Traditional financial securities such as stocks, bonds and other real world assets are increasingly moving to blockchain infrastructure.
This happens due to the many benefits of this technology, such as lightning fast settlement, 24×7 trading, access to international investors and a significantly increased liquidity.
The World Economic Forum predicts that 10% of the global GDP ($7.8 trillion) will be stored on the blockchain by 2027.
Dr. Oluseyi Akindeinde, the Co-Founder/CTO at Digital Encode Limited, even wants the Nigerian government to take proactive steps by tokenizing the Bank verification Number (BVN) and/or the National Identification Number (NIN), as means to enhance security of transactions and ensure seamless processing.
Speaking at the Nigeria Computer Society (NCS) international Conference under the theme: ‘Smart, Secure and Sustainable Nation’ Dr Akindeinde said that a security on the blockchain termed ‘tokenized security’, will make BVN and NIN more relevant to events in the digital world.
He also said that online fraud has widespread business impacts hence Financial Technology (Fintech) companies require effective end-to-end strategy to prevent account takeover (ATO), deter new account fraud, and stop suspicious payment transactions.
The Digital Encode Co-founder’s presentation:
“I believe that using technology we can solve a lot of Nigeria’s challenges. But one of the issues I have with regulators is: At times regulations tend to stifle innovation. We just have to use technology to power our economy and regulators have to align towards that path. Issues around data and verification or authentication must be addressed to enhance our productivity and secure the cyber space further.
Industry-wise, let me use the financial technology companies (FinTechs) for the illustration: When you download their apps they ask the same questions for KYC – names, address, email, password, phone number, etc., for all of them. It means something isn’t right. Why is that we have National Identification Number (NIN) and Bank Verification Number (BVN) and they do not serve the purpose of a simple KYC for banking services.
In the real-world, when you are driving and the policeman flanks you, asks for your identification, you can flash your driver’s license. There are two things there: That identity I showed him is in my custody and I can also request for his own identity if I am not sure of his identity.
Now, if you look at all the implementations of fintech apps – web and mobile applications, the identity is just a one-way direction; I have proven who I am to the fintech company, but there is barely no way they are proving their true identity to me. This raises cybersecurity issues. The hackers can now say: Hold on, in the real-world, identification is a two-way thing, but online there is absolutely nothing.
Well, people argue that these apps use SSL, TSL, and other layers of security. No! There is a need for players to understand the layers of security. TLS and SSL operate on certain layers of security in which they just keep data in transit. Guess what, I can sit down here, put up a website that looks exactly like one of the banks or fintech companies, buy SSL certificates off the shelf and install them on the URL.
Now, the question is: How do we replicate what is obtainable in the real-world digital space to make it ‘Smart Technology’? There are two things there: I don’t need to always input my username and password on every website. Secondly, I need to prove that what I have is truly my information.
There is a technology for it called Blockchain Technology. Unfortunately, in Nigeria, when you mention blockchain technology, most people say ‘cryptocurrency’. Yes, cryptocurrency is one of the implementations. What blockchain has given us is the ability to send real-life assets, digitally.
For instance, when you login to your banking app A to send money to banking app B you aren’t actually moving value rather messages. You are delegating authority for that movement to the bank. That is why, sometimes the transactions fail then you have to call your bank and the bank goes ahead to call the switching company. There is no mechanism online, presently, by which you can digitally move value from one place to another. The blockchain technology gives impetus to that because it permits asset tokenization.
Then, I ask: We have NIN and BVN, but they serve no purpose other than for verification. Can we digitize the numbers and make them smarter in such a way that with my mobile phone, as long as I have NIN, I can be digitally identified across the board. In other words, we tokenize the NIN. Any app I am logging in I have to just put in the token, it gives me a QR Code to scan so I can connect to that app. Then, I can be digitally served. It will no longer become a cybersecurity issue.
The reason we have growing cases of cybersecurity is that we have many databases in Nigeria; so, if they don’t hack you in Bank A, they chase you to Bank B, C, etc. Silos identification will not help the system”.
He proposed a system that will make NIMC a centralized issuer of digitalized identity.
“If this is implemented I can login to any app through the NIMC app. I wonder why every time we want to open a bank account they keep asking for my data whereas I already have a BVN. Having a BVN (should) provide that I am already ‘verified’; then I should work in any bank, provide the number and get my services done without hassles. That is what blockchain technology can do for us.
By the time we start using that self-serving identity, we will not keep having databases in silos.
Secondly, when I visit a bank’s website I can authenticate the originality when they send me a QR Code notification on the status. So, even when a hacker sits down, he will have difficulty because he does not have access to that private key”.