Netki's Digital ID Service Tackles Global Compliance Challenges
Netki, the New York–based software startup, wants to make blockchain technology more user friendly by launching its new universal Netki Digital ID service, so that anyone can access services on blockchains without re-validating their ID at every stop. The Netki Digital ID will be both KYC (Know Your Customer) and AML (Anti-Money Laundering) verified, allowing users to access a variety of blockchain businesses including financial institutions like banks, exchanges and healthcare services.
Netki wants their ID to work on any blockchain, public or private, around the world and to provide automated onboarding and validation of new customers, as well as easy sharing of digital identities.
The company’s goal is to create a digital identity certificate that uses a standard recognized by governments everywhere as legally validated, to process transactions anywhere in the world. Pricing will be based on the number of certificates and the complexity of validations.
The Digital ID uses a new peer-to-peer payment protocol (BIP 75) that allows senders, receivers and their financial partners to exchange all four identities via a private encrypted channel.
According to Netki’s announcement, the Netki Digital ID service will allow for the easy capture of an individual’s documents and biometrics via their smartphone, along with multiple levels of automated and manual verification, including database checks, machine learning and biometric analysis.
International Compliance: A “Herculean Task”
Netki IDs are already in use in the U.S. and Europe on the Bitcoin and Ethereum blockchains, and the company is hoping to expand its service both to new jurisdictions around the world and on new blockchain networks.
Netki’s CEO and Co-Founder Justin Newton talked to Bitcoin Magazine about the process of expanding its ID service, despite the challenge of many different legal requirements in an international regulatory environment.
The regulatory landscape is changing around the world at a rapid pace. With this in mind we designed our tools and protocols to be flexible in the case of differing, new or expanding regulatory requirements.
“As we work on each new use case, we work with the customer’s risk and compliance team to determine what requirements are appropriate for their needs.”
Newton told us their team spends time in each new jurisdiction consulting with local regulators before offering their service.
Amber D. Scott, whose company Outlier Solutions works with blockchain startups on compliance and security issues, admires the spirit and sheer scope of Netki’s undertaking but recognizes that it is a herculean task to have any ID be compliant in every jurisdiction.
She recommends that companies planning to implement any new identification solutions should thoroughly research the requirements of the jurisdictions they are operating in, to ensure “that a solution meets those requirements in their entirety.”
Scott added, “We spend a lot of time with our clients conducting this type of testing, and very few solutions pass the tests.”
Michael Perklin, an internationally recognized security expert who oversees security for ShapeShift, acknowledges that verifying users can be time-consuming and expensive, and agrees that something like a universal ID would make this process easier.
“Many people complain that there are 20+ different identity standards and it seems that Netki is proposing a 21st. It seems like a great idea in theory but its success would depend on the community adopting the Netki ID as the industry standard as opposed to another service like uPort.”
UPort offers a mobile app that allows users to create self-sovereign credentials that would allow them to process transactions on blockchains.
Newton told us that while uPort is focusing on a business model, Netki has open-sourced their protocol. Another important difference between the two companies is that uPort stores private information on the blockchain while Netki stores information off-chain. That being said, Netki is currently partnering with uPort on several projects.
Caribbean Service Bitt Is the Test Case
Netki chose the Caribbean region to test its new service, partnering with fintech company Bitt, which provides a mobile wallet and payment services to anywhere in the world.
Newton told us:
“In terms of the project that we are working on with Bitt, we believe that one of the greatest promises of blockchain [technology] is around financial inclusion. The Caribbean region has far greater mobile phone penetration than banking penetration, and most banking is effectively controlled overseas,” he said.
By creating a locally run and focused alternative, they can lower the cost of remittance, spur inter-island trade and service many people currently excluded from banking and online finance.
Empowering Individuals Over Institutions
Netki’s founders believe that blockchain technology is the game-changer that will take society to the next level, allowing more democratization and levelling of existing silos.
Newton believes that blockchain technology is a means of empowering individuals and changing the way society interacts with each other; however, without easy access for the majority of people, universal adoption will remain a dream.
As part of simplifying and making blockchain technology more user friendly, Netki already offers a wallet-naming service for $9.99 per year, which allows users to register their unwieldy wallet address of letters and numbers to a simple name, making for easier transactions for both users and businesses.
Newton is excited about the future possibilities of blockchain technology for decentralization and democratization, saying:
“For the first time, using the standards we implemented at Bitt, and more broadly with BIP 75, regulated entities such as banks can operate on public networks like Bitcoin and Ethereum while still meeting their risk and compliance requirements. With the recent institutional interest, and positive government movement around digital currency, these tools couldn’t come at a better time to enable the ecosystem to really step up to the next level in terms of both usage and opportunity.”
Investors in Netki include O'Reilly, AlphaTech Ventures, Colle Capital, Digital Currency Group, Plug and Play, the Husseine Group, Bitfinex and Base Ventures.