Why Online KYC Should Be Based On Conduct, Not Biometrics!
eCommerce is failing to keep up with the technological revolution of other industries due to a fundamental assumption-based flaw in its structure.
Most online contracts and transactions are based on the notion that because both parties are KYCd, in the event of fraud, the perpetrator can be pursued based on biometrics.
This however requires a pursuer (the police or government) trust in their decision-making (which is at an all-time low) and extended periods for reconciliation.
In an attempt to add a second layer of more efficient protection, traditional financial systems have moved the responsibility of pursuers to the banks and financial regulation authorities.
They therefore have implemented controls over people's finances in order to be able to freeze and charge back funds. However, the bank and financial authorities are also no longer trusted due to numerous financial and ethical examples of misconduct.
Many have suggested cryptocurrency as a pure alternative to the traditional financial system. However, cryptocurrency alone is void of offering any basis on which to know if transacting Party A can trust transacting Party B. It also offers no technological basis for a refund or chargeback. Therefore, fraud has been prevalent within cryptocurrency businesses.
For this reason, cryptocurrency has not achieved any form of eCommerce mass adoption. Furthermore, crypto transactions also lack privacy and can often be traced back to an individual by untrusted governments. Therefore a basis for private trust is essential for eCommerce to technologically advance.
If the basis for trust in an eCommerce environment was formed on conduct and behaviour rather than biometrics, all of these risks would be eradicated.
ZKi3s with DAIOs and on-chain transacting smart contracts allow individuals to build up a reputational score based on previous online conduct that doesn't connect to personal private information like biometrics.
This then means that parties are much less likely to commit fraud as they risk losing their reputation. It also means there is no need for trust in a centralized authority to make final decisions, have control over individuals' finances, and pursue the perpetrator.
It also means refunds are made within seconds rather than days and the companies and buyers themselves make the decisions in who they will and won't financially engage with rather than banks or governments making these decisions.
ZKi3s are therefore private, instant, fraud-resistant, and more secure.