Distributed crypto identity as a mechanism for legal empowerment of the poor and stimulating local economic development

Billions of people are excluded from the rule of law. Many have no legal way of proving their own identity. Instead they rely on geographically-bound informal networks of trust to work and invest. Should they move in search of new opportunities, or as a result of conflict, they lose not only their homes and social support structures, but also their identities.

This paper proposes a mechanism by which a distributed information technology network, based on cryptographic proof instead of a single trusted intermediary, can generate secure digital identities without relying on the existence or benevolence of a functioning state.

Importantly, since there is no single point of failure and the identity is vouchsafed by an irreversible and distributed record, that identity can never be taken away from the individual. Government or organisation failure, conflict, or migration will not render a person without identity.

The means to generate secure digital identities already exist, are mature and low-cost. Biometric identity systems are in use in India. Cryptographic transaction mechanisms are in use online.

Nor is illiteracy or poverty a barrier to technology acceptance. Across the world’s poorest regions, individuals are more likely to have a mobile phone than a formal legal identity. They are also far more likely to use their phones as a means of financial exchange than to have bank accounts. The obvious advantages of virtual currency transactions and phone-based identity have spurred adoption.

Digital legal identities are now viable and offer even greater opportunities for the world’s poorest.