Standardizing Legal Entity Verification
The main value of a platform such as Uber or AirBnB is that it reduces transactions costs for participants that use their network.
Before smartphones with connectivity and good map functionality, it wouldn’t have been economically viable to stand on a street corner and hope that a driver you don’t know would pick you up and take you to a predetermined place. Taxis were really the only solution — but you had to call one beforehand — sometimes far in advance and there was a price to that.
Platforms such as Uber come along and are able to use these technological advances to demand and supply, value through cashless exchanges/credit card in-app; and create through a rating system. You can look at a platform like AirBnB with a similar lens.
I see what we’re doing in self-sovereign identity as further reducing the costs of business/transactions. And this incremental value value is achieved by reducing trust costs across silos.
How can an organization trust that a supplier located hundreds of kilometers away is who they say they are? Or, as a person, how can I verify that the organization receiving my personal data is indeed who I believe them to be?
There is a fundamental principle which often hinders development in the digital economy: trust.
As the global economy continues to go digital, overcoming the challenges associated with digital identity management is crucial. The ability to accurately identify legal entities represents a huge part of that effort. Only by establishing trust between legal counterparties can the true benefits of a digitally enabled world be realized.
Note: my thinking around network effects related to decentralized (non-siloed) ecosystems started while reading this wonderful 2019 blog post by Sam Smith.
For those interested, I recorded a podcast with Karla McKenna to talk about why accurately identifying Legal Entities represents a huge part of overcoming the challenges associated with digital identity management.
Karla is an international standards specialist in the area of financial services. Ms. McKenna is the Head of Standards for the Global Legal Entity Identifier Foundation (GLEIF) for which she is responsible for facilitating the development and implementation of GLEIF standards and leveraging international standards from organizations such as the International Organization for Standardization (ISO) to maximize data quality and the operational integrity of the Global LEI System.
About Episode
Some of the key topics covered during this episode with Karla are:
- What is the State of Legal Entity Verification today?
- What is a Legal Entity Identifier (LEI)?
- What is a Verifiable LEI (vLEI)?
- Should Governments be involved in the issuance of LEIs?
- Who can issue LEIs? Can Issuers monetize the issuance of LEIs?
- How are Relationships established between Legal Entities and Natural Persons?
- How GLEIF is establishing itself as a Root of Trust for Digital Trust Ecosystems.
- How to Chain Credentials and enable dependencies to be set between credentials within a value chain.
- Can vLEIs work with the Aries/Indy stack?
- What are some current Use Cases for vLEIs?
Originally published at https://northernblock.io on July 7, 2022.
