FIO Identity

PLEASE NOTE: This is just a draft idea, exploring some possibilities of the FIO protocol. It is NOT final or even suggesting at this time a path for FIO to take.

The traditional financial world, for better or for worse, works with verified identity through KYC (Know Your Customers) and AML (Anti-Money Laundering) compliance requirements. Even though this is only 0.1% effective at preventing crime, it is the reality we live in today (until we change it). Some examples of the problem:

And yet, if FIO wants to help the billions of unbanked people who want access to decentralized open finance tools while also providing a decentralized (as opposed to centralized or federated) solution for those who still have to play the KYC/AML game, we should look at creating verified FIO addresss. Depending on the need, this may end up driving the decentralized business strategy for the FIO Protocol which benefits all participants as the network effect grows. Billions of people and the many thousands of organizations that want to serve them have a problem FIO is uniquely positioned to solve.

Problem

I want to interact with a real human being, not someone claiming to be someone else (or 1,000 someone else's). I don’t want to store the KYC or profile information for that human on my servers. I may not want to do KYC at all and just want verification that some other organization I trust did do KYC. If I do KYC, I want a mechanism to, with the permission of the human, expose aspects of that KYC to third parties, and be rewarded for it.

Imagine how much we could improve the credit process if Equifax, Experian, and TransUnion were decentralized and the data they collect was in our control?

Solution

I’ll walk through an example to explain how FIO might help with this situation.

John Doe controls the FIO address john@doe via their private key.

I want to interact with Organization A (kyc@a, account aaaaaaaaaaaa) which requires KYC. I go through whatever process they require (upload identity documents, FaceTec, etc). I also sign an authentication message with my john@doe private key, proving the human they just verified has control as of right now of john@doe. kyc@a derives from their key path two new secret keys. These key paths are stored in a vouches table scoped to aaaaaaaaaaaa to associate them with john@doe via data encrypted with kyc@a’s private key:

Table: vouches

index	scope	data

index	scope	data
0	aaaaaaaaaaaa	<encrypted text>

With data decrypted as:

fio_address	voucher_secret_key_path	voucher_data_secret_key_path	voucher_type

fio_address	voucher_secret_key_path	voucher_data_secret_key_path	voucher_type
john@doe	m/44'/194'/0'/0/1	m/44'/194'/0'/0/2	1

The voucher type of 1 would mean KYC. Other voucher types are described later.

The derived keys are then used to encrypt parts of a message on chain essentially saying “We’ve KYCed john@doe and collected the following information.” This data on chain might be stored in a vouchers table:

Table: vouchers

index	scope	voucher	voucher_data

index	scope	voucher	voucher_data
0	aaaaaaaaaaaa	<encrypted text>	<encrypted text>

The voucher content is encrypted with the secret from voucher_secret_key_path (the key from m/44'/194'/0'/0/1) and the voucher_data content is encrypted with voucher_data_secret_key_path (the key from m/44'/194'/0'/0/2). With each new entry, a new set of keys on the key path are used.

voucher (decrypted via voucher_secret_key_path)	voucher_data (decrypted via voucher_data_secret_key_path)

voucher (decrypted via voucher_secret_key_path)	voucher_data (decrypted via voucher_data_secret_key_path)
`{ "account": "abcdefghijkl", "fio_address": "john@doe", "data": ["first_name", "last_name", "date_of_birth", "country_of_citizenship", "country_of_residence"] }`	`{ "account": "abcdefghijkl", "fio_address": "john@doe", "data": ["John", "Doe", "1/1/1980", "United States", "Puerto Rico"] }`

kyc@a then presents information for john@doe to encrypt and sign which essentially says “Here’s the table index where kyc@a vouched for john@doe encrypted with this secret key.”

{
	"data": [{
		"validator_account": "bbbbbbbbbbbb"
		"validator": "kyc@b",
		"vouchers_index": 0,
		"voucher_secret": "5KN6kXyaxs68b9QqauTf1g13FkawCPL4baVzwLy9NcozyzNcLtu",
		"voucher_data_secret": "5JM3esqkLk79MsF3pq9mYvjLRUciK4DUrCrj2GdAVfdNJhtaGRu"
	}]
}

The voucher_data_secret could be used to verify the voucher_data was stored correctly. The voucher_data_secret could be stored by the user for later use or discarded.

This information would be used to construct a new transaction to add a record in the validations table, scoped for john@doe, like so:

Table: validations

index	scope	validation

index	scope	validation
0	abcdefghijkl	<encrypted text>

The decrypted validation content:

validator_acccount	validator_fio_address	vouchers_index	voucher_secret

validator_acccount	validator_fio_address	vouchers_index	voucher_secret
aaaaaaaaaaaa	kyc@a	0	5KN6kXyaxs68b9QqauTf1g13FkawCPL4baVzwLy9NcozyzNcLtu

This process is be repeated for organizations B (kyc@b), C (kyc@c), and D (kyc@d).

Organization E (kyc@e) authenticates john@doe and instead of asking for KYC, it presents a list of KYC validators or combinations of validators it will accept instead. For example, it could ask for Organization A (kyc@a) or Organization B (kyc@b) and Organization D (kyc@d) together or maybe some combination like “3 from the following list…”.

john@doe decides they trust Organization E (kyc@e)to know they have a relationship with kyc@b and kyc@d, but they’d prefer to keep their relationship with kyc@a private. john@doe sends an encrypted message via the chain with their shared key with kyc@e (similar to a FIO Request), with the following:

Organization E then verifies these vouchers on chain in the vouchers table using the vouchers_index and validator_account scope with the voucher itself decrypted with the voucher_secret. Note, they can only decrypt the voucher content with the voucher_secret, not the voucher_data content. This tells them which fields were validated, not the values themselves used for validation.

Organization E then saves a new record in the vouches table but with voucher_type 2 which essentially says “We acknowledge the identity of john@doe using validations we trust”:

New entry for vouches table:

index	scope	data

index	scope	data
1	eeeeeeeeeeee	<encrypted text>

with data being:

fio_address	voucher_key_path	voucher_data_key_path	voucher_type

fio_address	voucher_key_path	voucher_data_key_path	voucher_type
john@doe	m/44'/194'/0'/0/1		2

New entry for vouchers table:

index	scope	voucher	voucher_data

index	scope	voucher	voucher_data
1	eeeeeeeeeeee	<encrypted text>

Type 2 vouchers do not include voucher_data.

voucher (decrypted with voucher_key_path)	voucher_data

voucher (decrypted with voucher_key_path)	voucher_data

New entry for validations table:

index	scope	validation

index	scope	validation
1	abcdefghijkl	<encrypted text>

The decrypted validation content:

validator_acccount	validator_fio_address