Ishan Pandey: Hi Chris Were, welcome to our series “Behind the Startup.” Please tell us about yourself and the story behind Verida?
Chris Were: I’m the CEO and co-founder of Verida. This journey started two years ago as I started diving deeper into blockchain technology. I had a significant interest in enabling people to own their own data and blockchain technology. Blockchain seemed like a great tool to make that a reality.
I started researching the existing technology solutions and realized that there was a significant missing piece around managing private data for end-users. Through that process, I started developing some early proof of concepts on how to solve that problem.
Over the last two years, those proof of concepts has evolved to become multiple SDK’s for developers and a mobile application for end-users. In that time, we have validated the demand in the market with enterprise partnerships that are utilizing the technology to create exciting new innovative platforms in the emerging Web3 space.
We’re very early in the journey, but it’s incredibly exciting to see the self-sovereign projects that are being developed on the Verida network.
Ishan Pandey: Please tell us a little bit about the Verida protocol and its data wallet and how does it exactly help consumers take control of their digital lives?
Chris Were: The Verida protocol is a network of personal data designed for software developers to easily build software where users own their own data and control their identity.
Web3 is an emerging space that allows crypto to be used as payments and tokens to create new financial ecosystems.
We’ve seen an explosion of those ecosystems in the decentralized finance (DeFi) space in the early days of crypto. We are taking that same innovation formula but extending it beyond financial transactions to also include personal data, identity and decentralized messaging between end-users.
We think that by adding those building blocks, we can empower Web3 developers to have the necessary technology stack that allows them to disrupt existing Web2 creating the decentralized self-sovereign future that the proponents of Web3 believe in.
The Verida “Data Wallet” which we call the “Verida Vault” is a consumer-facing mobile application. It enables end-users to create their own identity, sign in to decentralized applications to unlock encrypted personal data, facilitate crypto transactions, receive decentralized messages and consent to how their data is used in this new decentralized ecosystem.
It’s designed to be multi-chain, which is a critical requirement to ensure interoperability across different decentralized applications and the emerging multi-chain world.
It’s designed to have as simple a user experience as possible because there’s a lot of complexity with existing Web3 applications that deal with cryptocurrency and tokens. We believe that it’s essential that there’s a simple user experience so that people new to this space can adopt it without having a steep learning curve.
Ishan Pandey: Data privacy today is one of the primary concerns of all consumers involved in the crypto ecosystem. From a regulatory standpoint, what are some major compliances that entities involved in providing services in this space should abide by?
Chris Were: Data privacy is paramount. One of the challenges is that (almost all) Blockchain networks are public by design and are not suited for storing data.
This is why the Verida network is so important, as it provides a mechanism for users to use private keys for encrypting and managing their private data stored off-chain. Users can consensually (and privately) share their data with others while only making it available on-chain when absolutely necessary.
In Europe, the GDPR regulation is a driving force for enterprises to find new ways to avoid storing personally identifiable information (PII). GDPR introduces a lot of critical privacy considerations that require a rethink of how consumer-facing software is implemented and designed.
In South Africa, the Protection of Personal Information Act (POPIA) is very similar to GDPR. We’re already seeing partners, such as Primacy, winning contracts to build solutions on the Verida network in South Africa to meet those regulatory changes.
While in the United States has introduced rulings around health data interoperability making it easier for individuals to claim and take ownership of their own health records.
This is an increasing global trend, where new regulations open up access to centralized data that individuals can now access. This opening of data and increased regulation will continue to grow as people gain an increased awareness of these problems and the benefits of having sovereignty over their digital life.
Ishan Pandey: Could you share with us your thoughts on the present condition of crypto’s security? What needs to be done to dispel the widespread belief that investing in or holding digital assets is a security risk?
Chris Were: Firstly, I think it’s important to recognize that all digital activity comes with risk and different people have different risk appetites. As such. The security risk for one person may not be the same for another.
In the current centralized finance system, individuals entrust third parties (such as a bank) to access and control all their funds. In exchange for handing over this control, individuals have someone to call on if they forget their password. You can call the bank and get your password reset.
On the other hand, with crypto, you have complete ownership and control over your funds. If you lose your seed phrase or private key, then you’ve lost those funds forever. You are moving the burden of responsibility onto yourself. We’re still at a very early stage with people understanding this and there are lots of instances of people losing significant amounts of money because they’ve lost access to their keys.
There are some outstanding technologies to help manage this and I think we’ll see them becoming more popular and integrated into some of the wallets in the coming months/years. Some of these strategies include social recovery. An individual can share parts of a private key with multiple, trusted friends.
If multiple of these parties agree, they can recover your seed phrase for you. Even if you lose your keys, if you can get three of your five friends to come together, then you can actually recover your key.
There’s some exciting work being done with biometrics. The ability to have a combination of face recognition, voice, and other device biometrics that can effectively create a private key that’s unique to an individual. These unique combinations of biometrics can then be used to recover a private key from an encrypted storage service.
At the end of the day, it’s up to individuals to decide what risks they’re prepared to take. I think enabling the individual to make an informed decision of control and risk is a huge step forward for both financial services and managing our digital lives.
Ishan Pandey: What are your views on Web3 and how can it be leveraged in different industries?
Chris Were: Well, if you look at Web2, it is effectively the creation of an interactive read/write type of Internet, where users could communicate and connect, but it’s owned and controlled by large tech companies, large monopolies.
Web3 is incredibly exciting because it builds on that read/write web, but it brings with it data ownership for users and creators.
First, let’s look at what Web3 is exactly.
Web2 created the interactive read/write web we know today, Web3 extends this to enable communities to own the platforms.
This allows a new era where communities can build, operate, profit and contribute to the digital platforms of the future. That’s an incredibly exciting new world.
We see a huge potential for Web3 to create a hyper-personalized future where an individual can own and control all of their data. This could be information relating to their health, their finances, their location history, their purchase history, through to their dietary needs and interests.
If a user has ownership and control over all their digital data, it introduces a really exciting new world across almost every industry.
I can consensually (and anonymously) share my health data with a recommendation engine that will provide regular tips on how to improve my health for a higher quality of life.
I may opt-in to AI algorithms to train over my health data and receive a regular stream of tokens as payment. I may agree to be contacted by clinical research companies if my health data is a match for candidates to improve healthcare treatments.
I can walk into a shopping complex (or scan a QR code in an online store) and agree to temporarily share my data to receive a personalized recommendation of things I will likely be interested in.
There is also the emerging Metaverse that is a digital alternative to our real world. This is a whole new industry that is in its formative stages. While the current focus is gaming-related, the metaverse has a huge potential to transform many existing industries.
If we can allow users to own their own data and enable developers to access that data in a consensual way to create new innovation. We’re currently seeing the benefits of this trend in DeFi as it allows developers to innovate and experiment with new financial models.
In the same way, we think that if you can unlock people’s personal data and allow developers to innovate, we can create this new hyper personalized world. That provides immense value to improve the lives of those participating in this Web 3 future.
Ishan Pandey: How do you see the Web3 revolution impacting the development of dApps and the DeFi space?
Chris Were: The DeFi space and decentralized apps at the moment are quite simple in functionality. There’s some structural complexity with lots of blockchains, multiple layer ones, and two chains, making it complicated for people to navigate. DeFi is focused on tokens and finance in a rather closed ecosystem.
The Web3 future that I see has a lot more connectivity with the real world. DeFi is kind of living in its own little bubble at the moment. The next evolution is to unlock real-world assets and bring them across to on-chain DeFi in a provable way.
Once an individual can prove they own things like property and equities, they can leverage those assets to unlock new DeFi products and services such as uncollateralized loans. This will bring with it a whole new wave of DeFi innovation that isn’t yet possible due to the lack of a bridge between the real world and the crypto world.
The Web3 we see today is heavily focused on finance. As we start to build out the technology stack to include identity and personal data, that’s going to put a rocket under DeFi and allow it to reach a broader adoption across the global economy.
Decentralized apps are still very focused on just basic blockchain transactions. Once you start to add personal data into the mix, you open up a huge array of use cases such as; social media platforms, tokenization of personal data, personal recommendation engines across all of the e-commerce etc. This next wave of innovation will enable decentralized apps to compete with the existing Web2 monopolies.
Ishan Pandey: What role has the pandemic played in allowing traders to profit from cryptocurrency investments? Also, what do you think the post-covid-19 scenario would look like for the blockchain ecosystem?
Chris Were: Covid has obviously introduced a lot of volatility in markets. There’s a separate discussion that could be had around COVID causing central banks to print money, the inflationary impact that has caused and its impact on the crypto markets. However, what I’ve seen is an interesting mindset shift in technology disruption.
Before Covid, we identified healthcare as a really good use case for Web3 technology to assist individuals in owning and benefiting from their own healthcare data to open up innovation in the delivery of healthcare services. However, healthcare was too difficult to disrupt because it was so large with many powerful incumbents.
However Covid kind of broke the healthcare system in many places. It created this different mentality. Almost overnight, many health professionals had to work from home. It created this environment where some of the rules are thrown out the door, systems are put aside and people on the ground have to start working in different ways.
Suddenly doctors were trying to use Zoom for teleconsults, working out how to keep track of medical notes when they couldn’t access their normal IT systems etc. They started to create their own little systems outside of the traditional healthcare technology, which seems to have created this new mindset. Healthcare disruption is actually possible and not as hard as people thought.
We noticed an explosion of investment into this space, with startups looking to take advantage of new opportunities. Post-covid, I expect that trend will continue to grow with the expectation that technology can improve the delivery of services, whether that’s in healthcare, finance or how your local government operates. I think there’s a greater understanding that a new world is coming at us all very quickly. Web3 is that new world.
If you want to get involved and participate, now is the time to jump. It’s the perfect time to find new projects to be involved with, find partners that you can work with and start exploring this new world that is being created.
Ishan Pandey: What new advancements can we expect in future in the DeFi movement in its run against the traditional system?
Chris Were: We’re seeing the growing need for compliance. The FATF travel rule is increasing pressure on decentralized exchanges to consider Know Your Customer (KYC) processes for its users.
This is an interesting area that we’re actually working with partners on. The ability to bring off-chain credentials, reputation and verification into on-chain smart contracts is a key requirement for DeFi to become more regulatory compliant.
We’re going to see a trend of existing financial services providers, whether they’re traditional banks or other companies in the financial services sector, who don’t want to miss out on this DeFi opportunity.
These financial institutions will invest heavily in making crypto products available to their existing customers and trying to win new customers interested in exploring this emerging crypto world.
Here in Australia, we saw this just last week. Commonwealth Bank, one of Australia’s leading banks, announced that they’d be offering crypto transactions to their customers. I expect to see this trend continue as other innovative banks around the world want to avoid missing out on this opportunity.
The last piece will be central bank digital currencies (CDBC’s). Covid has introduced some significant challenges for central banks to support their economies that have been impacted by covid. Unfortunately, they have a fairly limited toolset to work with, which is primarily adjusting interest rates.
Having a central bank digital currency provides central banks significant flexibility to inject funds into an economy in an incredibly targeted fashion. I expect the deployment of CBDC’s will have a significant impact on existing DeFi protocols.
How these protocols continue to operate in an increasingly regulatory compliant fashion while also dealing with more restrictive CBDC’s could have a material impact on the early DeFi protocols.
Ishan Pandey: What trends and developments do you see in the industry next?
Chris Were: We see a critical piece of infrastructure involves trust. Today, there’s many different blockchain addresses, and many of them are anonymous, but we often need to know who we are interacting with.
If I receive a request for my health data, I need to be able to trust that it’s come from someone who should have access to that information and they are who they claim they are.
It will be critical to bring trust to the blockchain transactions, data interactions and messages we share between others in the Web3 we are all building. This will be a necessary building block for Web3 to reach maturity and widespread adoption across individuals and enterprises.
We are currently focused on getting out our core protocol and network live. This involves helping individuals take ownership and control of their personal data while providing connectivity for select parts of that data to be used on-chain. This is a critical piece of infrastructure for Web3 that will be live in 2022.
We have already commenced significant research in this area and we’ll be providing more information in our upcoming white paper.
Disclaimer: The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence, asking the right questions and equipping readers with better opinions to make informed decisions.
The material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company.