Blockchain-based reusable KYC: the “breakthrough” for Web3 security

The CEO of Cheqd, Fraser Edward, explained how blockchain-based reusable KYC would become the “breakthrough” for security in Web3. 

The rationale is that it would improve the user experience while also unlocking new use cases. 

“Blockchain-based reusable KYC is particularly valuable in Web3”: word from Fraser Edward

In an interview with Bitcoin.com, Fraser Edward, CEO and co-founder of the public permissionless network Cheqd, spoke about blockchain-based reusable KYC, describing it as “particularly valuable in Web3.” 

Specifically, Edward talked about how the mandatory process of identifying and verifying a customer’s identity when opening an account, KYC (or Know Your Customer), would become more efficient and reusable if it were blockchain-based.

In this regard, here are the exact words of Cheqd‘s CEO:

“By undergoing the KYC process once and obtaining re-usable credentials, users can utilize those credentials with different service providers multiple times. Implementing such a system would significantly expedite onboarding processes and enhance user satisfaction, particularly when compared to the current approach.

It also allows people to use parts of those digital credentials for other purposes, like proving they are over a certain age to buy alcohol, tobacco or lottery tickets for example, without exposing everything in the credential.”

Edward also talks about the European Commission’s survey that revealed that 21% of respondents have switched markets or exchanges in the past 5 years, with a lower percentage switching current accounts or spot investment products. 

Not only that, many of the financial service providers outsource their KYC requirements to third-party vendors such as Onfido, Jumio or Trulioo, who perform the checks and provide the results. 

This means that each time users have to repeatedly provide their KYC information directly to the platforms they change or to the third-party vendors who handle this part. 

Here’s where a blockchain-based reusable KYC would streamline the whole traditional process, as well as unlock new use cases. 

Reusable blockchain-based KYC and the Trusted Data Market with Cheqd

In addition to speaking generally about the benefits of blockchain-based reusable KYC, Edward also talked about the Trusted Data Market, Cheqd’s market is infrastructure. 

Basically, Edward explained how in this data-driven world, trust and assurance in data is critical. 

It is a shift in value from generic data to “trusted data,” characterized by data that is transportable, cryptographically verifiable, with guaranteed provenance and traceability. And indeed, the more trustworthy the data, the more customers are willing to pay to get it. 

“Trusted data” also means the “signals” that support risk reduction with regard to lending in DeFi. 

And so, such data may include transaction history on the chain, signals and social evidence such as DAO contribution history, ownership of real-world assets, and even Web2 credit score and borrower KYC data. 

In this scenario, the lender (the verifier of the trusted data) can use Cheqd’s payment infrastructure to pay the issuer of the trusted data (such as a consumer credit agency) in a privacy-preserving mechanism.

With Cheqd, the transaction (the loan) remains trustless, but the relationship between the borrower and the lender has signals that support trust, enabling a more efficient crypto lending market while maintaining what makes crypto lending unique.

Cheqd: nominee for startup of the year

Taking a look at Cheqd’s official Twitter profile, the startup is moving forward with its expansion, communicating its presence at several conferences. 

Not only that, HackerNoon’s celebrated technology open-community has nominated Cheqd as startup of the year. 

As the company tries to make itself known, its CHEQ token is trading at $0.054 at the time of writing. A 10% dump from its price a week ago of $0.060.