Palau and decentralized IDs: another publicity stunt?
Enjoy a digital resident status in Palau by signing up to your own decentralized ID on the blockchain
Bitcoin Block 779,545
0000000000000000000154e28c3b597eb48f49bd0cc254753b25d6b30ff142d7
El Salvador made history when announcing bitcoin as a legal tender in the country. The country gained recognition in the eyes of the crypto community and was hailed to be the next big revolution. Things were hyped up and many new projects were announced. Bugs were silenced and everything was exaggerated. Well, it was the bull market after all and everyone was intoxicated with hopium. A dash of that blockchain juju and valuations were skyrocketing. El Salvador hooped onto the bandwagon when it was already overcrowded. Then came the Chivo wallet with many bugs, surveillance issues, and a lack of usability. The volcano bonds were just a publicity stunt with no economic fundamentals and Bukele was exaggerating the “Bitcoin effect”.
Palau is a country adopting a broader approach and opening its doors to the blockchain as a whole rather than being a bitcoin maxi. It is opening its doors to crypto people. Vitalik Buterin has created a decentralized ID for his public wallet and CZ has partnered with the Palauian government as well as made healthy collaborations with the system there. Hence these big names entering the arena does mean something big and settling the foundation for crypto in such times does mean there in it for the long haul. But how much are these decentralized IDs decentralized and how will they benefit the state?
The decentralized ID that the Republic of Palau issues to any citizen who shows interest in being a part of the nation. He or she can acquire this ID by paying $248, $1039, and $2039 for a 1-year, 5-year, and 10-year citizenship respectively. This ID is also supplemented by a physical ID card and an NFT minted on the blockchain. Also, a digital residency comes with it. Basically, it stands valid in any area where proof of identity is required and now you have a Palauan ID. These services include KYC on exchanges like Binance, benefits during travel, a Palauan address, and access to facilities in the country.
Now let’s hop over to the technical side. How is the whole setup going to be executed? The Palauan government partnered with Cryptic Labs using their Root Name System (RNS) for their digital IDs. It uses zero-knowledge proofs to verify the identity of the individuals. This basically means you don’t have to reveal your identity while verifying yourself as a citizen. But initially, you have to have yourself verified by the government which puts that information in safe custody only to be used when providing services to the holder of ID. The information is KYCed using third-party authorities recognized by the RNS.
You own the customer data and maintain all rights to it. This agreement gives us no ownership rights in Customer Data. You grant us permission to use your contact information exclusively to deliver the subscription service and benefits, as authorized by these terms of service. This information will also be used to contact you through email or phone in order to follow up with you as needed.
Source: RNS privacy policy
My take:
A government providing a better system for recognizing its citizens is of no harm. It brings foreign investment to the country and highlights its image as a progressive nation.
However, for the country to better build its image in the public, it is necessary that it undertakes the practices of security, privacy, and censorship resistance with the utmost responsibility.
Going digital and using the blockchain increases efficiency but the most important cost is privacy. Using Ethereum is a suitable choice but the storage of user data and its access should be safeguarded by all means.
Small nations are looking into emancipating technologies to free themselves from the clutches of large organizations which have the end goal of restricting these countries in their access to capital.
I hope you liked the analysis of the Palauan digital ID.