Blockchain technology: the answer to securing legal identity?

In this blog I tend to examine the legal aspects of identity and of how it impacts groups and individuals. But I have noticed recently a lot of chatter about blockchain technology and its potential uses in relation to legal identity and for identity documents. Being the kind of lawyer that is not that technically savvy, I want to delve a bit deeper here into what blockchain technology is and what the link is between blockchains and legal identity.

 

What is blockchain technology and how does it work?

Blockchain technology was originally used for digital (or crypto-) currencies, for example, Bitcoin. These days its potential applications beyond cryptocurrencies are being investigated. The blockchain technology was invented by a person, or group of people, known as Satoshi Nakamato ¹. Blockchains are described as digital information that is distributed, i.e. not stored in a single location, but hosted on millions of computers simultaneously (and regularly updated), but not copied. Another way to look at it is that two people can make or see amendments to a document. Access to the document is limited to one single user at a time.

According to Investopedia’s entry on blockchains, the main use so far, besides cryptocurrencies, has been for related financial transactions, but ² they describe blockchain applications as “almost without limit”.

The key point is that a blockchain piece of information has no single point of failure. This is because blockchain data is public, but a security feature is added by using encryption technology – what is known as a ‘key’. With any piece of information there are usually two keys: the ‘public key’ that encrypts the information and the private ‘key’. The private key is the one that only the owner of the information has and will use to ‘unlock’ the encryption and access the information.

 

Does ‘public’ mean public?

Put simply, it does not have to be. The information is publicly available across many servers, but this does not mean that is ‘public’ in our usual sense of the word. The law firm DLA Piper explains the difference between a public and a private blockchain network:

“A blockchain network may be public and open (permissionless) like the internet or structured within a private group like an intranet (permissioned). The blockchains that have captured the imaginations of many financial institutions are known as “private” or “permissioned” blockchains because only certain pre-approved participants may join them. These blockchains use a variety of means to ensure the identity of parties to a transaction and to achieve consensus as to the validity of transactions.” ³

 

Beyond financial transactions

One example of how blockchain has been used, away from financial transactions, is in the delivery of aid. The World Food Progamme is using blockchain technology in a pilot programme to help distribute financial aid to Syrian refugees in Jordan. This is a low-cost way to assist people without government issue IDs or bank accounts to access financial benefits and the legal system: Individuals taking part in this pilot

“would have a place for an employer to deposit his pay, for a mainstream bank to see his credit history, and for a border or immigration agent to check his identity, which would be attested to by the UN, the Jordanian government, and possibly even his neighbors” ⁴

 

So how could this apply to legal identity?

Can blockchain technology really be used to capture legal identity and to evidence that legal identity?  To help me understand better, I consider some of the discussion on this issue and what might be the pros and cons.

As part of its efforts to make progress on the Sustainable Development Goal in relation to legal identity, Goal 16.9, see more in my previous blog post, the UN is taking an interest in the potential of blockchain technology. Reuters reported last year that

“Accenture Plc and Microsoft Corp are teaming up to build a digital ID network using blockchain technology, as part of a United Nations-supported project to provide legal identification to 1.1 billion people worldwide with no official documents.” ⁵

Infoweek’s commentary lays out quite starkly how useful the technology could be for those who don’t have very much by way of home, security or possessions, but have that one ubiquitous piece of technology – a mobile phone:

“Those shoeless kids aren’t likely to have access to a safe place to store paper documents; […] But a lot of them have access to mobile phones. In Somalia, for example, only 3 percent of the population has a legal identity, but 70 percent had a mobile phone in 2013. And not everyone needs to own a phone to access proof of identity; a person can simply log into an ID system from a borrowed phone or an Internet café any time.” ⁶

The main discussion then seems to be around using blockchain technology to evidence legal identity because it is more secure and more permanent. Its key advantage being that it is potentially more secure, than ‘paper’ documents. For migrants, refugees, abandoned children and other vulnerable groups, these ‘paper’ documents, if they were obtainable in the first place, are easier to separate from their rightful owner. For example, the World Identity Network’s recent Report on ‘Making Invisible Children Visible’ points out that taking away a ‘paper’ ID for an individual is a common tactic for traffickers, smugglers and their intermediaries, making it easier to exploit and coerce these now ‘invisible’ people along the way. ⁷

 

Advantages of using blockchain for securing and evidencing legal identity

One of the advantages identified by Valid ⁸ is that it can help those governments which lack the resources to institute, maintain or expand a paper ID document programme:

“The creation of a trusted ecosystem of identity issuers, would help governments share the resource burden of ensuring access to digital identity with other actors in the ecosystem.”

Another is that it gets around the problem of governments ‘owning’ legal identity:

“By immutably storing the hashes of one’s identity attributes on a distributed ledger, blockchain-based digital identities have the potential to disrupt the status quo where governments are the sole custodians of a citizen’s identity.”

This could limit the ability of governments to exclude already marginalised groups from rights and benefits which can only be accessed by possession of a legal identity and of identity documents. ⁹

 

Disadvantages of using blockchain for securing and evidencing legal identity

Valid ¹⁰ argues that

“In fact, one could even envision a public-permissionless identity blockchain where everyone is allowed to participate in the process of identity verification. It would be fair to say that my neighbour can attest claims about my “residential address” with a greater degree of reliability than the government or any other institution.”

But could reliance on such verification become problematic, if one is not on best terms with one’s neighbour? What if that neighbour has long sought to marginalise, exclude and drive out people or groups that are considered undesirable.

Another issue, which is not so much a disadvantage as a possible hurdle for blockchain technology to be applied to legal identity, is that the political will still needs to be there.  In other words, the system still requires government approval and participation. Because of this, how widely it is used and whether it is used in a non-discriminatory manner will mirror the inequalities of the ‘paper’ system currently in use. ¹¹

 

Is blockchain technology the answer?

Access to rights and benefits is often dependent on ‘belonging’ in some way. This could be citizenship, residency or an ID document to show the holder is entitled to access those rights and benefits. Anything that makes that easier is bound to be a positive development. But it is important that such technological advances are used to help people gain access to rights and benefits. It is equally important that blockchain technology is not another tool to marginalise those that already find themselves on the fringes of society. Perhaps the true benefit of blockchain technology will prove to be the user’s ownership and control of their own data. Anything that empowers individuals and groups facing marginalisation and exclusion should not be ignored.