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The latest thinking and expert insights into the insurance industry.
11 April 2018
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Identity Blockchain: The Solution To The Weakest Link In Our System

Tey Rjula is co-founder of Tykn.tech. His organization employs blockchain technology to store and certify birth and death certificates and academic degrees. Tey is a practical expert and explains the importance of blockchain in the fight against document fraud.

Without a birth certificate you were born nowhere

You only learn to appreciate something when you have lost it. This applies in particular to a birth certificate – I once had one, but lost it. I was born in Kuwait in 1990. When the Gulf War broke out my family and I fled to Lebanon. My father is from Syria and my mother is American born, so we spoke English at home. Living in Syria was not an option as it was forbidden to speak foreign languages at Syrian schools.

Three months after our arrival in Lebanon a civil war broke out. Unfortunately the only copy of my birth certificate was lost. As part of his war strategy, Saddam Hussein had ordered the destruction of the vital records in Kuwait. The authority that used to issue them no longer exists. Therefore on my Dutch driving license my place of birth says: Unknown.

Paper, paper, paper

Since the Gulf War nothing has changed in the way governments deal with birth certificates. All over the world the birth of a child is only registered on paper. There is no form of interoperability whatsoever – so original birth certificates can only be examined at the place where they were issued.

The main consequence of this are the invisible children. Worldwide around 230,000,000 children under the age of five have not been registered. Hence, officially they do not exist. Tens of thousands of child refugees are undocumented. They do not have a certificate that proves who their father and mother are. This primarily concerns children from Syria and Afghanistan.

What’s more, most insurance companies say that the main threat is fraud with personal documents. In 2016 there was a 20% increase in fraudulent claims and that only includes the cases that were discovered.

The weakest link

Birth certificates are the weakest link in the chain of identity. There is a worldwide standard for passports: it must contain a RFID chip, microfibers and it should be legible. However, the document required for the application of that passport still only exists on paper.

My first experience with bitcoin dates back to 2011 and its most popular use was on the Dark Web. There you can order false documents: false birth certificates, passports, driving licenses and academic degrees. These are respectably delivered to your home by the postman. Including thisblo great service, the total package costs around 3500 Euro. The passport you buy is genuine, but the details inside are not.

It was a first when in 2006 the German branch of Hamas purchased a birth certificate and passport in Germany. They put it to use with false details. This led to a warning by the US to Germany, the Netherlands, France and Italy stating that the passport system needed to be adapted in order to guarantee that their citizens could continue to travel to the US without a visa.

The solution

By circumstance I ended up at a Refugee Centre in the Netherlands. Here, together with others, I set up Tykn.tech. The objective is to employ blockchain technology for trust, privacy and interoperability of essential documents. We use blockchain technology for birth and death certificates and academic degrees. This technology allows legal organizations to confirm an identity digitally. GDPR compliant, paperless and independent of any central registry.

What is Blockchain technology?

Blockchain has conquered the world, the financial as well as the non-financial, but what is it exactly? In Japanese ‘taiken’ means the highest authority. I personally call it an unchangeable register. A book everyone can add to, but which can’t be changed without anyone noticing. Blockchain is a combination of separate, existing elements derived from cryptography, distributed systems, consensus algorithms and economy.

The decentralized technology ensures the system can’t be attacked anywhere or be closed down. Saddam Hussein’s tactics do not work here. That does not mean it can’t be traced. Right from the beginning bitcoin has been used by criminals and money launderers, but actually that is pretty stupid. Bitcoin has an inbuilt, undeletable DNA that leaves traces all the time and everywhere.

Open or with permission?

There are two types of blockchain. The first is permission based. Here access to the system is determined by a group of users. Secondly, there is open access, allowing everyone access, like for example bitcoin.

Registering a legal identity needs to be guaranteed and issued by the authorities. That is why we have chosen a permission based system. We help governments, NGOs and other organizations with KYC (Know your customer) through a set of APIs.

An example of such an application is the Ana app. Ana means ‘I am’ in Arabic and this app stores my data, driving license and other documents. If I go to the bank to open an account, the employee puts the app on the scanner and my identity is confirmed. If I want to buy a bottle of champagne in the Netherlands, I need to prove that I am over 18 years of age. The shopkeeper scans my Ana app and sees my photo and the confirmation that I am 18+. Exactly the information he needs, nothing more, nothing less.

Lots of potential

The application of blockchain technology in identification also has a lot of potential for insurance companies. Take for example the GDPR requirements concerning data privacy and data protection in 2018. Blockchain is much more effective than centralized solutions which are an open invitation to hackers, with all additional costs. I also see potential in a worldwide, or at least an international approach to tackling fraud.

Our mission: ZINC 2020

Tackling fraud and other business applications are very interesting. Although it is our mission that is closest to our heart: ZINC 2020. It stands for Zero Invisible Children in 2020. As far as we are concerned by that year these children will no longer be invisible, but invincible.

 

Learn more about blockchain in this webinar: “Blockchain for insurers, the future of fraud fighting.”

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