Page 164 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

As well as being seamlessly able to prove identity for access to government and commercial services, these
enhanced privacy protections prevent use of that identity beyond what the individuals have authorized.
BanQu, Bitnation, and Onename are examples of companies using blockchain to help solve the identity
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problem. By allowing this type of authentication ‒ if done by a mobile device and seen as an acceptable ID
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for DFS know your customer (KYC) ‒ this could be used to fulfill KYC remotely, which would allow for remote
opening of DFS accounts, and thus the propagation of those accounts in rural areas with little access to banking
branches or even MNO agents.

However, there are many challenges to introduction of these systems, most notably, the fact that much of the
developing world is without any form of government-issued identification or even traditional documentation
such as birth certificates. Proving actual birth identity a priori for inclusion on an ID blockchain is thus very
challenging.

The issue of an ID that was enrolled at one institution for KYC purposes being fully accepted for KYC purposes
at another institution is also an open question and may require legislative intervention. 143

7.5 Property registers
Similar to identity, property, or land registry formalization, can be another hindrance for those financially
excluded to enter or participate in a formal economy. Although people may own small plots of land, dwellings,
vehicles, and equipment, they are not able to monetize these assets as collateral due to the lack of formal legal
title to those assets. The causes of this are said to be from poorly resourced and often corrupt bureaucracies.
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DLTs can help solve these encumbrances by lowering the cost of land titling and formalization through databases
that work with the local governments to record and track land title transactions, allowing unbanked individuals
to enter and benefit to some extent from the formal financial system. Property titles could then be effected
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and verified without a centralized third party. In the Republic of Georgia, the National Agency of Public Registry
plans to utilize a permissioned blockchain to develop a permanent and secure land title record system to track
all land title transactions across the country. Similar pilots in Ghana and Sweden use DLT as a decentralized
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land registry. 148
However, high initial capital costs could, as with the adoption of any new technology, be a deterrent to the
implementation of these systems, especially when there is no existing map of planned roads, land plots, or
zones that indicate proper location or boundaries of the property. Barriers to reliable electronic land records
are typically not in the data structure used to store them but in the acquisition of reliable source data.

7.6 Smart contracts

As noted earlier, smart contracts that are self-executing and embedded into a blockchain can enforce legal
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contracts containing multiple assets and enforcement or performance triggers. This could relate, for example,
a smart contract that provides insurance for crop failure whereby small farmers are automatically paid out

141 Private ID provider BanQu uses proprietary DLT to create unique, usable identity by creating a mash-up of a ‘selfie’ plus other key
human characteristics for people with no access to technology or banking. That profile is recognized and accepted by financial
institutions as legitimate identification information. See Banqu (2016) Identity Process Flows, available at http:// www. banquapp.
com/ identity- process- flows.
142 Inside Bitcoins (2016) Blockchain Identity: Solving the Global Identification Crisis, available at https:// goo. gl/ M7JoXu .
143 See ITU Focus Group Digital Financial Services Report Identity and Authentication (2017).
144 De Soto, H. (2000) The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere. Basic Books.
145 Consumer’s Research (2015) The Promise of Bitcoin and the Blockchain available at https:// goo. gl/ MzCGyh .
146 This formalization of property provides a great many additional benefits, such as establishing the basis for legal protections for
land ownership in the country, greater transparency within the economy, and the ability of landowners to participate further in
the formal economy by using their land as collateral for financial products such as loans. Consumers Research (2015) ibid
147 Coindesk (2016) Republic of Georgia to Develop Blockchain Land Registry, available at https:// goo. gl/ vZgGSi.
148 Bitcoin (2016) Bitland: Blockchain Land Registry Against Corrupt Government, available at https:// goo. gl/ gAVjGK; Coindesk (2016)
Sweden Tests Blockchain Smart Contracts for Land Registry, available at https:// goo. gl/ YhNDSZ.
149 See Section 3.

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