Published on: 2015-01-09T19:36:18+00:00
The author of a mailing list suggests the need for an optional identity layer to address the institutionalization of Bitcoin and enable the flow of billions of dollars through it. This layer, modeled after the Internet, could potentially facilitate the migration of the legacy financial system to a more regulated sidechain with a stronger identity layer. Market forces should regulate the nexus between custodial and non-custodial address spaces, similar to current rules governing coin issuance.To defend private keys adequately for large sums of money, the development of hardware, such as minimalist secure hardware with additional policies on top, is recommended. These policies could include refusing to sign transactions without proof of identity for the target address. Recent events, like the Bitstamp hack, highlight the urgency to move forward with new technologies for securing private keys.However, while an optional identity layer may help solve security issues faced by Bitcoin exchanges, it remains unclear how it would address incidents like the Bitstamp hack where KYC (Know Your Customer) procedures were already in place. Requiring all transactions to have attached identity information would not be feasible for Bitcoin. In the long term, the proposal of minimalist secure hardware with additional policies could provide adequate defense for private keys. The lack of such hardware currently exists due to implementation lagging behind ideas, but the Bitstamp event may accelerate its development.Alex Daley has raised concerns about the potential threat of taking Bitcoin transactions backwards, using the example of Target being hacked and losing bitcoin addresses instead of credit card details. The Winklevoss Bitcoin Trust SEC filing also highlights the risk of loss, damage, or theft of bitcoins as they are appealing targets for hackers and malware distributors. The optional identity layer, modeled after the Internet, could potentially offer a solution to this issue by providing a "killer app." While collaboration and time would be required to create this Bitcoin Identity (BCI) layer, TNABC (The North American Bitcoin Conference) could serve as a platform for such collaboration.
Updated on: 2023-08-01T11:04:58.349196+00:00