Casey Wagner

Coinbase launched its Verifications platform Thursday, bringing know-your-customer policies on-chain.&nbsp;



The exchange said launching identity verification on the chain protocol level increases security and transparency, providing a solution to common challenges associated with typical KYC methods.&nbsp;



“Built on the [Ethereum Attestation Service’s] open standard, our verifications are public and composable,” Coinbase Cloud, the company’s blockchain infrastructure arm, <a href="https://x.com/CoinbaseCloud/status/1722702333576905115?s=20">wrote</a> on X.&nbsp;



Ethereum Attestation Service is a base layer where users can make declarations and add virtual signatures to information.&nbsp;



“EAS enables anyone to make attestations on chain or off chain about anything,” the service’s website reads. “You simply register a schema (or use an existing one) about any topic and make attestations referencing that schema.”



Coinbase Verifications, built on Coinbase’s layer-2 <a href="https://blockworks.co/tag/base">Base</a>, already has about 9,300 attestations from users, according to <a href="https://dune.com/ryanyyi/verifications-by-coinbase">data</a> from analytics firm Dune. The service is expected to help particularly with Sybil attacks, which is when hackers use a single node to create many fake identities.&nbsp;



The service is the next step toward “using open source, public good infrastructure to enable the next billion users to come on-chain,” said Jesse Pollak, the creator of Base.



The move marks Coinbase’s <a href="https://blockworks.co/news/coinbase-base-success-rea">entry into the decentralized identity game</a>. Proof of Humanity, a verification protocol where users can submit social and video proof of their identities, emerged as a leader in the space when it launched on Ethereum-built application Kleros in 2021.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/daos-mediation-code-governance">Made by humans but governed by code?</a>



“In our digital interactions, we cannot know who is sitting on the other side of the screen,” the Kleros team said at time of launch. This enables AI manipulation through impersonation and the spread of misinformation by bad actors.



Coinbase’s announcement comes as Coinbase shares begin to par gains after an explosive week. The stock was trading down a little less than 1% Friday <a href="https://blockworks.co/news/crypto-equities-soar-market-rally">after gaining as much as 6% during Thursday’s trading session</a>.&nbsp;



Still, Coinbase (<a href="https://blockworks.co/price/coin">COIN</a>) remains up close to 7% over the past five trading days and is in the green more than 175% since the start of the year.&nbsp;



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Coinbase launches KYC service on Base

Bessie Liu

A protocol designed to use zero knowledge cryptography to verify identities has landed on the Aleo blockchain, a zero knowledge privacy (ZKP) network.



The protocol, called zPass, enables users to upload identity documents offline to privacy servers and share anonymous “proofs” to organizations. As a result, these companies do not need to store this data themselves.



Users who generate their own proofs can then determine exactly who they share their information with and just how much personal data they wish to reveal.&nbsp;



Alex Pruden, Aleo&#8217;s CEO, told Blockworks in an interview that zPass represents the implementation of a research paper into zk-creds.



“The idea of zk-creds was to take a US passport, create a digital record from it, then use that record for age verification purposes,” Pruden said.&nbsp;



Pruden explained that on zPass, a two-step process helps ensure that individual identities are safely verified. First, the issuance of the record on-chain is based on the existence of a physical record, and then it is the ability for each individual to control their own privacy keys which generate the proof of identity.&nbsp;



Read more: <a href="https://blockworks.co/news/what-is-decentralized-identity">Mastering decentralized identity: The pillar of Web3</a>



“The key piece of what zk-creds and zPass does is to issue the identity, and the identity is the document based on a real-world physical document,” he said.



John Reynolds, a product manager for Aleo, noted that existing zk identity systems either rely on centralized proving schemes, or are decentralized but not private.&nbsp;



“A lot of <a href="https://blockworks.co/tag/zero-knowledge-proof">zk</a> identity systems use a centralized proving system or have centralized sequencers —  we have a leveraged tailored [<a href="https://blockworks.co/tag/layer-1">layer-1</a>], we have the ability for users themselves to act as provers, they can generate proofs, send those proofs to Aleo, decentralized <a href="https://blockworks.co/tag/validator">validators</a> can validate those proofs, and the Aleo blockchain will not push all of this overhead verification to third party systems,” Reynolds told Blockworks in an interview.  



On the note of decentralized identity solutions, Reynolds said that because they are not private and information is publicly available on a database, users can be tracked.&nbsp;



“They may not be able to see all your information, but they can see who you’re sharing it with and how often you’re sharing it with them, and can target you as a result of that,” he said.



At launch, zPass will focus primarily on providing zk age verification and creating child-safe spaces online, Reynolds said.&nbsp;



“We want to create a space that supports children and avoids them from being exposed to potential predators or [predatory] content,” he said. “So our main goal [for now] is to lean into age verification.”&nbsp;



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Aleo blockchain adds zPass, a ZK protocol for verifying identities 

Matthew Gould

Not long ago, Facebook launched the micro-blogging platform “Threads” — treading on the toes of X, formerly known as Twitter, owner Elon Musk and resulting in a <a href="https://www.nytimes.com/2023/07/01/technology/elon-musk-mark-zuckerberg-cage-match.html">literal cage fight</a> set for an unspecified date. 



However, before any punches are thrown (<a href="https://www.cnbc.com/2023/08/14/mark-zuckerberg-calls-off-elon-musk-cage-match.html">if ever</a>), I’m more interested in looking at the roles that Web3 and decentralization could have for this new app.



When Zuckerberg launched Threads, he did something pretty novel; he went beyond the “shared accounts” feature offered by Meta that allows Facebook and Instagram logins with the same credentials. In a move seemingly ripped verbatim from the Web3 playbook, Threads users instead can carry over their usernames from Instagram, offering unprecedented interoperability. Unfortunately, there’s still a disconnect from Web3.&nbsp;



Web2 apps will forever be obliged to trust that incoming data from associated apps is legitimate and accurate, something that they still can’t verify. Moreover, users still don’t own their own data, and given Meta’s <a href="https://www.theguardian.com/technology/2023/aug/07/norway-meta-fine-user-privacy-breach-targeted-ads">track record</a> when it comes to safeguarding user information, it’s unlikely that Threads will ever change that for its users.



Social media sites have realized that most people want uniformity across their socials. This could — and should — extend to the same verifiable credentials. At the very least, people want the same username within one ecosystem, for example in between Meta, Instagram, Facebook and Whatsapp. And if the users want it, then social media platforms want you to have the same name too; it benefits everyone.&nbsp;



When you sign in to a platform and you have the option to sign in with Google, Facebook or Apple, it’s your credentials that grant you access to these third-party sites. What if it was all tied together into one decentralized username or identity that is undeniably and verifiably yours?&nbsp;



One day it could be, but I’m not convinced the big players are developing in the right direction for a decentralized web.



<h2 class="wp-block-heading">Web3: The solution to portable identity&nbsp;</h2>



Web2 companies need to take a leap of faith and see Web3 as the solution.&nbsp;



Perhaps these companies don’t feel ready to tackle the data validation problem between applications, but the longer they ignore it, the better the chance is of rival developers generating a superior solution. I see the problem of digital identity as a slow-moving train headed for an inevitable station where blockchain and Web3 are ready and waiting to board.



The portable identity situation is ultimately an issue of trust and safety, especially when you examine the problem of misinformation. Whenever I hear conversations about phishing, impersonation, and digital fraud, I just think, “Wow, we really need a global digital identity and a set of standards that people can build on.” The improvements to the digital experience would be remarkable.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/congress-crypto-legislation-dams" target="_blank" rel="noreferrer noopener">Congress takes a serious swing at crypto legislation</a>



Coming from crypto and Web3, I can see how blockchain can easily verify data from different sources, but I also see that it’s not perfected yet. Blockchains need to get faster, cheaper, more prevalent and easier to integrate into existing Web2 businesses and their APIs. If they can do all of that, there will be a new future for online trust.&nbsp;



<h2 class="wp-block-heading">Fragmented &amp; trapped: why Web3 can save our skin</h2>



Your digital reputation is fragmented and trapped on each platform. Each social media site is a walled garden, your data is kept in application siloes, and the app owners will do everything they can to keep you there. They especially don’t want you to try and take your data (your digital reputation) with you. Facebook, Twitter, Instagram, you name it, they are data aggregators, and that data is the extractable value that they monetize to keep the wheel spinning.



I don’t know about you, but I don’t like it. I actually want to own my own data, my digital identity, and my online reputation. Then, I want to take it with me wherever I go. Web3 is going to do that for me, for us.



<h2 class="wp-block-heading">What could Threads and Facebook have done differently?</h2>



Threads connected directly to Instagram, allowing new users to start with a built-in network and avoid awkward first posts in an empty space. Simultaneously, Meta announced <a href="https://www.coindesk.com/learn/what-is-activitypub-understanding-the-social-media-protocol-metas-threads-plans-to-use/">plans</a> to work with the ActivityPub Protocol to create seamless connections and interactions with other sites. ActivityPub is already working, and some lesser-known social media sites — such as Mastodon, Pixelfed, PeerTube, Lemmy and Kbin — are using it to allow cross-platform interactions and communications, the result of which is called “The Fediverse.”&nbsp;



If Facebook, Instagram and Threads are supposedly next to join the “Fediverse,” it will show a significant change of direction. Connecting platforms and lowering the garden walls will force Meta to choose whether to give up centralization (and lose valuable data) or sacrifice user experience (and lose valuable users).&nbsp;



<h2 class="wp-block-heading">My verdict on shared identity</h2>



I believe there’s a better approach that Meta could have taken.&nbsp;



Your reputation in Web3 is surely best served by an identifier for your digital self. That identifier should also act as a self-sovereign data container that is 100% owned by you, that you can use for logins, verify ownership, make and receive payments and complete know-your-customer (KYC) checks.&nbsp;



Your followers, content and data should all be connected to you, not the platforms you use. Your digital self will be kept safely in your unique wallet, accessible only to you. Permission for others to engage with you will be 100% yours, and they will know that it’s 100% you that they’re engaging with.&nbsp;



Finally, your digital life will be tied into one identity. Not only will this provide more autonomy for users, but it could usher in a safer, more transparent and more connected internet.&nbsp;



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<div class="wp-block-post-author-biography">Matthew Gould is CEO and co-founder of Unstoppable Domains, a Web3 domain name provider working to onboard the world onto web3. Unstoppable Domains are one of the founding members of the Web3 Domain Alliance – a coalition that aims to promote the technological advancement and interoperability of web3 domain registries and improve the experience of web3 users by seeking to prevent malicious phishing attacks, bad actors impersonating web3 “top-level domains” (W3TLDs), cybersquatting and web3 domain collisions. Prior to Unstoppable Domains, Matthew founded multiple software companies in several industries. Matthew holds a B.S. in Finance from the Georgia Institute of Technology and is a native of Atlanta, Georgia.</div>


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Dear Web2, we want our data back

Shalini Nagarajan

Kenya has suspended <a href="https://blockworks.co/tag/worldcoin" target="_blank" rel="noreferrer noopener">Worldcoin</a> operations in the country due to concerns about public safety and the integrity of financial transactions.



The country’s Interior Cabinet Secretary, Kithure Kindiki, announced on Wednesday that all related activities would be suspended until relevant public agencies confirm there are no risks to the general public.



“It will be critical that assurances of public safety and the integrity of the financial transactions involving such a large number of citizens be satisfactorily provided upfront,” the politician said in a <a href="https://www.facebook.com/photo?fbid=598481229140719&amp;set=a.598481322474043" target="_blank" rel="noreferrer noopener">statement</a> posted to Facebook.



Any individual or legal entity found involved in, supporting, aiding or abetting Worldcoin activity will face appropriate actions as deemed necessary, he added.



The Worldcoin Foundation told Blockworks that demand for its &#8220;proof of personhood&#8221; verification services in Kenya resulted in tens of thousands of individuals queuing for three days to obtain a World ID.



“Out of an abundance of caution and in an effort to mitigate crowd volume, verification services have been temporarily paused,” a spokesperson said.



&#8220;During the pause, the team will develop an onboarding program that encompasses more robust crowd control measures and work with local officials to increase understanding of the privacy measures and commitments Worldcoin implements, not only in Kenya, but everywhere,&#8221; they said.



Worldcoin, unveiled on July 24, requires users to provide iris scans to obtain a digital ID, also called “World ID.”



In some countries, users are offered a cryptocurrency reward as part of the initiative to establish “universal access to the global economy.”



The central feature of the project’s World ID is the use of a biometric marker, an iris scan, to distinguish humans from artificial intelligence (AI) bots. Individuals who register for this service in jurisdictions that allow it receive Worldcoin&#8217;s cryptocurrency token, WLD.



The primary objective of this digital identification system is to link your &#8220;World ID&#8221; to websites and applications, replacing conventional logins. This process verifies your real identity without the need to disclose personal information such as names and emails.



In the realm of AI development, a digital ID such as this could be crucial to differentiate humans from AI bots on the internet, according to Worldcoin.&nbsp;



The project’s mission appears to be to protect individuals from AI misinformation and establish clarity in identifying trustworthy sources online.



Read More: <a href="https://blockworks.co/news/worldcoin-not-in-us">Worldcoin is here — just not here in the US</a>



<h2 class="wp-block-heading">UK, Germany and France probe Worldcoin over data handling</h2>



The Kenyan government&#8217;s decision follows investigations by other government agencies into the project.&nbsp;



Arthur Cheong, founder of crypto investment firm DeFiance Capital, <a href="https://twitter.com/Arthur_0x/status/1686660120011530241" target="_blank" rel="noreferrer noopener">said</a> that more countries are likely to follow suit soon. According to him, gathering sensitive eyeball biometric data by a single private company, not under the respective government&#8217;s jurisdiction, is deemed too critical and sensitive.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Expect more countries to take similar action soon as eyeballs bio-metrics data is too important and sensitive to be gathered by one single private company not under the their respective government&#39;s jurisdiction. <a href="https://t.co/Z6Ce14L5IN">https://t.co/Z6Ce14L5IN</a>&mdash; Arthur (@Arthur_0x) <a href="https://twitter.com/Arthur_0x/status/1686660120011530241?ref_src=twsrc%5Etfw">August 2, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The UK&#8217;s Information Commissioner&#8217;s Office (ICO) revealed last week that it will be conducting inquiries regarding the project.



In a statement to Blockworks, the ICO clarified its action, emphasizing that organizations must have a valid and legal basis for processing personal data. A spokesperson highlighted that if they rely on consent, it must be given freely and withdrawable without any adverse effects.



Since Nov. 2022, a German data authority has been conducting an independent investigation into the project due to concerns about the extensive handling of sensitive biometric data.&nbsp;



Furthermore, France&#8217;s privacy watchdog has also initiated its own investigation into the matter.



Updated Aug. 2, 2023 at 1:04 pm ET: Added comment from Worldcoin spokesperson.



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Worldcoin faces setback in Kenya as operations halted

James Cirrone

North Dakota launched a program last August allowing all high school graduates to keep their credentials — transcripts, diplomas and more — in a blockchain-powered digital wallet.&nbsp;



The overarching use case for the state’s Open Credential Publisher is to allow students agency over their crucial documents when applying for jobs, Tracy Korsmo, one of the chief architects of the program, explained.  



If students opt to use this digital wallet, they’ll be able to provide verified credentials to anyone who requests them — perhaps a college or prospective employer — with the help of a permissioned blockchain. 



The blockchain used by the North Dakota Information Technology (NDIT) department was originally developed by Seattle’s Evernym and operated as the Sovrin network. Software company Avast acquired Evernym in December 2021 and is shutting down that blockchain, so NDIT will have to find a new chain by the fall, Korsmo told Blockworks. 



“The way it works in a self-sovereign blockchain is that the person is not on the blockchain. Nor is their data on the blockchain,” he said. The institution or school who has the permission to issue the credentials on behalf of the student will be the only entity that’s on the blockchain.&nbsp;



Then, a pairwise decentralized identifier (DID) is created for the student. On-chain, it’ll show that the institution issued a diploma to that specific DID, for example.



In a scenario where a former K-12 or college student is sitting down for a job interview, the employer in that interview could have an application which generates a QR code. Through that QR code, the student would be able to send their chosen credentials in a peer-to-peer exchange which automatically validates them.



Right now, Korsmo said, North Dakota students can email an invitation link to an employer that will take them to the blockchain wallet so they can verify and download the credentials shared with them.



This eliminates the pesky step of employers having to call a high school’s front office to obtain and verify documents, Korsmo said.



But Korsmo envisions a world where diplomas and transcripts aren’t the only credentials people will decide to store in their digital wallets.



“We&#8217;ve already started to bring it into recognized credentials,” Korsmo said. “One of those would be career ready practices and work-based learning experiences. That credential actually is a prior learning award for credit hours in a community college.”



Essentially, participating community colleges, which include Lake Region State College and Bismarck State College, will be able to accept these digital credentials and award course equivalencies. Korsmo said he’s working to make this awarding process automatic.



<h2 class="wp-block-heading">North Dakota wants blockchain to help match skills</h2>



NDIT is also working with community colleges to begin doling out cybersecurity degrees in the form of digital credentials. There’s also efforts to get similar credentials for EMTs, Korsmo said.



“Bismarck State College’s cybersecurity program has been broken out into five stackable credentials. Once you get three of them, you have an associate&#8217;s degree. Once you get all five, you have a bachelor&#8217;s degree,” Korsmo said.



He added that each one of those credentials will have value, so that even if a person drops out but still has one or two credentials, they’re still employable.&nbsp;



It’s an idea called skills matching, and during the summer, the information technology department wants to take it a step forward by connecting the digital wallets to its system so it can actively push out notifications about potential credentials students and former students can pursue.



“From a student&#8217;s perspective, it&#8217;s opportunity,” Korsmo said. “If I could anonymously upload my skill base, and I could explore pathways to other careers I never even thought of before…that&#8217;s huge for the learner.”



This philosophy isn’t limited to just North Dakota. It’s also part of an eight-state <a href="https://www.nga.org/projects/skills-driven-state-community-of-practice/" target="_blank" rel="noreferrer noopener">consortium</a> through the National Governors Association that is trying to advance secure digital resumes that are verifiable and put a greater emphasis on people’s skills so they can be matched to a job that fits their strong suits. 



Outside of North Dakota, the states include New Hampshire, Connecticut, Virginia, Indiana, Kentucky, Alabama, Arkansas, Oklahoma, Colorado, Wyoming, and Washington.



<a href="https://www.ibm.com/blog/the-internets-next-step-the-era-of-digital-credentials/" target="_blank" rel="noreferrer noopener">Universities</a>, <a href="https://blockworks.co/news/jpmorgan-exploring-applications-of-digital-identity" target="_blank" rel="noreferrer noopener">institutions</a> and <a href="https://www.ibm.com/blog/the-internets-next-step-the-era-of-digital-credentials/" target="_blank" rel="noreferrer noopener">corporations</a> around the world have long <a href="https://bitcoinmagazine.com/business/pilot-project-verifies-academic-credentials-bitcoin-blockchain" target="_blank" rel="noreferrer noopener">toyed</a> with using blockchain to verify credentials across a variety of different networks, including implementations that interact with <a href="https://techcommunity.microsoft.com/t5/security-compliance-and-identity/ion-we-have-liftoff/ba-p/1441555" target="_blank" rel="noreferrer noopener">Bitcoin</a>. 



The University of Johannesburg, for one, now <a href="https://universityofjohannesburg.us/4ir/2022/07/blockchain-based-certificates/" target="_blank" rel="noreferrer noopener">issues</a> certificates with embedded, blockchain-powered QR-codes to prove authenticity.



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Student credentials on the blockchain: North Dakota opts in for digital wallets

Richard Smith

Anyone who has interacted with ChatGPT has experienced this unsettling question: “Is this thing human or not?”&nbsp;



That question is, in essence, the long-awaited failure of the Turing Test.



We’ve been unwittingly using the Turing Test as a proxy for online identity for decades now.&nbsp; Over time, it would become clear whether we were interacting online with a person or a machine.&nbsp;



With the advent of ChatGPT and generative AI, however, we can no longer rely on the Turing Test as a proxy for “I’m human.” And digital personhood ultimately requires some way of knowing whether or not we are dealing with a real person.&nbsp;&nbsp;



Web3’s vision of digital personhood has relied on both decentralization and the Turing Test to be able to say, “I’m human and I control these digital assets.” When ChatGPT broke the Turing Test, it showed us that decentralization alone is insufficient for digital personhood.



If we’re serious about digital personhood, then it’s time to get serious about digital identity.&nbsp;&nbsp;



We have to architect Web3 to support identity from the top down.



<h2 class="wp-block-heading">What makes a human, human?</h2>



Many may be surprised to learn that the digital identity movement has its own Satoshi-like figure who authored the definitive white paper on digital identity a full seven years prior to Satoshi’s famous Bitcoin white paper.&nbsp;



In 2005, Kim Cameron brought the stone tablets of identity management down from the mountaintop when he published his landmark paper, <a href="https://www.identityblog.com/stories/2005/05/13/TheLawsOfIdentity.pdf">The Laws of Identity</a>.



While Kim may not have been as mysterious as Satoshi, his work on digital identity was as definitive as Satoshi’s work on decentralization.&nbsp;&nbsp;



Kim put forward a problem statement for digital identity that was as simple, clear, and concise as Satoshi’s problem statement for decentralization.&nbsp;It’s instructive to look at them both together.



Kim’s identity problem statement (2005):&nbsp; The Internet was built without a way to know who and what you are connecting to.



Satoshi’s decentralization problem statement (2012): Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments.



While these two problems are distinct, they are inextricably intertwined. We have to know who and what we are connecting to online (Kim/identity), and we have to be able to do so peer-to-peer, without an intermediary (Satoshi/decentralization). This is just as true in the digital world as it is in the real world.&nbsp;&nbsp;



In a post-Turing Test world, however, the problem of identity has taken on a new urgency because machines are increasingly able to spoof people.&nbsp;We will not enjoy the full fruits of decentralization without also making digital identity a top priority.



Toward the end of his life, Kim gave us yet another way to think about the challenge of digital personhood. He gave a <a href="https://www.kuppingercole.com/watch/eic2019_14_09_cameron">talk</a> where he said that, when it comes to our online lives, “Content is what we are, aspects of our identity, but we don’t own it, we don’t keep it, we can’t control it. Basically, we lack a digital shelter that would offer the same fundamental privacy as a home.”&nbsp;&nbsp;



In short, we are digitally homeless.



Just as personhood is impaired by homelessness in the real world due to lack of privacy, digital personhood is similarly impaired by digital homelessness in the digital world.&nbsp;&nbsp;



Digital personhood requires a digital home — a digital place where we have the power to decide what parts of our digital selves we share with others and when and how we do so. That digital home is inseparable from our digital identity.&nbsp;&nbsp;



Decentralization isn’t a sufficient principle for overcoming our digital homelessness. If we don’t also architect for digital identity, we will never know who or what we are connecting to online and AI bots will overwhelm human beings.&nbsp;&nbsp;



Up until now, we’ve been able to skirt the architectural demands of digital identity because when push came to shove, we could lean on the Turing Test as a proxy for our humanness and we could manage our dispersed digital selves without ultimately requiring a centralized digital home. With the advent of Large Language Models (LLMs) like ChatGPT, those days are gone.&nbsp;



Kim Cameron, unfortunately, is gone too, but his Laws of Identity live on. All those who aspire to true digital personhood would do well to remember that Kim came before Satoshi, and identity comes before decentralization.&nbsp;



As Kim said, in the online world, “content is what we are.” Now that generative AI has rendered human-quality content virtually free, we should make sure that we have an alternative method to value and recognize personhood in the digital world.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Dr. Richard Smith – Berkeley Mathematician and PhD in System Science – is a fintech entrepreneur, the CEO of The Foundation for the Study of Cycles, and the author of The Risk Rituals newsletter. He has built a reputation as “The Doctor of Uncertainty” amongst his academic peers and has helped government agencies and Fortune 500 companies alike make sense of complex sets of data. In his upcoming book, The Risk Manifesto, Dr. Smith will aim to further educate investors on how to circumvent self-destructive instincts and adopt a systematic way to manage their fear of risk. With his background in mathematical theories of uncertainty combined with his investing and trading experience,Dr. Smith is a regular speaker and lecturer and particularly enjoys opportunities to share his knowledge and help others gain an edge in the market.
</div>


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Web3 Has an Identity Crisis on its Hands

The White House has included crypto in its updated list of areas to watch in emerging technology.&nbsp;



In the latest national security standards report, President Biden’s team lays out parts of the tech industry it will “prioritize” creating standards around.&nbsp;



The strategy is designed to “strengthen both the United States’ foundation to safeguard American consumers’ technology and U.S. leadership and competitiveness in international standards development,” the White House said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/04/fact-sheet-biden-harris-administration-announces-national-standards-strategy-for-critical-and-emerging-technology/">statement</a> Thursday. Having universal standards ensures technologies are consistent in terms of safety and security, the statement added.&nbsp;



The federal government said it would be focusing on “digital identity infrastructure and distributed ledger technologies, which increasingly affect a range of key economic sectors,” per the <a href="https://www.whitehouse.gov/wp-content/uploads/2023/05/US-Gov-National-Standards-Strategy-2023.pdf">report</a>.&nbsp;



The list also includes biotechnologies, artificial intelligence and semiconductors.&nbsp;



The report comes just after the White House Council of Economic Advisers (CEA) released a <a href="https://www.whitehouse.gov/cea/written-materials/2023/05/02/cost-of-cryptomining-dame-tax/">Digital Asset Mining Excise</a> (DAME) <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">tax on crypto mining firms</a> Tuesday. If passed, it would trigger a 30% tax on the cost of the electricity used by bitcoin mining to address “the economic and environmental costs,” the CEA said.&nbsp;



The proposal has the industry up in arms. Public bitcoin mining firm <a href="https://blockworks.co/tag/riot-blockchain">Riot</a> said the tax would set the US back as a leader in the crypto space.&nbsp;



“It’s hard to overstate how bad an idea this is,” Riot told Blockworks. “This proposal would push financial innovation and jobs away from America to other jurisdictions overseas, while causing harmful environmental outcomes and increased national security risks for the United States.”



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White House Tackles Digital Identity, Distributed Ledgers in New Tech Standards

San Jose Deputy City Manager Rob Lloyd said Thursday he envisions a future where blockchain technology is used to vote in city, state and even federal elections.&nbsp;



“The 40-hour workweek, worker rights, [worker’s] comp protections — those usually start at the local level and then work their way up to state and get adopted by federal — I think the same pattern is going to happen with blockchain-driven voting,” Lloyd said.&nbsp;



He added that zero knowledge proof technology could be used to ensure voter anonymity, while also guaranteeing that their vote is forever recorded on an immutable digital ledger.


<div class="wp-block-image">
<figure class="alignright size-full is-resized"><a href="https://www.linkedin.com/in/roblloyd/"><img decoding="async" loading="lazy" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/rob-loyd.jpeg" alt="" class="wp-image-54551" width="200" height="200" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/rob-loyd.jpeg?w=400 400w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/rob-loyd.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/rob-loyd.jpeg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/rob-loyd.jpeg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/rob-loyd.jpeg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/rob-loyd.jpeg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/rob-loyd.jpeg?w=80 80w" sizes="(max-width: 200px) 100vw, 200px" /></a><figcaption class="wp-element-caption">Source: <a href="https://www.linkedin.com/in/roblloyd/" target="_blank" rel="noreferrer noopener">LinkedIn</a></figcaption></figure></div>


Lloyd’s comments were captured on a Web3-focused <a href="https://open.spotify.com/episode/1WaCG5F1YCZ7pibHTY5bjw?si=V1mwOkmKSASgW8bRNC940g&amp;nd=1">podcast</a> called “On Chain On Air,” which was hosted by Ashley Spradlin, head of education at Metis, an Ethereum layer-2 <a href="https://blockworks.co/tag/rollups" target="_blank" rel="noreferrer noopener">rollup</a>. This latest podcast featured Lloyd and University of San Francisco Professor Jonathan Reichental, both of whom are based in and around Silicon Valley. 



Reichental, who also advises governments about new technology through his firm Human Future, acknowledged the potential of blockchain-based voting. However, there’s one big problem, he said.



“The reality is we&#8217;re moving further away from electronic voting,” Reichental said. “The challenges that have occurred, or the appearance of challenges, has given people hesitancy around electronic voting.”



“People aren&#8217;t ready for it, and people are not going to accept it in the short term,” he added.



A July 2022 CNN poll found that Americans’ trust in elections has <a href="https://www.cnn.com/2022/07/21/politics/cnn-poll-elections/index.html" target="_blank" rel="noreferrer noopener">eroded</a> over time. Shortly after the January 6th attack on the Capitol, 36% of people were “very confident” that elections were representative of voters’ wishes. A year and a half later, just 16% were very confident.



The public trust dilemma exists with blockchain technology as well. While built to create <a href="https://blockworks.co/newsletter/issue/29722677" target="_blank" rel="noreferrer noopener">decentralized trust</a> systems, the myriad human failures behind crypto-adjacent centralized players over the past year have resulted in flagging public perception: <a href="https://blockworks.co/tag/voyager" target="_blank" rel="noreferrer noopener">Voyager</a>, <a href="https://blockworks.co/tag/celsius" target="_blank" rel="noreferrer noopener">Celsius</a>, <a href="https://blockworks.co/tag/blockfi" target="_blank" rel="noreferrer noopener">BlockFi</a>, and <a href="https://blockworks.co/tag/ftx" target="_blank" rel="noreferrer noopener">FTX</a> are just a few examples.&nbsp;



But Reichental said that falsely conflating crypto speculation with and blockchain technology holds back potential breakthroughs.



“We have to be really clear that these are two separate items. Blockchain is the technology, the platform. Crypto is an application that runs on top of blockchain.”



Lloyd pointed to one such use of blockchain technology that has absolutely nothing to do with crypto as a form of money: Marriage.



Utah County, Utah has opted for digital marriage certificates, where couples can choose to have a record of their legal union <a href="https://www.utahcounty.gov/dept/clerk/marriage/digitalvspapercertcopy.html" target="_blank" rel="noreferrer noopener">stored</a> on public Ethereum. Additionally, Americans from any state or locality can get married online through Utah County.&nbsp;



“Utah, of all places, took the leadership position…and they said we&#8217;re going to allow digital marriages and they&#8217;ve actually been unlocking use cases for blockchain more than any other state that I&#8217;ve seen,” Lloyd said.



The state’s service provider is using Ethereum because it is “a hundred times more reinforced than any redundant backup system ever devised,” according to its <a href="https://titanseal.com/faq" target="_blank" rel="noreferrer noopener">FAQ</a>.



<h2 class="wp-block-heading">Identity management</h2>



Another potential use case for blockchain technology to conduct government business is, what Reichental referred to as, “self sovereign identity” or SSI.



“[With] SSI identity management, we don&#8217;t ever have to get concerned with crypto and yet, we&#8217;re using the very best of blockchain technology,” Reichental said. “We can get authenticated without the recipient knowing personal information about us.”



Currently, to access most government services, you have to log in to multiple sites and remember all your login credentials. With a digital identity solution in place, Reichental said dealing with bureaucracy would be easier because the government would simply be able to authenticate you through whichever blockchain it decided to use.&nbsp;



Reichental also offered up a hypothetical situation where a person gets pulled over by a police officer. As it stands now, to verify who you are, a cop will take your driver’s license back to their vehicle.



In that situation, “you&#8217;ve lost control of your identity,” he explained. And in our society, you’re forced to hand over identifying documents to people all the time.&nbsp;



“In a properly implemented SSI environment, the cop can take a barcode or QR code, and he or she never sees the information, authenticates against this blockchain environment that&#8217;s being used, comes back and says, ‘yes, this person is who they say they are,’” Reichental said.



Digital marriages, SSI, electronic voting and paperless records could be the future, but according to Lloyd, who is actually responsible for administering government services, three criteria need to be met before blockchain technology can gain widespread civic adoption.



It needs to be stable, first and foremost. Second, vendor platforms need to begin adopting crypto as a form of payment. And finally, there needs to be a <a href="https://blockworks.co/tag/regulation" target="_blank" rel="noreferrer noopener">regulatory</a> framework, he said.&nbsp;



“When we see those three things, then we&#8217;ll know that the industry is at a point where we can really drive hard at it because we&#8217;ll have the basics on which we can create programs and maintain them and sustain them over time,” Lloyd said.



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How Blockchain Can Make Government Work Better For Citizens

Michael Bodley

Venture capitalists are paying attention to cryptocurrency to fiat payroll processing solutions again — in at least one recent instance.&nbsp;



The latest indicator: Rise Works, which bills itself as a “web3-enabled payroll &amp; compliance solution,” has closed its seed round, the startup told Blockworks exclusively. The US-based startup works with DAOs, including the crypto staking specialist Lido (<a href="https://blockworks.co/price/ldo" target="_blank" rel="noreferrer noopener">LDO</a>), as well as a number of other types of decentralized organizations looking to compensate their personnel via digital assets.&nbsp;



The 2023 demise of a number of traditional Silicon Valley banking solutions, including Silicon Valley Bank (SVB), left crypto industry participants and their backers still holding dry powder with what they viewed as an opportunity to capitalize. Results have been mixed.



Read more: <a href="https://blockworks.co/news/silicon-valley-bank-meltdown-has-little-to-do-with-crypto">Silicon Valley Bank Meltdown Has Little to Do With Crypto&nbsp;</a>



In late March, on the heels of SVB’s collapse, <a href="https://blockworks.co/news/svb-contagion-rippling">contagion from the venture capital favorite bank spread to Rippling</a>, one of the top solutions for crypto companies when it comes to payroll and other back and middle-office operational and financial needs.&nbsp;



Around that same time, Rippling <a href="https://www.rippling.com/blog/rippling-raises-500m-in-series-e-funding" target="_blank" rel="noreferrer noopener">raised</a> a massive $500 million Series E round, according to the company, which described the round as “an unusual financing” in a March 17 <a href="https://twitter.com/Rippling/status/1636820635505786880" target="_blank" rel="noreferrer noopener">tweet</a>.&nbsp;



Enter Rise Works.&nbsp;



Its recently closed round was co-led by Sino Global Capital and Polymorphic Capital, CEO Hugo Finkelstein told Blockworks in an exclusive interview.



Other participating investors included Draper Associates, Hashkey Capital, Paradigm Shift Capital, WW Ventures, P2P and Cosmo Capital.&nbsp;



<h2 class="wp-block-heading">How Rise Works… works</h2>



The company is looking to capitalize on voids left for solutions in the wake of the series of prominent collapses of both traditional finance and crypto-native firms in that particular line of business, Finkelstein told Blockworks.&nbsp;



The startup’s differentiators, Finkelstein said, include its focus on DAOs. Decentralized organizations like DAOs have unique compensation structures for contributors or in-house employees, and are often headquartered or based in various jurisdictions — whether in the US or abroad.



“The fact that we’ve built ourselves on the blockchain,” is Finkelstein said is what makes Rise unique. “We can onboard DAOs very efficiently, very fast. That&#8217;s how we’ve won deals compared [to] our competitors over time, because we have the infrastructure ourselves.”



One of the prominent voices in the Lido ecosystem — who goes by the pseudonym “adcv” and holds the title of “<a href="https://steakhouse.financial/bios" target="_blank" rel="noreferrer noopener">chef</a>” at Steakhouse Financial — told Blockworks that Rise Works is “handling all of the compression of crypto to fiat payments for people who need it,” adding that “some of these [traditional] technologies are unfortunately still a few steps behind.”&nbsp;



Lido is a Steakhouse Financial client. Adcv described the Steakhouse as a “a consulting firm that acts as a CFO-for-hire for DAOs.”



Finkelstein said Rise is intended to straddle the “Web 2.5” line in a manner that appeals to both crypto native types and traditional companies. The startup’s solutions for payroll work with both fiat- and crypto-based treasuries and corresponding internal accounting systems.&nbsp;



The startup’s on-chain solution is built on the Arbitrum (<a href="https://blockworks.co/price/arb" target="_blank" rel="noreferrer noopener">ARB</a>) blockchain and fits <a href="https://erc725alliance.org/" target="_blank" rel="noreferrer noopener">ERC-725</a> token standards for <a href="https://blockworks.co/news/what-is-decentralized-identity">decentralized identity</a>, Finkelstein said.&nbsp;



Crypto firms looking for compliant payroll processing solutions often run into a series of thorny problems when it comes to setting up the right backend solutions for the right jurisdiction under the right regulator. The <a href="https://blockworks.co/tag/sec" target="_blank" rel="noreferrer noopener">SEC</a> and <a href="https://blockworks.co/tag/cftc" target="_blank" rel="noreferrer noopener">CFTC’s</a> series of crypto enforcement actions against crypto companies with US business has placed the industry on edge so far in 2023.&nbsp;



US regulators <a href="https://blockworks.co/news/sec-boost-crypto-enforcement">have also been staffing up</a> in terms of personnel with crypto experience. Crypto market players as a result have been especially on edge when it comes to setting up compliant solutions, solutions that match know your customer (KYC) and anti-money laundering provisions, especially.&nbsp;



And not just in the US; countries including India <a href="https://blockworks.co/news/india-crypto-kyc-aml">have amped up their own compliance standards</a> for crypto players that fall under their jurisdiction.&nbsp;



Tim Draper, the managing partner of his Draper Associates, told Blockworks in a statement that “work is becoming borderless, and more people are looking to be paid in cryptocurrencies.”



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Built ‘On The Blockchain’ DAO Payroll Processor Rise Works Gets Sino’s Dollars

Sebastian Sinclair

Utah Governor Spencer Cox signed two bills into law on Wednesday related to blockchain and <a href="https://blockworks.co/tag/daos">DAOs</a>, as the state seeks to further support innovation of developing technologies.



The first bill, <a href="https://le.utah.gov/~2023/bills/static/HB0470.html" target="_blank" rel="noreferrer noopener">HB 470</a>, requires Utah’s Division of Technology Services to launch a pilot program for digitally verifiable credentials on-chain in a bid to “prevent the unauthorized alteration of electronic records.”



As part of the bill, the division will be held responsible for providing recommendations to government entities on implementation while establishing procedures for protecting personal identifying information.



The pilot program will be set up so the government can make use of those credentials and report on its progress to the Public Utilities, Energy, and Technology Interim Committee by October.



The second bill, <a href="https://le.utah.gov/~2023/bills/static/HB0357.html" target="_blank" rel="noreferrer noopener">HB 357</a>, seeks to establish that DAOs which have yet registered as for-profit or non-profit entities shall be treated legally as domestic limited liability companies.



Specifically, the bill “establishes the requirements of a decentralized autonomous organization to be recognized by the state.”



It also lays out the purposes for which a DAO may be set up, while membership requirements of DAO members as well as their inherent rights are formalized.



If a DAO satisfies certain criteria, it will then be considered a separate legal entity from its members with the ability to defend lawsuits in its own name, a section of the bill reads.



A limited liability DAO’s name must include the acronyms L.L.D, LLD or LD which stand for &#8220;limited liability decentralized autonomous organization&#8221; or &#8220;limited decentralized autonomous organization.&#8221;



<h2 class="wp-block-heading">Utah’s blockchain, crypto drive</h2>



The laws follow the Utah legislature’s passage of its Decentralized Autonomous Act last month, which enhances anonymity bylaws designed to protect organization members. It also establishes clearer tax guidelines surrounding them.



Earlier this month, Utah signed three further bills into law which established the <a href="https://le.utah.gov/~2022/bills/static/HB0335.html" target="_blank" rel="noreferrer noopener">Blockchain and Digital Innovation Task</a> Force, tasked with making policy recommendations surrounding the new tech. 



The state’s Division of Finance will also be required to deal with <a href="https://le.utah.gov/~2022/bills/static/HB0456.html" target="_blank" rel="noreferrer noopener">third parties</a> in a bid to accept digital asset payments and affording the division powers to create regulatory standards.



A framework for <a href="https://le.utah.gov/~2022/bills/static/SB0182.html" target="_blank" rel="noreferrer noopener">digital assets ownership</a> seeks to define terms and provide a basis for understanding and legally defining ownership through control.



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Utah Law Furthers Adoption of On-chain Credentials and DAOs

Blockchain domain name provider Unstoppable Domains teamed up with Polygon Labs to launch the digital identity .polygon, giving users a new way to enter Web3 applications and the decentralized web.



Having the .polygon domain name allows users easier access to the many dapps, games and metaverses, built on the Polygon blockchain, according to a <a href="https://polygon.technology/blog/unstoppable-domains-and-polygon-labs-launch-polygon-web3-domains" target="_blank" rel="noreferrer noopener">statement</a> Tuesday.



People will have the option to create profiles and connect these with their social channels, and display on-chain tokens such as tickets and awards.



From March 16 onwards, Unstoppable Domains will launch exclusive access to premium .polygon gaming and digital domains, meaning users can claim names like gamer.polygon or 00.polygon.



“User-owned digital identity is the future of the Internet, and with the Polygon ecosystem, we’re putting the power of user-owned digital identities into more people’s hands,” said Sandy Carter, chief operating offer at Unstoppable Domains.



Read more: <a href="https://blockworks.co/news/what-is-decentralized-identity">What Is Decentralized Identity? The Pillar of Web3</a>



Unstoppable Domains and <a href="https://blockworks.co/tag/ethereum-name-service">Ethereum Name Service</a> (ENS) are the top two blockchain domain name providers. Web3 domains are essentially non-fungible tokens that can be traded, but they are more popular for being used as a shorthand name for crypto wallet addresses. These can be used to transact across a growing number of apps, wallets, exchanges and marketplaces.



Unstoppable recently partnered with Polygon on another initiative in Africa last week. To address the lack of female representation in the Web3 industry, both brands committed to onboarding six million African women to Web3 over the next five years.



They launched a diversity and education group called Women of Web3 to expand access to user-owned digital identity through free Unstoppable domains, which are available to claim until April 8.



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Unstoppable Domains and Polygon Launch New User-Owned Digital ID

John Gilbert

Mastering Decentralized Identity: The Pillar of Web3

<div id="highlights-block_634d1932a233e" class="highlights">
 <ul>
 <li>Citizens will be able to access their digital IDs via their smartphones</li>
 <li>The tech-savvy nation ranks highest among developed markets for smartphone use</li>
 </ul>
 
</div>



South Korea plans to leverage blockchain technology for the use of digital identity cards as the country pivots towards a post-COVID-19 era of remote work and online verification processes.



The country’s government will allow citizens to verify their identity via digital IDs embedded into their smartphones, replacing Korea’s resident registration cards by 2024, <a href="https://www.bloomberg.com/news/articles/2022-10-16/south-korea-aims-to-boost-economy-with-digital-id-on-blockchain?leadSource=uverify%20wall" target="_blank" rel="noreferrer noopener">Bloomberg reported</a> Sunday.



It comes as South Korea — one of the most digitally developed countries globally — seeks to bolster economic growth following the pandemic. The country was among the most <a href="https://www.bloomberg.com/news/articles/2022-03-17/how-south-korea-is-beating-covid-despite-600-000-new-cases-a-day" target="_blank" rel="noreferrer noopener">significantly impacted</a> among developed nations.



According to a recent <a href="https://unctad.org/webflyer/why-robust-digital-identity-systems-are-essential-fostering-trade-and-development" target="_blank" rel="noreferrer noopener">report</a> by the United Nations Conference on Trade Development, the pandemic accelerated the shift toward digitization. As such, cybersecurity concerns are front and center in an increasingly hostile environment safe storage of sensitive data.



Blockchain-based IDs are one attempt to alleviate some of that strain placed on countries seeking to bolster their defense against cyberattacks which have, at times, wreaked havoc across <a href="https://www.interpol.int/fr/Actualites-et-evenements/Actualites/2022/INTERPOL-Working-Group-highlights-cyber-threats-across-the-Americas" target="_blank" rel="noreferrer noopener">Europe</a>, <a href="https://abcnews.go.com/Technology/cyberattacks-reported-us-airports/story?id=91287965" target="_blank" rel="noreferrer noopener">the US</a> and <a href="https://www.abc.net.au/news/2022-10-14/optus-says-customers-do-not-need-new-passports-after-data-breach/101538178" target="_blank" rel="noreferrer noopener">Australia</a>.



The initiative will leverage the benefits of storing user data in a decentralized manner while keeping citizens’ phone data, including how and where they use their digital IDs, private from the government, per the report.



South Koreans rank as some of the most technologically-savvy individuals across the globe.



Research conducted by the Organization for Economic Cooperation and Development’s Program for International Student Assessment in 2011 showed its younger generation topped other nations for use of <a href="https://www.oecd.org/education/educationkoreatopsnewoecdpisasurveyofdigitalliteracy.htm" target="_blank" rel="noreferrer noopener">online learning</a>.



South Korea also ranks at the top for <a href="https://www.statista.com/statistics/321408/smartphone-user-penetration-in-south-korea/" target="_blank" rel="noreferrer noopener">smartphone ownership</a>, with roughly 96% of all Individuals of any age owning at least one smartphone and using it at least once per month. The US stands at roughly 80% on the same metric.



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