Civic (CVC) Review: Securing Digital Identity on The Blockchain
Civic (CVC) provides on-demand, secure and low-cost access to identity verification services using Blockchain technology.
We all know how cumbersome it can be to constantly identify ourselves over and over when interacting with online providers. Civic's goal is to eliminate this redundancy of having to verify identity multiple times when engaging with these service providers.
Moreover, Civic aims to secure your digital identity from ever being hacked or exposed to unwanted parties through use of cryptography. This is particularly important given examples such as the Equifax hack last year.
CVC is the native token that is used in the Civic ecosystem where service providers will buy access to the secure user identification data.
In this overview, we will give a comprehensive overview of Civic, its technology and the prospect for the CVC token. Let's jump in!
How Civic Works
Similar to how the Bitcoin Blockchain stores a public ledger of payments, Civic stores a public ledger of verified identities.
The platform categorizes 3 types of participants – Users, validators and service providers.
Through the Civic ‘Secure Identity’ app, users input their personal information (name, address, tax ID or social security number, passport number, driver’s license, etc) and secure it using biometric fingerprint scanning. No username or password is required.
All personal information is stored on the users phone and encrypted so it can’t be seen directly by the Civic platform. Civic instead stores ‘attestations’ or references to your data on the public Blockchain.
Validators are 3rd party entities whose job it is to confirm that the information users put in is correct. These entities in most cases are also service providers (Financial institutions, Governments, Utility companies, etc).
These individuals / entities are incentivized with CVC tokens to crosscheck the users information with public and financial records to make sure it is accurate. Once Validators verify the information, they sign off on it and can begin selling the encrypted versions of users data to Service providers on the Civic marketplace.
Service providers / requesters are businesses or institutions (Hotels, exchanges, Banks, etc) that register with the CivicApp in order to identify their customers more efficiently.
Traditionally, Service providers would have to pay millions of dollars to use identity verifications services in order to comply with legally required KYC (know your customer) processes. In 2016, the average bank was reported to spend $55 million on KYC compliance.
Civic helps service providers save significant time and money on these services, by simply purchasing the ‘access rights’ to users’ information using CVC tokens (the currency of the CIVIC ecosystem).
The more service providers have access to the encrypted references to a users data, the more seamlessly the users can engage with each of these service providers.
The CVC tokens paid out by Service providers go to both the Validator and the user. The transfer of funds between one party to the next is automatically initiated through Smart Contracts.
History & Team
Civic was started by Vinny Lingham, a South African entrepreneur with a simple vision that a person’s identity should be held by the person themselves. He stated "You own it, you don’t get it from your Government".
Civic began integrating with partner sites and developing its first set of Smart Contracts in Q3 of 2017.Their platform went into Alpha phase in Q4, providing KYC services including document verification and the ability for Validators to confirm identities to earn CVC tokens.
Q1 in 2018 saw CVC progress to Beta version 1, expanding CVC token transaction capabilities amongst partners and identity providers.
As of today, Civics product is available on the web and mobile app. They’re currently doing open enrollment for service providers and inviting users to submit information that can be validated on the network.
Vinny’s previous ventures include being the founder of a digital gift card platform, Gyft, which was acquired by First Data Corporation in 2014). He brings over a decade of experience from the ecommerce space, which makes him very familiar with KYC and other identity authentication processes.
Vinny and the rest of the executive team are based in San Francisco:
Jonathon Smith – Co founder and CTO
15 years of experience in banking and technology advisory for companies like Deloitte and RBS.
Chris Hart – COO
20 years of senior finance and IT experience, most recently as the CFO at Guidebook, Inc. and Nextag
ICO & Token Performance
Having raised $33million in less than a month with little to no marketing, Civic stands out as a successful ICO story that did things “the right way”.
They managed to rally support from the crypto community by first launching a product, engaging in Telegram group chats and posting great thought pieces on popular tech blogging sites like Medium.com.
The token launched in July 2017 at a price of $0.16. The token has had 2 major peaks since launching, once on August 11th when it went to $0.64 per token, and again on January 3rd, when it hit $1.37. You can buy CVC on exchanges such as Kucoin and Poloniex.
- Civic aims to prevent Identity fraud, which is a massive issue as outlined in Civics white paper; in 2016; 15.4 million U.S adult victims. Losses amounting to $16 billion
- Service providers could save billions of dollars annually on KYC compliance
- Users get to save time by not repeatedly verifying their identity for each new service provider they interact with. Users in underdeveloped countries will benefit by having a digital identity which they can use to access basic health and financial services, as well as the ability to vote
- Reliability & Verification Process of Validators
In order to verify users personal information, Validators need access to the unencrypted version of that information. They are expected to use the same traditional methods of verification (such as cross-referencing with public records and other KYC compliant processes) that Civics app is supposed to be eliminating.
This means validators will still need to pay the costs of identity authentication, with the hope that they can recoup their losses by earning CVC tokens. However, Civic's white paper indicates that costs of identity verification under traditional methods are only getting more expensive. This may pose problems down the road for validators looking to profit from verifying user identification.
This leads to another issue, where incentives may not be strong enough to prevent malicious validators from leaking users personal information to parties outside of the Civic ecosystem. If these parties are willing to pay more than what validators can earn in CVC tokens, there’s no guarantee that bad actors won’t take advantage of the situation.
Validators (by definition) must have access to users readable data in order to do their job. This exposes a possible weakness in the system if incentives are not strong enough to keep validators trustworthy.
Challenges Marketing to 3 different Users
- Service providers on board to accept validated identification from users
- Users to sign up and provide their identification
- Validators to validate the information users provide in order to sell the attestations to service providers
Each group cannot exist without the other 2, and so if Civic struggles to acquire anyone of these groups, the entire ecosystem does not work.
The argument against this point is that the incentive to earn CVC tokens will draw interest and participation from users and validators, then all service providers have to do is sign up. It remains to be seen how far the platform will scale up with tokens as the primary incentive.
Identity is such a sensitive issue for users, making it almost unavoidable that Civic will have to explain to new users how the Blockchain works to secure their privacy and keep their data safe. This could become a hindrance to mass adoption.
- Selfkey: a Hong Kong base Company helping individuals control and store their digital identity on the Blockchain to be used for different interconnected services such as Citizenship, financial services transactions and more
- Decentralized ID: a platform that puts the user in control of their ID and personal data, which is transferred securely over the Blockchain and stored exclusively on the user’s device.
Should You Consider CVC?
The concept of securing digital identity is highly intriguing, and is also fundamental to what the Blockchain represents – decentralized trust. I believe any token that is solving a real problem, and is doing so by abiding by the basic principles of what a Blockchain is and should be used for is an investment worth considering.
Long term, the issues referenced under ‘Cons’ of Civic need to be addressed to find a viable solution, but in the short term, there is a very strong case to be made for why CVC may become one of the hottest tokens on the market:
Some have speculated that CVC’s peaks have been caused by a large surge in token buys by whales (individuals or entities that hold large amounts of CVC). Large companies, who currently spend millions of dollars annually on non reusable ID verification methods, could now be buying as much reusable identity information as they can while the price of a CVC token (the currency needed to validate IDs) is still cheap.
This is what is speculated to be driving demand for the tokens (outside of general sentiment around the crypto-currency space). I believe this makes sense simply because entities who are interested in operating within the Civic ecosystem will be far more likely to purchase tokens in large quantities. The more tokens they acquire, the more customers they can automatically verify, which drastically reduces the cost of KYC compliance.
A single user may only be interested in selling their ID references to a handful of service providers, whereas a service provider will seek to acquire hundreds of thousands of identities to reduce any friction between them and customers looking to buy their products/services.
Another way to look at it is to compare the price of today's KYC services to that of Civic. Current services are in USD and for the most part will always remain fixed. ID verification on Civic, however, is priced in CVC. This will continue to cost less as CVC becomes more valuable over time.
This naturally encourages service providers who are interested in the ecosystem to buy as many CVC tokens as possible so they can have an early advantage over competitors who arrive to the ecosystem late.
This untapped service provider demand for CVC tokens could imply increasing upward price pressure over the next few months. Of course, Civic has to keep to the roadmap in order for these providers to be interested.
Civic is tackling a huge issue that fits really well with what the Blockchain has to offer.
A system of identity verification should be decentralized, open and encrypted to offer maximum value to all parties involved. This is especially true in underdeveloped countries, where lack of proper identification prevents people from voting or getting access to crucial health and financial services.
The best approach for Civic is to start small by targeting groups that exist within their own ecosystem, and provide unique identification for access to different parts of that ecosystem. Universities and large companies with 1,000+ employees are a great example of this.
The users would be the students / employees, and the service providers would be the cafeteria, gym, dorm room and classrooms. From there, Civic will acquire a healthy database of users, whose validated identities can be made accessible to service providers outside of the companies they work for and the schools they attend.
This approach should ensure a more organic form of growth, by allowing users to ease into the Civic ecosystem without immediately disrupting their everyday processes for identity verification.
Disclaimer: These are the writer's opinions and should not be considered investment advice. Readers should do their own research
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.