Rethinking digital identity in emerging markets

Access to financial services, which many overlook, is a distant reality for a significant portion of the population. No savings account, no way to secure a loan, no insurance for life’s uncertainties. This is the norm for countless individuals in emerging markets. And, the primary reason is lack of formal identification. According to the World Bank’s Global Findex Database, around 1.7 billion adults worldwide remain unbanked, with the majority residing in developing economies. This exclusion impedes economic growth and keeps income inequality in place. At PixelPai, we’re proposing a way to change this.

We believe in the power of digital identity to increase access to financial services and extend universal income to more people. That is why, in collaboration with the University of Copenhagen and eToro Denmark, we’re creating GoodID: a new ID infrastructure for the GoodDollar (G$) protocol. GoodDollar is a Web3 initiative that distributes universal basic income (UBI) using blockchain technology. It’s already making a noteworthy difference, with over 1.8 million peer-to-peer transactions valued at G$40.1 billion. Yet, many users still face financial barriers due to the absence of formal IDs.

With GoodID, our goal is to create a voluntary identification solution that lets users identify themselves within the network and beyond, on other blockchain protocols and in the real world. We will integrate this into the existing GoodDollar architecture and smart-contract infrastructure on Ethereum, Fuse, and Celo blockchains. Moreover, by using blockchain, we cut out intermediaries and reduce costs, making the process efficient and trustworthy. Users will control their data and privacy, deciding who gets to see it.

Currently, GoodDollar uses a basic face-verification algorithm to prevent Sybil attacks, but this isn’t enough for standard credential-based identification. When implemented, GoodID will enable unbanked users to access basic financial services using their GoodDollar transaction history in place of a formal credit score. This aligns with the Sustainable Development Goals (SDGs) 1 and 10, focusing on alleviating poverty and reducing income inequality. Promoting financial inclusion also supports SDG 5, which aims for gender equality.

We are committed to applying our expertise in digital ID solutions to contribute to the design aspects of this initiative. Given our focus on research and exploration in this expanding field,  our role primarily centers around designing smart contracts tailored for digital identity management within the GoodDollar ecosystem. Through iterative user acceptance testing, we aim to gather valuable insights and refine our solutions based on practical feedback from early adopters. Additionally, we prioritize user privacy and security by using encryption to protect users’ identity data and carefully selecting the attributes stored on the blockchain while assessing data leakage risks.

Looking ahead, the GoodID project opens up a world of financial opportunities for the unbanked. Through this collaboration, we seek to not only design a novel ID solution that supports financial inclusion and advances the broader SDGs, but also to contribute to new research findings and deepen knowledge on blockchain-based identity solutions.