3FOOD

Third Industrial Revolution Consulting Group
mailing it a shared secret link or code. Banking, and other services that have identity-based
regulations also request verifiable personal secrets like previous addresses, mother’s maiden
names, and even a taxpayer's ID number or a state issued ID like a driver’s license and passport.
These systems build large, centralized databases of personal ID information that are used to
verify identities. As centralized repositories, they become single-vector targets, inherently
vulnerable to increasingly sophisticated cyber-attacks. That means that at the same time that
the value of the information contained in them increases over time, they also become less
secure over time. One paradoxical result is that identity theft, fraud and other breaches of the
identity system are easier to perpetrate against older people with identities that have accrued
more value.
With the Blockchain, instead of tying blockchain-related transactions to accounts with
usernames and passwords, transactions are controlled by a collection of related encryption
certificates. This is the device identity model and, when combined with the immutability of the
Blockchain ledger, it has major benefits for security and privacy.
Most people in Luxemburg own a variety of devices capable of cryptographic authentication,
such as a smartphone, a tablet, a desktop or laptop computer. Increasingly, also, computing
devices are embedded into machine-to-machine networks within the so-called Internet of
Things. As the locus of authentication shifts to the user’s devices the would-be attacker’s target
also shifts. Rather than fraudulently presenting themselves as any of the users of a service to
break into its database (or simply downloading a copy of the hacked database online) the
attacker that’s confronting the device identity model must compromise the actual device in the
user’s possession. The result is much less value per attack.
As more and more online services leverage the device identity model, expect identity fraud to
more intensely concentrate on older systems that still rely on shared secrets such as passwords
and Government ID numbers. Important applications like Facebook and ApplePay already rely
on Device Identity to protect their systems, but the Blockchain was the first to exclusively rely
on it. Additionally, because the ledger is distributed across a wide array of computers and is
constantly validated by that network, the security around the information generated by those
devices is also profoundly more secure than anything held on a centralized database.
The concept will be vital to the Luxembourg Financial Working Group’s proposal for a data vault
of citizens’ personal and property information with which they will use smart contracts to
transact with each other, with corporate entities and with the government. Given the
imperative of securing this highly sensitive pool of data -- and, in so doing, strengthening
financial and government security while protecting personal privacy --, a transition from shared
secret systems of identity to device-mediated ones secured on the Blockchain will be
296