Exploration of current KYC methods

Currently, Know Your Customer (KYC) processes play a crucial role in various sectors, particularly in the financial and cryptocurrency sectors. There are several methods and technologies used to verify identity and identify customers.

Centralised KYC methods: Traditional KYC methods involve the provision of physical documents, such as passports and driving licences, to financial institutions or other third-party service providers. These processes are often time-consuming and require significant resources for data processing and storage. Examples of such projects include Onfido (Total funding $182.1 million, acquired by Entrust), Shufti Pro (Total funding $20 million), Sum&Substance (Total funding $37.5M), Trulioo (Total funding $474 million), Jumio (Total funding $205M, acquired by Centana Growth Partners).

Blockchain technologies for KYC: In recent years, innovative blockchain-based KYC technologies have emerged. These methods allow customers to manage their own data and provide access only on demand. By using cryptographic methods and smart contracts, KYC processes on the blockchain become more secure, efficient and transparent. They often use social graph analysis technologies such as BrightID, HUMANITY PROTOCOL and Circles.

Industry developments: There are several projects and initiatives working to improve KYC processes using blockchain technologies. Some offer innovative approaches to identity verification, such as the use of biometrics (e.g. Worldcoin, total funding $240M) or decentralised identifiers (numerous projects). Others focus on improving the exchange and storage of data between parties, such as the EigenTrust algorithm: A reputation system for peer-to-peer (P2P) file-sharing networks that assigns each peer a unique global trust value based on its download history. It provides a distributed and secure method for calculating global trust values based on the power iteration method.

Overall, with the advancement of blockchain technologies, KYC processes are becoming more efficient, secure and decentralised. This opens up new opportunities to create innovative solutions for verifying identity and ensuring security in the online environment.

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