Today we’re excited to be a launch partner and key contributor to Verite, a set of decentralized identity standards developed with support from Block, Circle, Coinbase and Centre, as well as other leading blockchain and crypto projects, that enables organizations to issue and verify digital identity credentials for users and institutions participating in the crypto economy. Unlike alternative approaches to digital identity that involve proprietary tokenization or centralized approval mechanisms, Verite is decentralized, open-source, and free for anyone to build upon.
Little more than a decade ago, the breakthrough of decentralized blockchain technology became a reality through the Bitcoin network. Since that time, we’ve seen phenomenal strides in the application of principles of decentralization to create value for users and a more inclusive economic system for all.
Entire industries have emerged based on public blockchain infrastructure, including in media, finance, gaming, real estate, and many more. Innovations like smart contracts and layer 2 protocols built to scale transaction throughput have emerged more recently, setting the stage for hundreds of millions more users to connect to the internet of value and grow economic opportunities.
Dollar digital currencies like USDC are realizing the goal of combining these new democratizing technologies with the existing financial system, changing the way individuals and businesses access capital and the fundamentals of how value is transmitted around the world. Collectively, these advancements have become known as Web3—a paradigm shift from the top-down hierarchy of ecosystem control found in earlier iterations of the internet—a shift that puts ownership and governance into the hands of all stakeholders.
However, as innovation has continued to accelerate in all facets of the crypto ecosystem, the absence of a robust, open-source standard for sharing and verifying online identity has created many challenges for developers and end-users alike. That need led to the development of Verite.
With Verite, credentials can be issued and used to prove identity claims for an unbounded number of use cases, including KYC verification, accredited investor status, social reputation, NFT provenance tracking and more—without the need for participants to disclose personal data. These credentials are portable, incorruptible, and easily stored in a crypto wallet just like digital assets. Critically, credentials are owned by users, allowing total control over when and how identity attestations are accessed by different organizations or protocols.
Verite has the potential to unlock a variety of new Web3 possibilities, including:
- Access to permissioned pools that enable individuals and institutions to safely use DeFi protocols.
- Opportunity for individuals and entities who lack traditional forms of identification to participate in DeFi, helping to create a more globally inclusive financial system.
- Improved capital efficiency for DeFi, with credit score credentials that may enable more precise matching of a borrower's reputation, which may result in lower collateral requirements.
- NFT provenance mapped to credentials for artists and content creators to earn royalties as their NFT content is distributed.
- Robust reputation systems for DAOs to prevent sybil attacks and create more equitable governance for participants based on verifiable contributions.
Verite enables individuals and organizations to comply with financial regulations while preserving privacy—all in a manner that fits the Web3 ethos of decentralization and user ownership. Applied to DeFi, this identity framework will empower institutions to participate with on-chain borrowing and lending protocols with the assurance that all counterparties have been KYC’d. And the possibilities extend well beyond DeFi use cases.
Decentralized social networks, pseudonymous artists, online shoppers, and everyday citizens contending with economic or political turmoil all over the world stand to re-establish sovereignty over their online identity—shifting ownership of personal data out of the hands of a few private corporations and back into their own. Information about our preferences, financial history, and participation in social organizations are remarkably valuable. With Verite, users regain control of that value to share how they see fit.
Controlling our online identities represents a fundamental shift away from the data tracking realities of the internet before blockchains could ensure immutable recordkeeping—as with financial value, decentralized identity verification will unlock new, safer ways of doing business and eventually entire industries predicated on this new open framework.
Circle is already taking steps to build solutions for issuing and verifying KYC credentials for individuals and institutions to participate in DeFi, working alongside trusted ecosystem leaders including Algorand, Block, Coinbase, Compound Labs, ConsenSys, Espresso Systems, Hedera Hashgraph, Ledger, MetaMask Institutional, Phantom Technologies, Solana Foundation, Spruce, and the Stellar Development Foundation—with more on the way. Any project can begin incorporating Verite’s open-source standards today.
Decentralized identity has long been the “holy grail” of Web3 since the earliest days of the internet. With Verite, Circle is primed to contribute to the foundation of the next wave of Web3 innovation and mainstream adoption.