In today's digitized world, "Know Your Customer" (KYC) has become key to maintaining security and compliance. KYC refers to the process of businesses verifying and assessing their customers' identities, typically used to prevent crimes such as identity theft, fraud, and money laundering. However, conventional KYC processes often rely on centralized institutions, potentially raising privacy concerns and making users' information a target for attackers. Is there a decentralized KYC verification method that can protect user privacy while ensuring compliance?
This brings us to the decentralized KYC verification method we're introducing today, based on blockchain and zero-knowledge proofs (ZKP). This method combines the immutability and distributed characteristics of blockchain, the privacy-preserving capabilities of ZKP, and the safety feature of a whitelist address, providing a novel KYC solution.
How Decentralized KYC Verification Works
-
Users first need to go through KYC verification once through any trusted centralized service provider. Once the user has completed KYC verification, the service provider generates a digital signature containing the user's identity verification information.
-
The user stores this digital signature on the blockchain, which can be done by interacting with a specific smart contract. This smart contract is used to record the addresses of users who have passed KYC verification.
-
For enhanced security of the original private key, the KYC-verified private key can specify a whitelist address, which is used as the actual address in application scenarios instead of the original private key. This increases security when the user logs into some wallets or Web3 applications with this address. If the private key of this address is lost or stolen, the original private key can be used to reassign the whitelist address in the specific smart contract.
-
Through zero-knowledge proofs, users can prove to others or entities that they have passed KYC verification without revealing any of their private information. This proof can verify their digital signature without revealing the signature itself.
-
When other users or entities want to verify whether a user has passed KYC verification, they only need to see if this user has interacted with the smart contract (i.e., if there is a record on the blockchain) and verify their zero-knowledge proof.
Application in Satoshi App and Core Blockchain
This method can be well integrated with existing applications like the Satoshi app and Core blockchain. In the Satoshi app, after users complete KYC verification, they can make multiple token airdrops in a smart contract on the Core blockchain. By using this decentralized KYC verification method, users can prove that they have passed KYC verification without revealing their private information.
Advantages and Significance
The advantage of this decentralized KYC verification method is that it protects user privacy, allows users to control their identity information, and only prove their KYC status to the people or entities they choose. At the same time, this method maintains the effectiveness and compliance of KYC verification. This is achieved by associating the KYC status with the address on the blockchain and using zero-knowledge proofs to verify this association.
Moreover, the use of a whitelist address significantly enhances the security of the private key. Users can comfortably interact with wallets and Web3 applications, knowing that even if the whitelist address private key is compromised, they can easily reassign a new whitelist address using the original private key.
Finally, this method opens up new possibilities for blockchain applications. For example, some blockchain applications may require users to complete KYC verification to use them, or they may want to provide special services or discounts to users who have passed KYC verification. By using this decentralized KYC verification method, these applications can meet their KYC needs while protecting user privacy.
In conclusion, the decentralized KYC verification method based on blockchain and zero-knowledge proofs not only provides a new way to protect user privacy and enhance compliance but also opens up new possibilities for blockchain applications. This is a significant advancement that has profound implications not only for blockchain technology itself but also for the entire digital world.