And this information is a hugely valuable commodity: many of the biggest companies in the world (Facebook and Google spring to mind) owe their enormous market valuations largely to the fact that they own vast stores of data on their users and the perception among investors that this must be valuable (even if it is not always entirely clear how). As AI technology develops (which we have discussed previously on this blog, eg Robotic Alms and Algorithm is gonna get you) and offers new ways of analysing and using information, the premium on data about individuals and their actions will grow even higher.
But we might also be on the brink of a fundamental shift in the way that personal identity works - one that will make many existing systems and rules entirely redundant. Emerging technologies (particularly blockchain, although not exclusively) are making the development of “self-sovereign identity” a real possibility. Trustworthy identification has been one of the main challenges facing the internet ever since it was invented, because none of the traditional, offline means of verifying that someone is who they say they are apply (as famously encapsulated in a New Yorker cartoon by Peter Steiner in 1993, in which two dogs are seen using a computer and one is saying to the other “on the internet, nobody knows you’re a dog.”) The way this challenge has been overcome up to now is to rely heavily on the role of trusted third parties (banks, government agencies, the Post Office, law firms etc) as guarantors of identity. When it really matters for us to know who someone actually is on the internet, it almost inevitable involves recourse to one of these third parties to confirm it. This gives these organisations a huge amount of power. (You can read more about the challenges of identity on the internet in this fascinating article by Kim Cameron of Microsoft)
We might be on the brink of a fundamental shift in the way that personal identity works - one that will make many existing systems and rules entirely redundant.
The basic idea behind self-sovereign identity is that rather than have our information held by third parties (often without us even knowing what that information is) and used to guarantee our identity and make decisions that affect us; we could turn the entire model on its head and give each individual control over their own digital identity. Obviously this identity has many different aspects that are only relevant or appropriate to certain contexts (e.g. you might want a prospective employer to be able to access information about your educational qualifications, but you probably don’t want them to be able to see that you are also the life President of a Mighty Morphin’ Power Rangers LARPing society).
Currently these different aspects are kept separate by virtue of the fact that the information is held by different third parties, but that means that have little control over when this information gets shared. (So the LARPers might grass you out to your employer for some reason, or- more seriously- a healthcare provider or a wearable fitness tech device might pass on data to insurance companies that would affect your premiums). With self-sovereign identity, you would hold all of the different elements of your online identity in a “box” or “wallet”, and would then be able to choose which of those elements to reveal in any given context.
With self-sovereign identity, you would hold all of the different elements of your online identity in a “box” or “wallet”, and would then be able to choose which of those elements to reveal in any given context.
As Don and Alex Tapscott put it in their book Blockchain Revolution:
“What if ‘the virtual you’ was in fact owned by you – your personal avatar ─ and ‘lived’ in the black box of your identity so that you could… reveal only what you needed to, when asserting a particular right. Why does your driver’s license contain more information than the fact that you have passed your driving test and demonstrated your ability to drive?”
We need not get in the detail of how blockchain could make this work here (You can find out more by checking out the work of organisations like Evernym or uPort who are working to make self-sovereign ID a reality), but the basic facts to be aware of are:
- The technology offers a way of creating and maintain an immutable record of transactions
- This record is public
- All kinds of things can be recorded on a blockchain, including ID information (or, more likely a hash of the information, as putting your entire ID on a public ledger is probably a recipe for disaster.)
- Different parties could access the relevant information recorded on the blockchain, thus removing the need for the information to be stored in multiple locations
- There are cryptographic techniques (e.g. “zero-knowledge proofs”) which would make it possible to confirm that you have a particular piece of identity documentation without having to disclose any of its content.
- There would probably have to be a role for trusted authorities of some kind to confirm that the information recorded on the blockchain matched that in the real world (in much the same way as organisations like the Post Office currently play a role in the UK government’s Verify scheme by checking that someone has the relevant passport/driving licence before they are issued a verify ID that they can use in interaction with other agencies like HMRC etc.).
What would flipping the model of online identity on its head mean for charities and donors? Here are six possibilities:
1 DIGITAL IDENTITY AS A CHARITABLE CAUSE
Self-sovereign identity could have particular benefits for marginalised groups, or for those who find themselves in contexts where reliance on third parties is no longer possible. For instance, refugees and migrants who are unable to get hold of their documentation when leaving their home country often face enormous challenges in terms of proving their identity. This may be as basic as proving that they have a justifiable right to asylum, but it also extends to things like proving that they have certain qualifications. A qualified doctor fleeing Syria, for example, may find it impossible to get work that makes use of his or her skills because they cannot prove that they have a medical degree, so they are forced either to take low-paid, unskilled work or to rely on benefits.
There are already a number of initiatives trying to address this problem by using blockchain technology to create immutable, secure records of identity that individuals would be able to access anywhere in the world (E.g. BitNation’s Refugee Emergency Response project or the UN’s new digital ID project in partnership with Microsoft and Accenture). If the broader notion of self-sovereign digital identity takes off, it might not be necessary to set up specific initiatives for refugees as they will be able to use the same systems as everyone else. However, there will still be work for charities and aid agencies to do in ensuring that those who need a sovereign ID are able to create and access one.
2 FUNDRAISING AND DONOR INFORMATION
The emergence of self-sovereign identity is likely to have a profound impact on the way in which organisations obtain and use personal data, and also on the legislation and regulation that covers this activity. If individuals gain complete control over their own ID, and are able to determine which aspects of this they want to share in any given situation and on what terms, then the power dynamic will be radically different from the current one. Organisations may no longer be able to hold information about their customers beyond that which the customer themselves has allowed (which might be nothing more than a zero-knowledge proof-based confirmation that a certain piece of ID does exist and belongs to the customer, but no further detail about its content). This could preclude the onward sale of data for marketing purposes. This has been a vital tool in the armoury of fundraisers for some time (although not an uncontroversial one as previously mentioned), so its removal would mean huge upheaval to the fundraising profession.
3 IDENTIFYING TRUSTEES
Charities do not only need to have personal information about their donors and supporters, but also, crucially, about their own trustees. This is important if they are to ensure that they stay on the right side of rules governing the suitability of trustees and their behaviour (e.g. making sure that a trustee is not using a false name, or that they do not have any past convictions for fraud offences, or making it easier to preclude trustees entering into conflicts of interest).
Assuming that prospective trustees were obliged to divulge the required information when applying, the development of self-sovereign ID could make the system more efficient and effective because the individual would be able to access all the relevant information themselves, whereas currently it requires interacting with multiple third parties (for CRB checks etc.) The process could even, eventually, be automated, as we explored in some detail in our paper Block and Tackle.
4 UNIVERSAL GIFT AID AND OTHER TAX RELIEF
Self-sovereign ID could have huge benefits in terms of making tax reliefs on charitable giving work better. Take Gift Aid, for example: the UK system which allows donors to empower a charity to reclaim the basic rate of tax paid on a donation on their behalf (and also allows higher-rate tax payers to claim some additional personal relief too). It has long been recognised that Gift Aid, whilst popular, is under-utilised and that there is a vast amount of potential tax relief that goes unclaimed in the system. This might be due to lack of awareness, due to the (real or perceived) administrative burden of claiming the relief, or because people are increasingly giving digitally using methods which Gift Aid, as an essentially paper-based system, is ill-equipped to deal with.
Some organisations have suggested that the development of a universal database of Gift Aid-registered donors, together with a system of unique identifiers, could overcome many of the failings of the system. Donors would make a one-off declaration that could be stored in the database and then simply give their unique identifier each time they made a donation, which could then be cross-referenced against the database and verified.
I should probably ‘fess up at this point that I have been involved in pushing for a Universal Gift Aid Declaration (UGAD) in the past, including being pretty heavily involved in getting HMRC to include a detailed section on the idea as part of their consultation on digital giving and Gift Aid back in 2013. However, I now think that technology might have overtaken this idea. If a system of self-sovereign identity based on blockchain emerges, it will make it possible to achieve exactly the same end result far more simply.
Whereas the original UGAD proposals involved building a dedicated database and linking it to a system of unique identifiers (which raised questions about who would set up and maintain the database, and what could count as a unique identifier), you would get these for free in the blockchain version. The blockchain itself is essentially a massive shared database that could store Gift Aid declarations alongside all sorts of other things, and you wouldn’t need a new unique identifier, because the declaration could just be one of the many aspects of your overall self-sovereign identity (kept in the “box” or “wallet” described above). Any time you gave to charity in such a way that it could be linked to your self-sovereign ID, your declaration could be automatically invoked and the charity would be able to claim Gift Aid.
This version of UGAD would also have other benefits over and above any of the previously-considered models. In particular, it would be far more likely that Gift Aid could be integrated with HMRC tax records, as it is quite possible that HMRC (along with many other government agencies) will adopt blockchain-based systems in the future and thus tax records and Gift Aid declarations could be included as aspects of an individual’s self-sovereign ID. If this were the case, then it wouldn’t even be necessary to demand of individuals that they make a declaration that they have paid sufficient tax to cover any Gift Aid, as you could simply establish smart contracts which verified whether this was the case and prompted a Gift Aid claim accordingly.
There might also be further benefits in future if some of the applications of blockchain in other areas take off: for example it might make Gift Aid on donations of goods far more manageable. At the moment, whilst it is possible to claim the relief on donations of goods to a charity shop this is essentially achieved via a convoluted workaround that involves you as a donor empowering the charity to claim Gift Aid on your behalf on the sale value of the clothes once they are sold. However, there are currently a number of organisations exploring the use of blockchain technology to create transparent supply chains in various industries (eg Everledger, Provenance.org) and this could be extended to the clothing industry. In a future where each garment is uniquely recorded on the blockchain, it would be a simple matter to link that to the system of Gift Aid so that the relief was triggered automatically when the item was donated to a charity shop.
5 CHARITIES AS ORACLES
We have already noted that within any system of self-sovereign ID there is likely to remain a limited role for trusted authorities of some sort, in terms of getting someone onto the system in the first place by verifying that they do have a particular piece of documentation and that the information recorded on the blockchain corresponds with the real world. Parties playing this role are sometimes referred to as “oracles”.
It is clear that organisations which already play the role of trusted third parties in terms of holding personal data, like government agencies or banks, could develop into oracles in the future. The same holds for charities, who may be asked to play the role of guaranteeing some aspects of the identity of their beneficiaries (or even, perhaps, their donors?) This could carry implications in terms of legal and regulatory responsibilities, and in terms of the relationship that charities have with those they work with and those who support them.
6 MONETIZING PERSONAL DATA FOR CHARITY
Finally we come to the most speculative (and I think most interesting) possibility: which is that self-sovereign identity could enable each of us to monetize our personal information. Currently, an awful lot of money is being made by companies who offer us services for free (eg Google, Facebook, Twitter) in exchange for information about our online (and , indeed, offline) interactions and behaviour. This information can then be used for things like targeted advertising.
Currently, we all seem to be OK with this arrangement: probably because we don’t like paying for things on the internet and because we have not yet realised the value of our own personal data. However, in the future, if we all have our own self-sovereign ID we will have far more control over which information we release to companies we interact with, and this opens up the intriguing possibility that we could start charging them for that data.
This is an idea that has been explored by many tech thinkers (e.g. Jaron Lanier in his book Who Owns the Future? or in articles like this one from NextWeb), and there are already projects looking at making it work in practice (e.g. this one from MIT). So let’s assume for now that some version of this vision does become reality. All of a sudden each of us has within our grasp a means of generating revenue simply by living our lives and being willing to share the data that that generates. As regular readers of this blog will know by now, my question at this point is always “could some of this money go to charity?” And I think that it could.
I have explored in other places (eg this blog post on the Internet of Things) the idea that fractional donations of cryptocurrency could be made every time there are machine-to-machine transaction in a large-scale Internet of Things. Exactly the same principle would seem to apply here as we are once again talking about the possibility of a huge volume of miniscule transactions taking place, and the parties in those transactions could decide to forgo a small part in order to give some to good causes. This raises questions about how you allocate the donations, and I have previously suggested that the best answer might be the use of AI to develop some form of automated philanthropy (see this paper on blockchain, DAOs and the decentralisation of charity and this infographic for more).
As with many technological developments, it is hard to predict precisely what will happen to digital identity in the coming years. However, it seems certain that something has got to give; as the current model is struggling to keep pace with the changing realities of our world. We are more aware of the fact that our lives generate huge amounts of data and increasingly suspicious of the ways in which this is being used by the organisations that control it. It seems likely, therefore, that we will start to demand a greater degree of control over our own identity and personal information. Whether this will result in the development of fully self-sovereign ID, I don’t know, but however far along the spectrum we get there are going to be profound implications for charities and their donors.