Decentralised ID: the surveillance capitalism and fraud fightback

Thursday 15 December 2022 09:36 CET | Editor: Mirela Ciobanu | Interview

Fraser Edwards, CEO and Co-Founder at cheqd, explains what decentralised identity, also known as self-sovereign identity (SSI) is and outlines how incoming regulations are shifting data ownership towards this new paradigm.

This new paradigm has the potential to both fight fraud and provides an alternative to the surveillance capitalism model.


Can you tell us about cheqd? What’s the story behind it?

Personal data has become a trap. ‘If you aren’t paying for the product, you are the product’, meaning the individual hasn’t been in control of sharing their data. Instead, their data is locked in these companies’ silos and is not portable.

cheqd was born to invert those models. We put the individual at the centre by enabling them to have full control over their personal data, making their data portable and enabling commercial models, and revenue streams for this new paradigm.

We work across sectors – the market potential for self-sovereign identity or decentralised identity totals ~ USD 0.55 trl. Within web 3, cheqd serves gaming, NFT, Decentralised Finance (DeFi), and more. For the web 2 industries, our solution targets banking, supply chain, healthcare, travel, ecommerce, retail, and others.


What is currently happening in terms of identity fraud in the verticals that you target? What are the main types of fraud happening and how damaging can be for businesses and UX?

Identity theft losses in the United States cost USD 502.5 billion in 2019 and increased to USD 712.4 billion in 2020. In the UK, the annual UK-issued debit and credit card identity theft reached a value of 29.7 million GBP in 2020.

With the FTX bankruptcy or Revolut cyber-attacks, a need for safe and privacy-preserving decentralised identity solutions hasn’t been more timely.

As we serve both web 3 and web 2 it’s worth exploring these separately.

Individuals in web 2 are usually being targeted in relation to financial services or telecommunications since they are the easiest to financially gain from. There is also a lot of fraud in ecommerce which is difficult to prevent since full KYC checks are expensive. Fraudsters are typically professional and work through a series of personal details and accounts. cheqd directly addresses this by enabling trusted data sources, removing the vector of fraudsters entering data they found or bought, e.g. on the dark web.

In web 3, identity fraud is a lot less sophisticated and is typically targeting individuals without prior access to personal details and accounts. The outcome is still the same as web 2 though in syphoning off funds either via cryptocurrencies or assets like NFTs.

It is slightly different when it comes to web 3 companies. A good example is FTX where funds were moved between entities without proper hygiene and worse, records for auditors appear to have been either bypassed or created fraudulently, ultimately harming individuals as consumers.


How can we mitigate these threats? What is decentralised or self-sovereign identity (DID or SSI) and why is it important in the web 3 context?

Self-sovereign identity (SSI) or decentralised identity (DID) is a method of identity that centres the control, ownership (and sometimes storage) of information around the user. It gives individuals greater control over what information they share (and how).

SSI enables a reusable KYC concept that offers a much more seamless way of ID verification. When an ID verification is needed, SSI can significantly reduce the friction for users improving a customer experience while providing a compliant service. In short, current KYC is ‘single-use’ while KYC’ed SSI makes KYC ‘recyclable’. This ultimately means that it’s possible to embed trust in many more interactions, although regulations need to reflect this technical possibility.

Web 3 is focusing much more on online interactions, including metaverse(s). This means that trust has become even more important even when users remain anonymous or pseudonymous.

There is also the concept of ownership in web 3, i.e. direct ownership rather than via third parties (not your keys, not your crypto). The ability to create, buy, and move an avatar/digital object within a metaverse or porting progress from one game to another are all examples of ownership and portability in web 3.


Are entities prepared to adopt these types of solutions? How does integrating SSI in digital identity regulations, such as eIDAS, increase adoption?

A number of governments have led, or intend to lead, initiatives to actively promote the use of SSI, including the European Commission, United States, Canadian, and Australian governments.

New regulation such as eIDAS v2 is crucial for the success of SSI for two main reasons. Firstly, with supranational regulators such as the EU providing regulatory frameworks through which vendors can conform to, such as the Verifiable Credentials playbook and wallet conformance scheme, customers and enterprises can see the data ownership paradigm is shifting and companies will begin to either replicate their existing commercial models into this new paradigm or explore new, previously impossible, opportunities.

Secondly, regulatory certainty that SSI will be a viable way of exchanging data, with legal effect, is a huge factor for enterprises adopting the technology since it legitimises the technical mechanisms used by the SSI community. This will help kickstart adoption, removing the risk factor from decision-making for enterprises and pushing them to figure out how they build.

Avast’s acquisition of our partner and investor Evernym indicates the extent to which big businesses will increasingly adopt the paradigm. Salesforce is expanding into verifiable credential management with its recent acquisition of Credential Master. Twitter’s moves to launch Bluesky, their decentralised social networking effort, while developing decentralised identity coined Web5 with TBD, both show businesses’ commitment to adopt the solution.


Sometimes being in control of one's data can sound scary. How to educate users on the needs and benefits of such solutions?

cheqd will never control or have access to users' data. What we’re building is giving the data owners an opportunity to fully control their data. Therefore, we believe this will be an empowering experience for them.

As decentralised identity is a rather new paradigm, educating end users, whether these are individuals or enterprises, or public bodies, is vital. Together with our partners, we’re developing a lot of educational content to show how easy it is to use a solution such as ours, including fun and interactive demos.

We are expecting tooling to enter the market which will take the load off users. Users will have direct control over their data but may set policies that decide where it is shared. This could be sharing fake names and proxy email addresses when registering for public wifi but sharing real details when interacting with a bank.


What trends are on personally watching in the digital identity space for 2023?

The adoption of SSI by governments and by industry in general, including areas of financial services, and the constant push of having a cheaper, more efficient way to issue, verify, and prove credentials are other big trends for 2023. 

We also see a massive trend towards decentralised reputation where there isn’t a need for central authorities to regulate or approve the issuance or acceptance of credentials, where trust can be built between people, organisations, and others based on social proofs and interactions, the same way people have been building relationships forever.


About Fraser Edwards

CEO & Co-founder at cheqd

Fraser has a rare skillset, blending technology and business acumen. He has deep consortium and self-sovereign identity knowledge through leading the Known Traveller Digital Identity and blockchain payments expertise through architecting cross-blockchain payments on the Jasper-Ubin project with the Singaporean and Canadian Central banks.



About cheqd

cheqd is a technology company enabling individuals and organisations to take full control of their data. It provides payment rails, customisable commercial models, and governance structures for trusted data, including self-sovereign identity (SSI). Based on blockchain technology, cheqd is built upon a public permissionless network with a dedicated token - $CHEQ.

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Keywords: digital identity, identity verification, identity fraud, online authentication, data protection, self souvereign identity, banks, fintech
Categories: Fraud & Financial Crime
Companies: cheqd
Countries: World
This article is part of category

Fraud & Financial Crime


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