than our regular web two id cards or whatever, which is interesting. I didn't really think about it that way. So thanks for one small thing to add. I don't know if this is in every country, but I know some bars in the US. They have a scanner that just scans an id, then pops up saying over 21. To get into the bar.
Innovative Solutions for Age Verification
The whole goal with this would be you have a QR code and basically on your phone or something on your phone that shows this, and they tap into that system, it says, hey, this person's over 21, they're good. Or over 18, they're good to go. And simple, easy. Again, less friction. No opportunity for someone to know your address, which a bouncer has no need for. They can only create issues.
The Necessity of Minimal Data Sharing
They don't need your, they really don't need your name, address, document number. They don't even really need your birthday. They just need to know that you're over the age that's needed. Very interesting. And whenever somebody does, you know, six, successfully obtain their reusable KYC. How do you guys ensure the authentication of their identity? I mean, is there a very strict parameter, you know, behind that?
Concerns Over Fake IDs and Authentication
Because anybody can get a fake id, of course, in web two, et cetera. And it's become way more difficult now with generative AI. I heard from the, I was in a working group with the EU Commission maybe like three months ago, and according to them, I haven't double checked this, but you can get an image generated that looks like a picture of an id card with whatever picture you want on it, whatever details you have.
Generative AI's Influence on Identity Verification
The other for somewhere between ten and $20. And you can, depending on the service, just submit that. And it will take it as given because it will look at it and be like, yep, this looks like a passport taken on a picture or taken on like a phone camera. And yep, it matches this individual because it would do, because it's got your face on it and you can just get through that way. So I think it's good.
Evaluating Assurance Levels in KYC
There's always been ranges of these things but I think it's gonna for the original issuance and how you get that in the first place. I wouldn't be surprised if it starts getting more and more strict just because of generative AI in terms of how like where the spectrum is. For anyone familiar with ISO standards, which are like international standards for kind of, you name it, there are different assurance levels.
Increasing Rigors in Verification Processes
And it goes from like, okay, I have scanned or I've seen a picture of a document and I've seen a selfie to I've seen a picture of a document and a selfie that is a video with a specific series of flashing lights on it. So I know it's legit. And it came from exactly this time to I've read the NFC chip on a passport which has its own signature on it and I've seen that and I've seen this flashing light selfie thing.
Ensuring Authenticity through Government Verification
And then the highest level, which is AAL three, assurance level three is like I have physically shown up, presented myself to a government official like a border agent, and they have then done those checks themselves as well asked me like biographical questions about where I grew up, what I do for work, what's on my passport, and just try to throw me off. There's all these various different levels right now.
Shifts in KYC Standards
I think a lot of people just default to the lowest level. I wouldn't be surprised just due to generative AI, if there has to be the shift up because it is so risky. And I think people who are issuing credentials are, if they don't get this right, they're probably going to be the ones bearing the fines rather than anyone else because they're just, yeah, they'll be found culpable.
The Rising Threat of Fake IDs
So it's, I know it's a whole new world out there, all due to generative AI. I think if you'd asked this question like three years ago, it would be a lot less. You'd be fine with the lower levels. Now I think the requirements are going to go up just because, yeah, it's so easy to get around and fake it. I'd be really curious for both Brian and Adagio if they've actually seen any of those attacks so far, given that you guys are more focused on actually issuing those records on behalf of people.
Issues Arising from AI-Generated IDs
Oh, we're definitely seeing more and more fake ids and all of that. And they're becoming harder and harder to even capture the AI because we're using AI to combat AI. At the end of the day, it's no longer really acceptable for a KyC vendor to go through a manual review of every single doc, of every single applicant or user just because of the time that it could take, especially for a larger vendor like us.
Strategies to Combat Fake IDs
But from the other perspectives and this whole AI ingestion, I mean, we just started working with a new company that they're having all kinds of issues. We had one person submit 50 different usernames or try to create 50 different user accounts. We had to implement multiple ways of combating this because it was this picture on 50 different id documents, just change the name, change certain things.
Enhancing KYC Processes
And these are all just little things that most vendors aren't going to capture. The things that we're doing to combat this is recommending higher and more stringent processes. One of those is, has this face already been set up or created? So if it's the same person taking those pictures, we now have that. And that's another level and one piece that we're doing here in the US, we're trying to figure out how to do it in every country.
Phone Verification as a Security Measure
But phone number verification, you can use a phone number, at least here in the US. I believe it's in most states, most countries that you can capture most information off of a user based on their phone number. So now you match that phone number information up from the telecommunication providers, telecom providers, and you have another layer of security.
Recommendations for Effective KYC
So we just recommend if you're actually trying to combat this, the higher level KYC that you start with, the better position you're going to be in down the road. I had no idea. And if anybody else has any insights, please don't let me butt in. But I had no idea the complexity of how AI, obviously I knew how AI can navigate really any kind of resource or application, but I didn't know that was currently happening.
AI's Role in Overcoming Identity Fraud
And for you to combat AI with AI, of course, is the only solution, it sounds like. But for reusable KYC, what kind of infrastructure is available now for businesses and retail users to stay confidential while remaining compliant with KYC whenever they're trading or transferring? And I know Adagio at the beginning you kind of hit a little bit on some of those aspects, but I'd really like to get into how that's possible for institutions like you were mentioning, VC's, whenever they take their, their, you know, the token allocation, you know, a lot of these VC's maybe don't want to dox, you know, themselves for selling that specific token or whatever.
Fractionalized Identity Approach
So how does that work, like with being KYC'd all while staying confidential? Well, one way to do this is fractionalized identity. So revealing only a part of your identity or some data about you without sharing your full profile. The other part is actually on the vendor side of whatever information they're requesting. And how are they handling the data.
Data Theft Concerns and Solutions
It's very likely that most of the people in this call had their passports leaked, even though they don't know about it. It's so common to have honey pots that are being just abused by online scammers and hackers. So it's like a multifaceted problem, because not only like cheap loan vendors should have better KYC requirements to verify the data and liveness of a person in order to avoid, you know, misuse of your data.
The Consequences of Data Misuse
Basically because what can somebody do with your fake id in a proper bank? And I assume and using any of the solutions that we have speakers here for, they shouldn't be able to really hack the system, assuming that there's a good 3d liveness check unless they're using sophisticated AI. But that's kind of a niche case. Most scammers are not that sophisticated, although of course there are also professionals who are trying to avoid it.
Maintaining Security with Reusable KYC
So it's a multifaceted problem. From one side, you need to have reusable KYC that stores your data correctly. That gives you data ownership. That's the web three part where you are the owner of your data, perhaps in a decentralized storage that is compliant with each jurisdiction.
Managing Compliance across Different Regions
So you have a separate private identity on a decentralized database, like Quill, for example, separate data points. And Europe, separate data points. In America, separate data points for the rest of the world to be compliant with the regulations. Then at your consent, you can share fractionalized or full data points using a zero knowledge proof or not.
Ensuring Privacy in Data Handling
And this data should be transferred through something like deco triple handshake protocol, whereas even the provider who is giving you access to data creation and creation of your KYC profile wouldn't see the actual data coming through. And then the vendor receiving the data should only process whatever data they need, delete the rest and just, yeah, make you feel safe and give you an ability to delete your account with option to delete your data if regulations allow, so to speak.
Regional KYC Resources and Limitations
Wow. I mean, so like, so for you guys, I. There is a, there are obviously strict regulations for each region that you provide the KYC in. So what, like, do you guys offer this resource in like every region on earth? Or do you have a strict geographical area that you guys provide for?
Protocols for Compliance in Different Areas
So I previously worked at the project which provided sanctions attestations. So only this part. Therefore, this data was put directly on chain and there was no need to store this data in any particular jurisdiction. But for a hinkle protocol where we accept multiple credentials, we are actually only interested in the user going through a full KYC check with a third party provider, since we're not doing our own KYC.
Verification Processes and Privacy Considerations
And then we just need, all we need is an attestation that they are over 18, over 21, and not sanctioned. So for Henkel, we are implementing protocols. We could use also other reusable KYC protocols, but the integration is pretty special because we don't actually collect names and surnames of our users on purpose because we're a privacy protocol.
Preventing Illegal Activities through KYC
We just want to make sure that no bad actors like the north korean Lazarus group, sanctioned individuals, anybody that's illegal to do business with in the US, we just don't let into the pool because they could make the privacy pool spoiled, so to speak. Like it's illegal to do businesses with bad actors, of course. So we are very thankful they aren't bad actors, but we don't really care about the name and gender and so on and so forth.
Henkel's Innovative Approach to Privacy
So, from Henkel's standpoint, we are. We have this innovative approach, which makes sense in the context of privacy, right. For other companies, you know, like there, it's. It's complicated to send personal identity information from the US to European Union and back and forth. So that's why there's special decentralized identity protocols. Need to use decentralized identity providers which are compliant, because initially there was something called the ceramic protocol built on top of ipfs. But unfortunately, this isn't really compliant with GDPR or CCPA. CC California Data Protection act because some of the nodes for ipfs, they're fully decentralized. And some of them are in China, some of them are in America, some of them are in Europe. They're everywhere. And it's just not compliant with the data protection rules in European Union or the US. So newer solutions were created, like, for example, Quill, which have a jurisdiction based decentralized storage. But Quill on its own is just a database. And we need much more to be able to reuse the KYC in the way that it should really be done on chain.
The Need for KYC in DeFi and Web3
Nice. Nice. It sounds like this is absolutely necessary for scalability in DeFi or web three or whatever you want to call it. And with that, of course, there's many more use cases beyond DeFi. This is just where we're at. This is how we got introduced. But how would you see KYc being implemented in mainstream? I know we talked a little bit about that, just like a mainstream kind of outlook. Is there any adoption there? I think if you change it from being what everyone's expectations of, like Defi banking KyC stuff, yeah, I think there's loads. I just, I think it just looks a little bit different. And I think, I know one of the final questions is, like, how do we see it evolving in the future? So I think my answers to this might overlap. So again, if you look at online merchants, they're still asking for data from you. It's just different data than id passport kind of stuff.
The Peer-to-Peer Trust Model
I think then if you look into different areas, like people just trading peer to peer or selling peer to peer or interacting peer to peer, they're typically doing it based on reputation. I would imagine most of this audience has an experience of like, they know someone completely anon and yet they've sent, like either sent or received large amounts of value, like multiple. I don't, I know people who've sent amounts anonymously to each other into like the five or six figures. They don't know who each other is, like in terms of where they live, who they are, but they've got loads of social proof. They've got these long histories where they've interacted together. They've built that up over time. So they've started off with smaller amounts and they built up. So I think in certain areas you've already got elements where to some degree you've got KYC overusable KYC being done where it is just on a much lower assurance basis, where it's just reusing information in different places. And that's kind of fulfilling it.
The Evolving Concept of KYC
But I think you've also got examples which are using reputation and social proofs to if we change KYC from know your customer to know your counterpart, it's changing that knowing part on know your counterpart into like, do I trust the other side of this deal, regardless who the other side is? And I think in Defi and crypto and web three, we’ve already got great examples where people are trusting each other based on builds up reputation, social proofs, and the right kind of just data points. And my hope is that is where things go in the future. So unless you’re specified by regulation, as far as possible, we start actually looking for is this information relevant to this transaction? So I can't say who I heard this from because the meeting I was in, but it was a US insurer. And they were talking about currently to make an insurance decision. They do it based on your name, your id, and your credit score.
Shifting the Focus to Relevant Data
And the guy was like, this is nuts. And he was from this company. He was like, this is nuts. Your credit score has nothing to do with your ability to drive, but it's the only data point that we currently have, or one of the only data points that we can index on to provide you with a price. And he was like, where we would love to get to instead is that your credit scores are relevant, but we're doing it based on, obviously they know how many points you have and if you've ever had a DUI or something. But they're like, we want to actually do this based on your driving style. We would much prefer basing it on genuine data that is relevant to the transaction than just asking you for all sorts of random shit because it's the only thing that we can get our hands on. So that's a long way of saying, I really hope that in the future we move to relevant data points rather than just getting as much data about people as possible and then hoping that's going to be enough, because I think that's a lot of what is happening right now.
Community and Credentialing
Realize that's quite a long winded answer to that. But that's kind of answering both of those. Like, where I think this is being done well right now and where I hope it goes in the future. That is. That is awesome. That is awesome. So that is. Those are the end of my questions. I really wish that we had more time with you guys because some of this information I've learned. I've learned so much. And if anybody has to jump off, you know, of course, Adagio, I think you said that you might need to. Need to bounce up out of here. Thanks for. Thanks so much for coming, brother. Oh, nice. Nice. Okay, awesome. Okay, so let's. Let's get into the, let's get into the. To the end here, guys. Oh, did somebody request to speak? Okay. All right, so the giveaway and the creds.
Introduction to Creds
I'm excited about the creds. I don't know much about the creds. Let's. I just want to learn more about it and I want to know, you know, what. What users are going to receive and how it's all going to work. So, creds, are you there? I am. Hi, Eric. Hi, everyone else. I'm Matt. I'm the community manager at checked. I'm using my mobile device. I'm behind creds at the minute, but it's just easier because I've got my mobile in hand. And yes, I shall tell you about creds. Got to say, you've touched on a lot of really important points when it comes to identity. How we can use various data points, but also be able to trust the data that we provide, regardless if it's for KYC purposes, for insurance, or even just for general transactional use.
The Purpose and Function of Creds
So cred started originally as a way for Czech to be able to demonstrate the technology in the community and issue credentials, whether it's for participating in events or just being awesome. Then we made the decision that actually, what if we could build this in communities? But not just in our community, in other communities. Now I've got Fraser in my DM every week asking me for three f with such a freeloader. We've all been there with all of these scams and impersonations. So when it comes to looking at our identity, we can look at our identity in various ways. It's not just our personal attributes, right? It's a little bit more than that. As it was mentioned, it's our social interactions, it's the people we engage with, it's the events we attend.
Issuing Credentials in Web3
Now, with creds, I can issue credentials as a creator, and I can in a web three sense, just to keep it sort of in context. I can issue my moderators a credential to prove that they're part of a team. We've also got team credentials to prove that we are part of the project, which can be passed on to a telegram bot to verify on the check network that we are who they say they are and verify the credential. It's a great way to be able to create learning journeys. So if you've got some educational content out there and you want a way to engage your community, there's a great way to do it by issuing credentials. The other thing is it can be used for things like ticketing events, achievements, various types of gamification exercises for you to start identifying who your contributors are.
Building a Trusted Data Economy
But the really interesting thing, the real value proposition, is when it comes to community and when it comes to reputation and when it understand, it comes to understanding loyalty, that's where the true power of creds comes into play. We've all seen, you know, like reviews, where you suspect that's just been put on there and, you know, you can't trust it. So suddenly we're at a point now where we need a way to be able to have a trusted data economy. And how do we do that? Well, a great way to do that is to start generating verifiable, consented data. So our analytics and insights platform, which is continuing to be built out, will give you very powerful insights and your key contributors. And from that you'll be able to reward loyalty and start from a marketing perspective, this is particularly powerful because you can start to identify in particular skills.
Acknowledging Contributions in the Community
Have they participated in daos and governance? Are they a quota? And then we start to then use this reputation to cross pollinate communities. So instead of some random attorney community, you've got data points on all of their reputation. So I've just issued a credit to everybody that's attended to this web three MA on reusable KYC. So if you just check the comments, you can click the claim code. You can either connect with Telegram or with discord to claim that. And if you are interested to learn more, feel free to drop the checked or creds account. A DM and I shall take you on a tour. But I hope that gives you a decent overview of what creds is, how it can be used and why it could be very powerful in your community.
Encouragement and Acknowledgements
That is awesome, man, amazing. Thank you so much for giving that out to all the audience. Appreciate it. And so for the users that just received that cred, that's amazing. But for the winners, for like the top questions, is there any difference or is there, are the users that get that win from the questions just getting more creds? Yes, they'll get an additional credential that basically signals they asked an awesome question and they were awarded the prize for participating in the EMA, as well as just a general proof of attendance credential which they can use and share on their profiles, which is another feature that's built into the product.
Minting Acknowledgements
Awesome. Awesome. And so whenever they go and navigate other ecosystems that check is a part of, they're able to receive some sort of, or not receive, but be acknowledged as a member and somebody that has contributed or just done really those specific actions that you just mentioned, right? Correct. And in a verifiable way. Amazing. Amazing. So for everybody here, you got your cred. And for the top questions, what we're going to do is, because there are five awesome questions and we have a limited amount of time, what I'm going to do is I'm just going to tag all of the individuals in the comments that got the best questions.
Conclusion of the Webinar
And of course, you're here in the space with us right now. But because we do have a limited amount of time. I can't announce each winner, but right after the space is over, I'll post all the winners in the comments. And if you just respond to the comment or send us a DM, you can get your prize ASAP from us. And of course check will issue, we'll see those as well and issue another cred. So thanks so much everybody for coming. That was an amazing space. I learned so much. If you weren't here at the beginning, I would definitely go back, tune in, listen, take down some notes because these guys are bringing some amazing insights.
Final Remarks and Thanks
And if you want to learn what the future holds for this space and with its scalability, definitely tune in to the beginning. So thank you so much everybody for coming. It was a pleasure Frazier Brian Adagio, you're not here, Matt. Thank you guys. You guys were awesome. Thank you. It's really cool. Thank you. Cheers guys.
