KYC verification create transparency and sense of trust among a community of users. Everyone on the platform is aware that the other user was made part of this platform after through vetting. Credentials used for user registration were checked with the help of identity verification services. Various platforms utilise different KYC services or even a proprietary KYC software for complete identity verification. Blockchain technologies can be quoted as an apt example of a platform that has lot to benefit from KYC identity verification.
KYC verification for Blockchain
Blockchain technology is in itself considered an enclave as far as data security is concerned. Access to resources stored on blockchain is restricted. This sense of data security and huge potential presented by this security has contributed to widespread adoption of blockchain across multiple industries. KYC based identity verifications add an additional layer of security in blockchain technology. It makes sure of the fact that every one that has the access to blockchain based resources has the true identity that they are claiming to have.
How KYC verification works?
How a typical company wants to operate KYC verifications for its blockchain technology depends on the regulatory guidelines and the intrinsic needs of that particular blockchain product. User information is mostly collected from end-users and they are asked to display an appropriate identity document to corroborate their presented credentials. Driving licenses, identity cards or passports are favored document formats to perform KYC verifications. In case of address verifications, utility bills and bank statements are also admissible proof of address.
Why Blockchain needs KYC?
As explained earlier, blockchain is basically a centralised platform in which the access is limited to only a limited number of people. Just think of facebook, but instead of opennly logging in or signing up for its profile, you need to have personalized code that only you can enter to access your profile or set up a new account. Such is the way, in which a typical blockchain based facebook will work. Now, as security of assets and data stored in those assets – not to mention the users who are using those assets – is essential to blockchain based product, so KYC verification tends to be the perfect gatekeeper.
Blockchain & KYC – the next frontier
Experts are hoping that with rampant data breaches, compliances like GDPR focusing on user data rights and privacy based legislation, KYC and blockchain will become the favored medium to launch new technologies and make them air-tight against malicious attacks. KYC software have come a long way with modern day technologies being incorporated into KYC verifications. Artificial intelligence, OCR based data extractions and various other new trends have been made part of KYC based identity verification services.
Many tech companies that are working in blockchain technology have started partnering up with KYC services providers to eliminate risk of encountering individuals with fake or doctored identities. It is high time that these 2 new upcoming trends of modern technologies teamed up to launch products that are not only safe to use but also protect the overall data rights of their users.