Blockchain Identity Verification Staking Mechanism

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Solution Overview

Problem

Current identity verification systems are inefficient, costly, and invasive, leading to security breaches and high costs for financial institutions and individuals, while also denying access to essential services due to the lack of proper documentation, especially in low-income countries.

Innovation Solution

A blockchain-based identity verification system that uses a staking mechanism to incentivize validators for accurate attestations, where validators are assigned trust levels and stake values based on their accuracy, and users can securely share verified information without exposing personal identifiable information (PII) to requesters.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If traditional identity verification methods are used, then financial institutions can verify customer identity, but the process is costly, time-consuming, and invasive

Engineering Contradiction:

Improveidentity verification accuracyVSAvoidverification process time

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The system performs identity verification in advance by having users complete KYC (Know Your Customer) processes once, storing verified identity data on blockchain. This preliminary action eliminates the need for repeated verification processes when users access financial services, significantly reducing time loss while maintaining verification reliability.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system creates digital copies of verified identity information stored on blockchain networks. These cryptographic copies can be shared across multiple financial institutions without repeatedly accessing original documents or re-verification processes, reducing both time and resource consumption while maintaining verification accuracy.

Inventive Principle:

Principle #26Copying

2Reliability

If traditional identity verification methods are used, then financial institutions can verify customer identity, but the cost is high ($15 or more per customer)

Engineering Contradiction:

Improveidentity verification accuracyVSAvoidverification cost

Core Design Contradiction:

ReliabilityVSLoss of energy

Solution Approach 1:

The system merges verification efforts across multiple financial institutions by creating a shared blockchain-based identity verification infrastructure. Once an identity is verified by one institution, the verification result is stored on blockchain and can be reused by other institutions, eliminating redundant verification costs and reducing overall energy consumption across the financial sector.

Inventive Principle:

Principle #5Merging (Combining)

Solution Approach 2:

The blockchain-based identity verification system serves multiple financial institutions simultaneously with a single verification infrastructure. The verified identity data on blockchain can be accessed by any participating institution, making the verification system universal and significantly reducing the per-customer verification cost from $15 or more to a fraction of that amount.

Inventive Principle:

Principle #6Universality (Multi-functionality)

3Ease of operation

If digitized personal information is stored and shared, then convenience and cost benefits are achieved, but security breaches and data theft increase

Engineering Contradiction:

Improvedigital information sharing convenienceVSAvoidsecurity breach risk

Core Design Contradiction:

Ease of operationVSObject-affected harmful factors

Solution Approach 1:

The blockchain network acts as a trusted intermediary between users and financial institutions for identity verification. Instead of directly sharing sensitive PII (personally identifiable information) between parties, the blockchain mediates the verification process by storing cryptographic proofs of identity, enabling convenient verification while reducing security risks associated with direct data sharing.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The system extracts only the essential verification information needed for identity confirmation while leaving sensitive personal data secured on the user's device or in encrypted form. By taking out only the necessary cryptographic elements for verification and storing them on blockchain, the system maintains operational convenience while minimizing the exposure of sensitive information that could be targeted by security breaches.

Inventive Principle:

Principle #2Taking out (Extraction)

4Reliability

If extensive personal information is collected for verification, then identity verification can be performed, but user privacy is compromised

Engineering Contradiction:

Improveidentity verification accuracyVSAvoiduser privacy

Core Design Contradiction:

ReliabilityVSLoss of information

Solution Approach 1:

The system applies local quality by storing different types of information in different locations with different access permissions. Sensitive personal information remains locally secured on user devices or in encrypted storage, while only necessary verification proofs are stored on blockchain with controlled access. This enables reliable verification while preserving user privacy by ensuring that extensive personal information is not centrally collected or exposed.

Inventive Principle:

Principle #3Local quality

Data Source

PatentUS20240256703A1Systems and methods for providing identity verification services

Publication Date: 2024.08.01 CIVIC TECHNOLOGIES INC

AI summary

Systems and methods for providing identity verification services to users by providing a staking mechanism to incentivize participants in an identity verification system to be truthful and accurate and determining validator accuracy and associated setting of fees for using validator attestations to create an efficient, private and secure system.