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Media

Why Blockchain-Based Company Identity is Essential

Blockpass | August 2018

A lot of the focus for the crossover between blockchain technology and ID verification recently has, by necessity, been on human identity — particularly KYC.

The area is a hot topic at the moment with regulation and compliance for the industry key areas to address. Despite this, there are other aspects of identity are also important. One other area that is necessary is the ability to enable the identity of companies. In a similar manner to human identity, anonymity for companies is not conducive to a mainstream adoption and is certainly not acceptable from a compliance and regulation standpoint. Company identity will also require established, verified human identities to be tied to them (this is one reason for the current focus of Blockpass on human identity); however, development of company identity verification options are already under consideration.

Companies need to be able to fully interact with the blockchain to gain the most from its benefits. In a similar manner to humans, companies need to be able to register ownership of physical objects, digital assets, intellectual property etc. in order to be able to trade them at a human or company level. In using a blockchain-based system, this trade can be carried out faster and more securely than other available options and without having to go through middle-men in order to guarantee the veracity of that which is traded. Not only can trade be more efficient, but processes can be improved with automation, removing huge inefficiencies thanks to blockchain technology and smart contracts, which could then be tied to the company’s blockchain identity. Without being able to identify the company behind the product, application or smart contract, there will be a risk of users falling for fraudulent options or offerings. Another possibility enabled by having a company blockchain ID is for that company to be able to set standards, requirements or limitations for people who wish to provide information to it, or access its services, or purchase items from it (again, necessitating a verified human identity first). Without a verified company ID, users — whether they be human or businesses — will not be able to ascertain with any degree of certainty whether or not they are interacting with the entity they think they are, or a malicious actor pretending to be a company, and boundaries necessary for many regulatory standards will not be able to be implemented.

Two industries that would benefit greatly from blockchain and blockchain-based company identities are the shipping and logistics industries. Both industries have areas that could be significantly improved by the application of new technology. For example, the shipping industry still relies heavily on physical documents, such as bills of lading, being exchanged between importers and exporters which results in delays and high costs (processing paperwork can sometimes cost more than the shipping of the container); whereas supply chains have inefficiencies but also have issues with transparency and baseline standards.

In a blockchain system where companies have their own identity, businesses and consumers alike would be able to trace the provenance of a product to its source — improving transparency for all those involved — hugely beneficial to auditors and regulators in areas such as shipping and supply chains who would see a significant decrease in the time and effort required to ensure standards are being met. Being based on a blockchain system would also be beneficial to these industries as it would eliminate fraud and improve the security and safety of documents (they could not be stolen, damaged or lost). Repetitive KYC would be eliminated with an established, blockchain-based identity, enabling companies to cut down on the time spent complying with regulations. In removing the need for paper-based documentation, much of the hassle and cost could be removed from shipping and logistics, particularly with the use of smart contracts — companies could set up automated agreements to take place immediately on conditions being fulfilled (or not) without having to rely on third parties whilst simultaneously making the information more readily accessible to those who need to view it or monitor it without specialised equipment, in real-time.

The fact that there are already companies successfully testing and using blockchain for shipping and logistics — including some significant, established companies — shows just how much merit these ideas have.

Provenance: This UK-based start-up is focused on tracking the authenticity and social and environmental credentials of goods from their origin — using the Ethereum blockchain to make supply chains more transparent. Its protocol is designed to enable secure traceability of certifications and other relevant information in supply chains. Its proposed DApp would enable the authenticity of physical items to be established, including a record of where it has come from.

Wave: This solution seeks to connect all members of the supply chain to a decentralized network in order to allow them to directly exchange documents. The company has created a peer-to-peer, decentralized network that connects the various members involved in international trading supply chain — carriers, banks, forwarders, traders and other parties. This will allow users to manage ownership of documents on a blockchain -eliminating disputes, forgeries and unnecessary risks whilst removing the inefficiencies of relying on third parties.

Maersk and IBM: Having previously tested blockchain in shipping by tracking roses that were shipped between Kenya and the Netherlands, the two companies are expanding with a new joint venture to build blockchain solutions to improve the maritime shipping industry. The solutions are intended to replace inefficient processes and assist in tracking freight in a global supply chain, amongst other things. That these two industry giants are using blockchain for this highlights how important having the ability to identify companies in a blockchain system will be. Following an announcement of this made in January of this year, the two companies have just announced TradeLens, which enables digital collaboration across the multiple parties involved in international trade in order to solve huge inefficiencies and create and promote an industry standard for safely digitising and transmitting supply chain documents.

In short, companies stand to gain multiple benefits from utilising blockchain technology. In the business world, a company is more than one human — and more than just a group of humans; workers are assigned different positions in the company, employees are hired and eventually leave, deals are made between one company and another — not between individuals. So too in the blockchain world, a company cannot simply be represented by one person: a blockchain-based company ID is the way forward.

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