Anti-incumbent bias

Every time I’m accused of anti-PLP bias when I offer critiques I go back in time and discover gems like being called a “closet PLP supporter” and that I “lean PLP”.  I thought I’d highlight a comment from back when I was critiquing the OBA’s lack of a consultative approach to immigration and term limits which ultimately blew up in their face.

I guess in the end, rushing to scrap term limits didn’t bring the desired results after all.

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Are we damaging our cryptocurrency reputation before we’ve even started?

While I am a supporter of the government’s overall efforts to embrace fintech and drive innovation in the cryptocurrency and blockchain space, it is absolutely essential that we take steps to uphold our reputation in the financial industry.

The launching of a “pre-ICO” by a company founded and run by someone who sits on the blockchain and cryptocurrency task force before the new ICO law has passed and been made effective is exactly the kind of thing we don’t need.

How can we possibly tout ourselves as an upstanding, reputable jurisdiction looking to bring a prudent and respectable regulatory approach if the people tasked with guiding it forwards can’t wait a few weeks for the legislation to be in place?

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Addressing Bermudian income inequality

The Royal Gazette asked for my thoughts on the release of Census figures highlighting the disparity between white and black workers on island.   Portions of my comments were included in an article in today’s paper.

This is what I was asked

What jumped out at me personally was the disparity in annual personal income between white and black members of the public. Do you think this is part of the reason why the PLP’s emphasis on “two Bermuda’s” resonated with the public? What should government do to address this imbalance, and are they on the right track?

Below I have included a complete copy of my response.


 

Income inequality is a major factor in political movements all around the globe.  Lower income people feel left behind and disadvantaged by globalisation and economic policy that rewards the rich. The PLP’s emphasis on “two Bermuda’s” certainly contributed to their electoral success as not enough was done by the OBA to bridge this divide.  The same could be said of the previous PLP government as the reason for the OBAs meager victory in 2012.  Bridging the divide is a generational issue that requires long term focus on measuring the right statistics and addressing the root causes.

 

It is rather obvious that we have a troubling divide of income inequality in Bermuda, especially between the races.  We certainly didn’t need the census to tell us that.  However, one of the challenges we face is thoroughly understanding and addressing the root causes of these divides.  Too often we sensationalize misleading statistics without accepting that they tell an inaccurate and incomplete story.

 

The vast majority of our statistics and trends are published comparing black and white or Bermudian and non-Bermudian.  Our reliance on a large expat workforce can distort these numbers and turn people against the very things that could help address the root causes of our problems.  Unfortunately we rarely compare statistics and trends by race and status such as black Bermudian vs. white Bermudian.  By not doing so we distort the picture of true income inequality which makes for an easy target for short term political gains but an impossible problem to solve in the long term.

 

For example, let’s consider the PLP’s recent announcement that cryptocurrency exchange Binance will create 40 jobs on island.  It has been suggested that 30 of those jobs will be Bermudian so 10 of them will be non-Bermudian.   The likelihood is that the majority of those 10 non-Bermudian jobs will be highly skilled, highly paid positions filled predominantly by white people.   While Binance has made a very welcome pledge to invest in training and education, that will take time and the 20 Bermudian jobs are more likely to be support roles.  While those support roles are likely to be more representative of our local demographics they are unlikely to be as well paid as the non-Bermudian jobs.

 

Now let’s consider the PLP has considerable success in attracting cryptocurrency and fintech businesses to the island and generates many, many jobs. In a few years time, when the next census comes out, what would we read?  White incomes rose considerably while black incomes rose modestly.  Would that be a fair analysis?  Should the PLP in that case be blamed for not addressing income inequality and making whites richer?  Personally I think that would be unreasonable.

 

The challenge we face is that we are reliant on foreign investment and skilled labour to create jobs on island.  We could certainly insist that these new cryptocurrency and fintech businesses recruit non-Bermudian staff that match our own demographics, however that would act as a deterrent to those businesses creating jobs here.  We desperately need growth and new jobs.

 

So, solely comparing black and white is a poor means to measure our racial income inequality problem when we rely on foreign investment and workers who distort those numbers.  Instead we need to focus on measuring the Bermudian racial inequality problem so we can identify whether or not we’re achieving our aim of reducing racial income inequality.  Very thankfully, the 2016 census contains a breakdown of income by race and by status.  What this means is that by the time the next census is complete, our benchmark for success should be whether the income gap between black Bermudians, mixed/other Bermudians and white Bermudians has narrowed or has widened.

 

Narrowing the racial income inequality gap among Bermudians needs to be the target of any Bermudian government.  Focusing solely black and white numbers is great for political rallying but poor for driving long term results.  We cannot solve global inequality but we can most certainly do more to solve Bermudian inequality.  As such, I am very encouraged and hopeful that the pledges to incorporate funding and support for educating Bermudians on this proposed new fintech industry will do more to provide opportunity for all Bermudians and help narrow the gap.

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Blockchain may be an inefficient and over hyped variation of existing distributed computing… does it matter?

When it comes to building software, cloud systems architects are the present day luminaries.  These guys are the ones dealing with some of the most challenging aspects of computing today: distributed systems.  Building software that can scale globally across time and space is insanely difficult to get right.  These are the guys who actually achieve it, so when they talk about Blockchain, its worth listening.
It is worth understanding that fundamentally, Blockchain is basically an alternative solution to challenges in distributed computing.  Many of the “innovations” behind recent blockchain advances are really only reapplying well known computing concepts from the distributed computing space.  So, when someone like Clemens Vasters, a lead architect for Microsoft’s Azure cloud platform, talks about Blockchain and compares it to distributed computing, it’s worth listening.
The core of his argument is that blockchain effectively represents a neat packaging of a few core distributed computing concepts.  He suggests it has novel application for a handful of use cases but ultimately is inefficient as a solution for many problems compared to other practices, approaches and techniques of distributed computing.
In a nutshell, he struggles to see how blockchain “is even remotely as significant as the hype wants to make us believe.”  He has a point.  Blockchain, just like big data, AI, Internet of Things are over hyped tech buzzwords to which few really fundamentally understand but many are excited about. 
Technology isn’t magic. If you sprinkle Blockchain or AI on a broken process it doesn’t fix the process.  Technology is a tool, not the solution.  Yet far too few people really understand this fundamental point.  If you have garbage inputs or processes then you’re still going to end up with garbage coming out no matter what technology or buzzwords you throw at it.
So, Blockchain may just be one massive over hyped buzz word.  It is understandable that leading distributed computing luminaries are scratching their heads wondering how it is any different or better than what they’re already doing.  Though a better question is whether it really matters if its an over hyped buzz word?  From a Bermuda perspective, I don’t think it does.  We are in a position to capitalize on considerable interest and investment in tackling distributed computing problems.  Call it what you like, what matters is people are actively investing in solving problems.
What would you think if I were to tell you that in my early teens I was looking up information for school projects, chatted with people all over the globe and hosted massive multiplayer online games.  Nothing special right?  The big difference is that I was doing all that in the early 90s on telnet before the World Wide Web gained traction and long before the internet became what we know it as today.  What is commonplace and accessible for everyone today was a highly technical niche accessible to few back then.  If you told me back then that people would be able to do all of these things 20+ years in the future I may have scratched my head confused as to what stops everyone if it was already possible with technology of the day? It was absolutely possible, just accessible only to the few who understood how to do it.
Is it possible to solve most of the problems posed as targets for blockchain based solutions using existing technology?  Yes, it is.  Are those technologies more efficient and better suited technologies as solutions for those problems?  Yes, in many cases they are.  Are those technologies accessible to the average developer such that solutions can be built at scale?  That’s where I’m not so convinced.  Speaking as a tech professional, distributed computing is hard and we lack the platforms to make it accessible for mass consumption and problem solving.
So why does Blockchain, as an inefficient, over hyped technology have appeal?  Well, for one it is about the sheer amount of investment capital, open source community support and will of the community backing not just it, but a focus on distributed computing based solutions in general.  That investment and interest is the kind that could drive tremendous change in making distributed computing problems significantly more accessible.  That alone, has tremendous value as it means far more people will be able to solve problems they otherwise wouldn’t be able to.  So, yes, blockchain is over hyped.  Does it matter though?

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People underestimate the opportunity Bermuda has in the crypto space

The Premier just posted a photo of himself and other members of the Cryptocurrency task force meeting with the CEO of Binance.  It is yet another sign, alongside Minister Caines meeting with Joseph Lubin  that Bermuda is being taken very seriously by the crypto community.

Honestly, I’m very wary of what I know of Binance.  They’ve basically risen to prominence by taking a wild west approach to avoiding regulations.  It raises red flags when articles in Bloomberg include quotes like this:

“Binance lacks regulation and transparency,’’ said David Shin, president of the Singapore-based Asia Fintech Society. “It’s like a van stopped in front of an office building selling coffee while the legit coffee shops on the street suffer.’’

However, as I’ve long suggested, Bermuda’s greatest opportunity is providing a stable reputable and streamlined regulatory environment for new industries to flourish.  It isn’t Bermuda’s place to judge whether crypto, blockchain and DLT tech is the future, it is Bermuda’s place to align itself to provide the right regulatory environment that legitimizes it in a way that is compliant with existing financial regulatory standards.

We could certainly take the approach of avoiding all risk and watching as our island stagnates as we keep trying to kick the can down the road.  Or, we could embrace the opportunity and stand firm on remaining a top tier reputable jurisdiction knowing that there are companies out there very keen to find such a place to do business.  In that regard, I’m about half way through the consultation document the BMA has produced and so far I wholesale and very impressed with what I’m reading.

One can only wonder though, if the photo above represents how pleased the Binance representatives are in finding out that we’re very set on remaining a reputable jurisdiction.  We’re certainly not Malta in that regards.

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Blockchain Task Force: Thoughts on the e-id initiative

 

A few days ago, the Blockchain Task Force gave a presentation on their progress.  It absolutely deserves a standing ovation from the cheap seats.  As a big evangelist of Blockchain and Distributed Ledger tech, I couldn’t be more pleased with their direction so far and how much it aligns with what I’ve written about over the last few years.  I’ve been giving some thought with regards to the suggested e-ID initiative and thought I’d share my reflections.  Ultimately, I have concerns that the government may be attempting to build its own e-ID solution rather than embracing those being built elsewhere.  In my view, there is far too much risk involved with us trying to compete with our own solution and far more reward to be gained embracing third party solutions.

Around this time last year I met with John Narraway, now the head of the business development side of the Task Force, to discuss self sovereign identities and how in my view they are Bermuda’s biggest opportunity to set a foundation for innovation.  I wrote a bit of a primer about it here.  I’m a very big fan of the efforts of the task force in this regard and its potential opportunity for Bermuda and while I am pleased to see forward movement, I am hopeful that we are creating an environment for innovation rather than attempting to innovate ourselves.

While it is still early days, my fear is that the government could end up trying to build their own digital id solution.  Even worse, it could be a centralized one controlled by the government, the very anti-thesis of a self sovereign identity which purports to place identity ownership in the hands of the individual or entity rather than a third party.  To understand the problem with centralized solutions you only have to look at hacks like MtGox, Coincheck, Equifax, Ashley Madison, Paradise Papers….  We place ourselves at considerable risk if we hold the keys vs. delegating that risk to others.

One of the problems is that this isn’t an empty space.  There are many, many entities looking to build solutions.  For example, here’s a chart of just some of the efforts in Europe.

Unfortunately Bermuda is behind the curve and is talking about innovating in a crowded and competitive space. We’re too late to be a leader in implementation of digital ID solutions.  Instead Bermuda should focus on being an innovative regulator.  It aligns with what I’ve suggested in the past, government needs to be less hands on and more of a regulator and facilitator.

Thus, I would much rather see government focus on creating a legislative framework to support third party identification systems rather than create our own.  Let other parties build solutions, invite them to come here and embrace their solutions instead.  Examples such as local providers like banks, utilities and legal firms being encouraged to authenticate the ids and claims of entities on those systems as well as the BMA working to recognize and accept verified identities on those systems for KYC and AML.  That would be a much more welcome direction than Bermuda itself trying to build its own solution, and possibly one that offers much less risk.

 

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Government’s proposed Crypocurrency / Blockchain legislation

For those who have been following the government’s moves with regards to Distributed Ledger Technology (DLT), Premier Burt provided an update on the upcoming legislation that will be distributed for feedback soon.

The recording of this morning’s parliamentary session is available here.  The Premier’s statement is covered in the recording between 10:12am and 10:23 am.

As I have covered in my previous writings on distributed ledger technology and cryptocurrencies, I am wholly wary of the cryptocurrency bubble and associated scams but am very bullish and supportive of government moves to provide a solid regulatory framework to encourage DLT innovation in Bermuda.

The Premier’s mention of disclosure requirements sound encouraging.  We absolutely need a clear regulatory framework to be in place that provides a secure, trusted and transparent process for Initial Coin Offerings (ICOs).

I am highly skeptical of most ICOs due to their nature as a glorified uncollateralized loan agreement that provides little security for the investor.  ICOs of this form are basically IOUs that provide the bulk of the reward to the token issuer while leaving the bulk of the risk with the purchaser. My concern is if potential investors do not fully appreciate the risks and no protections are offered to ensure an issuer cannot simply raise a bunch of money and then disappear.  There are of course cases where this kind of financial arrangement is perfectly valid, so I await further details on what the task force has come up with to balance risks vs. opportunities.

I am hopeful that provisions are being made to allow for the tokenization of securities.  Namely, providing the ability for companies to issue rights of ownership in the form of tokens stored on a blockchain.  The present means of issuing stock in companies is cumbersome and could well be made more accessible and transparent. Thus, legislation legitimizing the tokenizing of assets would be welcome.

One of the concerns I have about the Premier’s statement is the suggestion that companies looking to offer an ICO will require consent from the Minister of Finance.  I would prefer to see us establish a politically independent body that reviews and authorizes these rather than than place power and control in the hands of a politician.

We’ll have to wait and see what is published in the coming weeks to find out more of what is intended by this legislation.

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Recap of my posts on blockchain and building a new Bermudian industry

Last night I attended a crypto currency meetup at ConnecTech.  Despite not considering myself an expert in cryptocurrencies, blockchain and distributed ledger technology, I was surprised by the many misconceptions people have.  As someone who has done a lot of reading on the topic and given a lot of consideration as to how Bermuda could build an industry around these technologies I was quite surprised.

After responding to a few questions and suggesting I’d done some writing about it, people asked where they could read it.  Thus, I’ve compiled a summary of all that I’ve written about how Bermuda can build a new tech industry around cryptocurrencies and distributed ledger technologies.


Sept 2015 – Bermuda is dead, long live Bermuda

Insurance is a maturing industry, Bermuda’s economy has stagnated.  How can Bermuda reinvent itself?

Feb 2016 – Diversify how exactly?

The most important step in creating a new industry was illustrated in Marc Andressen’s piece “What it will take to create the next great silicon valleys, plural”.  In order to create a thriving industry we need to create a streamlined regulatory environment that can enable it to flourish.  

June 2016 – The Blockchain explained… aka does the Premier have a mustache?

A primer on the basics of blockchain using whether the former Premier had a mustache as an analogy.  What are blocks, how are they chained and what does it have to do with creating a means for anyone to verify the data contained?

Mar 2017 – Will Bermuda’s economy be disrupted by “FinTech” and “InsurTech”?

What makes a “Tech” company different from a regular Finance or Insurance company?  Why is Bermuda not a “tech” innovation center and does Bermuda have any real “Tech” companies?  What can Bermuda do to change this?

Nov 2017 – What are cryptocurrencies?

A primer on cryptocurrencies and what they can be used for.  What is bitcoin and why should we be wary of it?  What are Initial Coin Offerings (ICOs) and why should we be wary of those?  If there are such risks, is there still opportunity for Bermuda?

Jan 2018 – Wary of the cryptocurrency bubble

Cryptocurrency markets are flashing telltale signs of being in a bubble. What are the indicators that it’s a bubble?  What are the risks of ICOs?  Is there still opportunity for Bermuda in this budding new industry?

Feb 2018 – Crypto Contagion?

Crack downs by regulators on cryptocurrency funding sources likely popped the bubble.  Will the collapse of the $800 billion cryptocurrency market lead to contagion in other markets?

Feb 2018 – Should Bermuda be investigating, pursuing and trying to incubate the development of distributed ledger technology?

Many Bermudians are terrified of the prospect of government investigating and attempting to incubate cryptocurrency and distributed ledger technologies.  Should we be doing it and what opportunities does it present?

Feb 2018 – Bermuda’s blockchain regtech opportunity: disrupting identity

Why is proving you are who you say you are so difficult?  What is wrong with current forms of identity and what challenges does that pose for conducting business?  Why is identity the foundation of the future innovation distributed ledger technology can bring?  What is Bermuda’s opportunity in introducing it?


Finally I’d like to add a video of Arthur C. Clarke in 1974 predicting what computers would be like in 2001.

An important thing to understand here is that in this video Mr. Clarke didn’t predict new technologies, he predicted technologies that existed becoming more accessible.  Everything he talked about then already existed, it simply wasn’t accessible to the average person.  His vision and foresight was having seen how other technologies like telephones evolved and became accessible.  He then applied that evolutionary thinking to computers to understand that one day someone would have access to all of the same things he had access to then.

This is a key thing to understand about technological evolution.  Distributed ledger technology isn’t a revolutionary change.  You could readily build anything today without blockchains and DLTs using existing technology.  The evolutionary leap, however, is that the technology is being commoditized and made accessible to the point where you don’t have to have a PHD in distributed computing to be able to build distributed solutions.

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Thoughts on the budget: duty estimations

One of the things about the recent budget that raised an eyebrow are the very optimistic revenue targets.  The Customs Duties estimate is quite high and leaves me wondering how the number was devised and what contributed to it.  The concern being, if we cannot meet our revenue targets we won’t be able to match the deficit targets and would need to borrow more, so it is important that these estimations are accurate.

A few questions arise.  How accurately have we predicted revenues in the past?  How much of an impact did the duty hikes the OBA made have?  How much of an impact did America’s Cup have on customs revenues?  Will the OBA’s duty hikes have created a permanent increase that will sustain revenues?  Was the America’s Cup impact so small that revenues weren’t impacted?  Are we counting on substantial import growth?  How do we arrive at this higher number?

Let’s take a look at estimates. Customs duties for 2018/2019 are estimated to reach $235 million, surpassing 2017/2018’s revised numbers of $231 million.

This is quite a high estimate and it raises the question of how accurate we’ve been in the past at estimating customs duty receipts.

Here’s a view past customs duty estimations for review (note, the left axis is adjusted to start at 150k to provide a focused comparison, also note the chart is in 000s).

What we can see looking historically (2005-2006 was the earliest data I could find) is that we initially tend to over estimate our customs duty receipts.  The revised numbers have usually come in lower than expected and the actual numbers even lower.  So even though it looks like last year’s revised numbers exceeded the estimate, there is the possibility that the actual number could come in lower as happened in 2013-2014.

2017-2018’s number seems to have been chosen as a benchmark.  One of the big questions that arises is why the Customs Receipts number for this year is much higher and is it a reasonable approximation for 2018-2019.

One of the big changes in the 2017-2018 budget was a hike in rates for a variety of categories.

Justifiably this would have raised revenues.  It is difficult to know by how much based upon publicly available numbers that I could find.  It would be great to know if the Customs Department provides more detailed breakdown of imports within these bands to be able to understand how these tax hikes translated into increased revenue.

Another questions that arises is how much of an impact did America’s Cup have?  As this writer has argued many times, America’s Cup represented mostly a temporary stimulus of the one off event as well as an increase in population for a few years.  While certainly many imports were brought in duty free, the additional purchases of the teams that resided here and the ACBDA staff likely weren’t.  This likely contributed to increased customs receipts, however the removal of the AC stimulus does not appear to be a concern for the 2018-2019 estimation.

Let’s take a look at Imports By Commodity Groups data provided by the Statistics Department’s Quarterly Bulletin of Statistics to get an idea.  Here’s a chart looking at year over year imports by quarter.

Considering currently available data for 2017, our Q1 imports were slightly higher and our Q2 imports were substantially higher.  According to the currently available numbers, in Q3 we saw a drop back to 2016 levels.

It is hard to say for certain that these increases were driven by America’s Cup and whether they were dutiable, but they do stand out as a substantial outlier.  A bigger question would be whether these were sustainable increases or if they were one offs.  Thus we can take a look at the commodity group breakdowns to see where the increases occurred.

Looking at the Q1 data we can note that the bulk of the increases came in the form of Machinery, Transport Equipment and Finished Equipment.  Can it be presumed that each of these categories represent one-off purchases rather than ongoing purchases?  It could certainly be argued that machinery and equipment are something you purchase once and use for an extended period vs. something like food or fuels which are purchased on an ongoing basis.

Taking a look at the Q2 breakdown we can see that again, the bulk of the imports came in Machinery, Transport Equipment and Finished Equipment.  Now certainly, some of the imports may have duty free or temporary and related to America’s Cup, however it is hard to know how much.

So how much of the revenue growth can we count on as sustainable?  We don’t have the best track record when it comes to estimations.  The tax increases are a wildcard as they certainly could have caused a hike but they just as easily could cause a drop in demand, especially if people bought things before the hikes.  These estimates will be something to keep an eye on because if we cannot meet our revenue targets we won’t be able to match the deficit targets and would need to borrow more.

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Bermuda’s blockchain regtech opportunity: disrupting identity


By Source, Fair use, Link

The “On the Internet, nobody knows your a dog” cartoon. It’s iconic and as relevant today as it was when it was first drawn back in 1993.  Verifying someone is who they say they are remains a tremendous challenge of the internet and business in general. The trouble of not being able to easily identify someone on the internet is that we need to create heaps of inefficient and ineffective process to overcome it.  We can change this.

When you try to open a bank account, especially as a company, you have to complete endless amounts of Know Your Client (KYC) documentation to prove who you are.  In reality, it is mostly security theater.  Providing a copy of a utility bill to prove your address is rather worthless when you consider how easily one could be faked using photoshop.  Worse, you keep having to sign and submit the same information and declarations over and over.

All of this amounts to a tremendous amount of friction and waste.  A whole host of bureaucracy is added to attempt to overcome this identity problem that adds a great deal of cost but not much value.  This is an area ripe for disruption.

How do you verify that you are who you say you are?  Today you have a variety of forms of identification.  You likely have identification issued by a central authority such as a government in the form of a passport and drivers license.  You perhaps also have an online identity with a site like facebook.

The trouble with a passport or drivers license is that it really isn’t very internet or business friendly.  The best you can do at the moment is take it to a lawyer, have them photo copy it and certify that the paper copy is authentic.  Though, even then people usually always want to see the original and make their own copies.  There is simply no valid digitial representation of your government id.  Worse, in cases such as a refugee fleeing a global conflict, your identity may lost, revoked or in some other way no longer be valid.

In terms of digital representations of identity, the best we’ve got so far is federated identities like Facebook Connect.

You might “log in with facebook” all over the internet which provides the advantage that you don’t need to create a new login or identity with each provider.  You can manage the “claims” that each app or provider has to your data and the ability to revoke claims or control at almost any time via facebook.

However it also brings with it the disadvantage that you still don’t really own or control your identity, facebook does.  If facebook locks you out or deletes your account then you also lose access to every other place that you use your facebook identity.  Facebook also theoretically has access to pretend to be you at every place you use it as a login.  Finally, it isn’t really backed, verified or authenticated by any authority other than facebook so it is really only useful for places that don’t require stringent verification that you are really you and not Sparky the dog with a human name or someone pretending to be you.

Identity plays a major part in every interaction across traditional services and the digital world.  The problem is that you rarely can use the same identity across services spanning the traditional and digital worlds.

So that’s today.  Let’s talk the future.  What if you were the ruler of your own identity? You’re its creator and it’s keeper.  Alone, it doesn’t mean all that much, but the invention of the blockchain and distributed ledger technology, a considerable amount more is possible.

Perhaps you use a service created around uPort.me or sovrin.org that allows you to create your own standardized Self Sovereign Identity that is recorded on a blockchain.  You then go to the Bermuda government and ask them to certify your identity as valid, encrypting and tying your personal information like your citizenship, date of birth and marriage status to your identity.  You own your identity and you control the ability for anyone to access this information. You can provide the rights to view as much or as little of this information to anyone who can verify that it was signed and validated as accurate using the Bermuda government’s digital signature.  You then have control over who and what has the rights to access your personal data.

You go to Belco and ask them to tag your utility bills against your identity to verify your address.  You go to your bank and ask your bank to tag your credit profile against your identity.  You ask your lawyer to tag your will against your identity.  Any provider you interact with can encrypt details and information about you against your identity and if you so choose, you could have multiple identities.  Again, you control who has claims to each piece of information stored against your identity and each bit of information can be validated by independent authorities like Belco, your bank or your law firm.

With your own secured and validated identity, instead of having to sign worthless pieces of paper and constantly provide proof that you are who you say you are, you can simply provide claims to information stored against your digital identity.   Your data only needs to be verified a single time rather than over and over. The cumbersome Know Your Client processes disappear into a verifiable digital transactions.  Even better, using smart contract mechanisms you can avoid the need to divulge unnecessary information.

Rather than having to show your id and divulge details like your date of birth (which puts you at risk of identity theft) to prove that you’re old enough to order a drink, a digital query could be made against your identity simply verifying that you’re older than 18.  There is no need to know your exact date of birth.  Similarly when trying to buy a car.  A car dealer could verify against your identity that your bank has pre-approved you for a car loan.  The dealer doesn’t need to know anything about what you earn or what your credit profile is, only that your bank has verified your identity as approved.

Where is the opportunity for Bermuda?  Bermuda has the unique position of being small enough to be able to enact change quickly while also having a mature business environment that could readily embrace and would probably welcome this change.  Bermuda could set itself at the forefront of innovation by reforming our regulatory frameworks to embrace these technologies and concepts to significantly reduce the friction of doing business.  The friction of KYC and other regulations on the ability to do business globally is a tremendous impediment to growth.  If we can reduce that friction, we can get a jumpstart as a center for regulatory innovation and improve our position as a modern international free port.

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