ICONLOOP's driver's licenses and the ICON public chain. Also: When Coinbase?
Welcome to this week’s edition of the RHIZOME Wire!
Note: Not everyone may remember this, nor was everyone around, but I remember a time in 2017-18 where the first place I would go each morning after I woke up was the ICON subreddit. There was consistently exciting news posted, and robust discussion about the future of the project and its bright prospects. It was a lot of fun. Over the past couple years, the subreddit has degraded. So myself and other members of the community are hoping to change that. If you’re interested in helping or learning more, please click here to learn more.
Driver’s Licenses on the Public Chain
A few days ago, we got some more good news from South Korea: ICONLOOP would be producing a decentralized, blockchain-based, government-sanctioned driver’s license for South Koreans.
From Cointelegraph:
Enterprise blockchain firm Iconloop has secured approval from South Korea’s Ministry of Science and ICT to test its decentralized identity, or DID, technology system to manage driver’s license data in the country.
According to an announcement from the company, the trial run aims to showcase the DID’s capabilities in offering secure data storage while preventing data forgery.
When the news first broke, ICONists reflexively once again wondered: will this run on the public chain?
After some suspense, we got initial confirmation that yes, it would indeed operate on the public chain:
The key part of this tweet was the fact that the driver’s license would exist within Zzeung, which is the same mobile application that utilized by Shinhan bank’s KYC process, as well as the COVID tracking-and-tracing process on Jeju Island.
Great news, right!
Well, not everyone thought so. There are some in the community who have been disappointed with the relatively low number of transactions that the seemingly game-changing services I mentioned above have been generating. For some, there was a belief that, because these applications would be used by so many people, that they’d generate a significant number of transactions. They’re concerned this drivers license initiative, when launched later in 2021, will have this same “problem.”
However, based on the way the application was designed, that wasn’t necessarily the case. The primary activity done is creating the ID. That’s what creates a transaction. Viewing or accessing the ID doesn’t necessarily do that. It’s also my understanding that these implementations haven’t been broadly rolled out yet, which makes sense.
Instead of viewing a new application of DID in terms of how many transactions that new application will generate directly, instead as: does this make the network as a whole more valuable?
When it comes to the driver’s license, the answer in my eyes is an indisputable “yes.” The driver’s license is the primary form of an identification that represents who a person is. It’s the anchor of what decentralized identification and hyper connectivity promises to be. To better explain, I am going to pull a quote from an article that Markus Jun wrote a long time ago about what ICON set out to do (you’ll notice a reference to “ChainID”, which was the name of the ICON decentralized ID at the time):
Our personal identity is at the core of every interaction we make, whether we’re visiting a hospital, making an insurance claim, checking into work, or shopping online. This means that to enable a seamless experience in which these interactions are linked to our identity, the Chain ID loopchain network needs to be connected to the loopchain networks of all the relevant industries and that’s what ICON enables.
Here’s how this plays out in real life. Imagine that a student requires surgery. She may check into a hospital, verify her identity on Chain ID and give permission so that the hospital can share her medical records directly with her insurance company. This will trigger a smart contract that will immediately transfer her health records and her surgeon’s medical certificate (signed digitally on ICON’s Chain Sign) to the insurance company. The insurance company can then immediately process the insurance claim as both the health records and the medical certificate are tamper-proof on the blockchain and do not require additional verification or the sending of official paper documents, steps which typically slow down the process of traditional insurance claims and make them more costly.
After her surgery, the student who needs to get hospitalized for a few days may then give permission to the hospital to share her records with her university so that she can get formally excused from attending classes. The information would again be shared immediately via a smart contract without the need of a third party ‘messenger’, without the need for paper (e.g., a doctor’s note), and with full assurance for both parties that the information is legitimate.
Thus, the use of Chain ID, Chain Sign, powered by smart contracts executing on the ICON network, enables information sharing within industries to become safer, faster, tamper-proof, and cheaper. This means that ICON isn’t just enabling connectivity between loopchain networks, but a more efficient connectivity.
It should be noted that this scenario is theoretically possible on any smart contract blockchain protocol. However, the reason why it’s a uniquely plausible scenario for ICON currently is because ICON is one of the only platforms that have already secured and built the networks in the necessary industries (e.g., healthcare, banking, insurance). Building a blockchain can be as easy as copying and pasting code, the true challenge is building a network.
This was written in mid-2018, and you can see just how prescient it’s become. It’s logical that in order to execute this vision, among the first additions would be a person’s identification. Without it, there’s nothing for the hospital or the insurance company to reference (how would they know who they are treating?).
At the time of reading this, his description still seemed far off and difficult to achieve. Yet, with the pending launch of the driver’s license, it may be soon becoming a reality, especially when you consider the number of other MyID Alliance partners that have lined up.
The final paragraph is especially important. There have been some in the community who have seen other projects offer “hyperconnectivity” in some capacity and are thus concerned about potential competition. But as Markus points out, while the scenario is hypothetically possible to replicate, the relationships and government approval aren’t as easy to achieve. Fortunately, ICONLOOP and ICON have already done the hard work of lining both up.
Ultimately, the way to look at each new addition to decentralized ID (and ICON as a whole), is as a node with a connection to every other node. As each new “node” gets added, the number of potential uses for each one increases exponentially. Accordingly, adding one new application, such as driver’s licenses, may not be an overnight game changer, but each one added gradually increases the network activity by a potentially exponential rate.
When Coinbase?
One of the great mysteries for many over the past two years has been the question of when (and if) Coinbase will list ICX. For many people, one of the first major memories they may have in crypto was the meteoric rise of Litecoin after it was listed on Coinbase in 2017 (which was aided by the fact it was the “cheapest” token relative to Bitcoin and Ethereum, the only other tokens on Coinbase at the time, which theoretically made it more attractive to retail investors). Ever since then, every token holder within every project has yearned for a Coinbase listing in order to give their token the same hyper-boost.
But in reality, does a Coinbase listing really help? Before we look at some numbers, I do want to point out that being listed on Coinbase is helpful. It adds more liquidity to the ICX market and creates another onramp/offramp for investors (particularly those who live in, say, New York State, where Coinbase is among the limited exchanges allowed to operate).
But what about the impact on price? Here’s a chart that CoinMetrics put together as part of a broader analysis of Coinbase listings, showing the USD price 10 days before and after the announcement of a Coinbase listing:
The average (mean) increase for these tokens is about 17%. There are three obvious exceptions—OMG, XTZ, and LINK—but there are others that are exceptions in the other direction as well.
What if tomorrow Coinbase announced ICX would be listed? As I write this on the afternoon of January 7, the price of ICX is about $0.58. If we got a 17% increase, that would get us to $0.67. Which is certainly nice…but I imagine that price won’t get the life-changing returns that many ICX holders are anticipating or hoping for.
I’m not trying to go out of my way to pre-FUD a Coinbase listing announcement. Rather, I am trying to temper expectations, as there may be some people who expect a Coinbase announcement to catapult us to $5 overnight. Coinbase is helpful, yes, but it’s a blip on the radar in the grand scheme of whether or not ICON becomes successful (and that’s true whether your definition of “success” is dictated by price or adoption).
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Thank you for your update. Your thoughts are very insightful and helpful. Regarding Coinbase, I would like to respectfully state I think you are dead wrong. I think being on Coinbase/Gemini is equally important, if not more important than product development or successful marketing to the future of the ICX ecosystem. The current increase in value for crypto is not being driven by retail investors in this cycle. Institutions (particularly USA-based) are currently driving investment growth and network effects and will continue to be the predominant driver of growth over the next couple of years. Currently, 10's of $bn are flowing into crypto through the regulated exchanges (and Fidelity) as institutional investors have limited on-ramps vs. individual investors. Institutions like to move in herds and will follow where established paths that have been created and blessed by regulators. MSTR has used Coinbase to purchase $1bn of BTC ($3bn today) and countless other institutions have followed suit. If we assume the flow of fiat into Crypto will increase from 10's of $bn's to 100's of $bn's, I predict the majority of these funds will flow through these two exchanges. A Coinbase IPO will bring new investors into the on-ramp fold and most new crypto investors will utilize the exchange they have a stake in. In my research, the cross-pollination of executives from Wall Street to Coinbase/Gemini is a factor of 10x vs. the other platforms out there. You are correct that being on Coinbase will not do much for the price of ICX in the short term, but over the longer-term cycle, it may determine whether the value creation of ICX will move up by 10x or 100x or more.