Impact of Biometrics on the future of Cryptocurrency

Blockchain or cryptocurrency aka digital assets have faced their biggest obstacles around the world is the non-acceptance by differenent governments around the world. This is mainly due to the lack of surveillance features in the blockchain technology, and the general nature of them to avoid governmental control. In this article, we will focus on the security aspect of cryptocurrency, and how the world of biometrics can help in gaining the consensus of the world.

Recently, in October 2017, the NAC foundation came up with what they called the AML bitcoin, a biometric-based currency that complies with the latest know your customer and anti-money laundering requirements that are stipulated in the US PATRIOT act. Similarly, in March 2018, it was reported that Penta security, another US-based company has come up with cryptocurrency wallets that are enabled with biometric features, along with secure key validation and proper encryption services.

Learn more about : How blockchain is shaping cloud computing - Part 1 and Part 2

Brief about Blockchain projects leveraging biometrics:

One of the first platforms to use biometric identification methods is the Hypr cryptocurrency security platform, with a three-factor authentication system and a Bluetooth enabled communication system that eliminates the possibility of fraud by converting bitcoins in real time. Similarly, Paypal announced its plans of entering the cryptocurrency market, developing a device that uses thumb impressions for security authentication. The company has already patented the use of a former encryption software to provide users with enhanced security features. Similarly, Humaniq, a blockchain auditing, and biometrics Technology Company, came up with facial recognition for user authentication, while Case, a credit card like device used for transacting and trading bitcoins has also come up with biometric security features for their users.
Various other biometric-based technologies are being used to provide enhanced security features to consumers, such as Iris scanning, lip passwords, and palm print recognition. These features and the fact that the cryptocurrency market is slowly moving towards biometric-based security features tells us that the market has already started thinking about its future, with governmental acceptance around the world a major feature of a powerful future for the industry.

The requirements

A consumer who wants to perform transactions of this biometrics based cryptocurrency is required to declare their residence, provide two government-issued identification papers, and submit either a fingerprint, iris or face scan in order to be registered. While it is not so difficult to identify the identity of the persons involved in cryptocurrency transactions, biometric security features are important to change the assumptions of governments across the world regarding the apparent reluctance of cryptocurrencies to embrace regulations and to uphold the standards of security across the world. Moreover, the blockchain technology has come up with a system which is transparent, but completely anonymous, another feature that has made governments suspicious of the digital currencies. As the number of cryptocurrencies in the market increase, the need for attaching an identity to tradable assets also increases. Henceforth, biometric features will enable individuals to identify the people they enter transactions with, which is also important considering the tremendously high values that some of the transactions are worth, today.

A centralized database pitch to monitor cryptos

In the Indian market especially, the need for a centralized database for cryptocurrencies has been talked about. While such a move will surely be helpful in creating a real-time record of transactions and to identify the people involved in them, there are various problems as well. Such a system will either be based on UID (unique identity) AADHAR or PAN (Permanent Account Number) and will hold various other details of the individuals who transact, like their past transactions and the value of the bitcoins stored in their wallets. The government of India has refused to entertain the possibility of identifying cryptocurrencies as legal tender and has tried to get their hands on the identities of the individuals involved in trading. The problems with such a centralized database have been discussed by experts around the world. With such a database being accessed by thousands of users around the world in short periods of time, users with malicious intentions can gain access to certain personal data of the people involved in transactions, making it easier for them to hack into their wallets and steal money. A centralized database is thus not helpful, although it will help in regulating the entire market. In such a scenario, a shift towards decentralized databases with biometric authentication and identification methods becomes important. Also, very nature of blockchain is to conduct a transaction in a trustless manner without involving any trusted third party.

The present

As of now, all cryptocurrency related authentications are done via passwords, secret questions, and tokens. The problem with these methods is that they have a long history of being fallible. They provide an opportunity to hackers a chance to enter the system and gain access to personal information. This is in addition to the obvious risk of fraud and theft. These methods do not validate the person, as it is easy for individuals to steal passwords and tokens. This has emerged as the biggest obstacle that cryptocurrencies have faced. Such obstacles prevent blockchain projects to reach their full potential around the world. To counter this, multifactor authentication needs to be introduced. This is not just in cryptocurrency related mechanisms, but also for all types financial transactions. Google 2FA is an example of multifactor authentication. But it may not be enough. Biometric technology provides the blockchain projects with the most apt procedures for security authentication. The mechanism has the potential to make the entire process for cryptocurrency transactions more secure, easier and efficient. With decentralized databases being the most important feature of blockchain technology, the future appears to be one filled with decentralized biometric authentications making the process more secure. It will also let governments around the world know that blockchain or crypto projects are not willing to compromise on their existing security features to make them more open to legislation and regulations. In order to change the way in which governments view blockchain or cryptocurrencies, in order to better protect the privacy of their users, biometrics technology is sure to play a huge role in the cryptocurrency world of the future.

What do you think? Can biometrics help cryptocurrencies in their aim to become more stable, efficient and convenient? Will governments across the world change their stance in the future? Do let us know in the comments.

By Rishabh Bhatnagar:
Rishabh is a law student with a passion for Blockchain / Cryptocurrency, Internet of Things (IoT), Cloud Computing, Artificial Intelligence, and Startups. He is an avid reader with a taste for writing. He likes learning about new things and is a writer at TechSutram.Opinions expressed by techsutram contributors are their own.