Stepan Gershuni: Bitcoin is the first and the only decentralised finance
The founder of the Credentia blockchain project, Stepan Gershuni, told LetKnow.News about features of digitising the workflow, what Decentralized ID is and how are those things related.
- What problems does the electronic document management on the blockchain solve and what does your project have to do with it?
- At the moment all the paperwork is carried out in paper format. And sooner or later, it must go digital, because digital documents cannot be lost, they are cheaper to issue, it is easier to verify them and more difficult to fake. Documents are divided into two categories: internal and external. Internal, such as accounting, has been digitised long ago. Enterprises are now actively using 1C, SAP, Microsoft, Oracle.
External workflow is yet to be digitised. Those are documents or facts about a person, organisation or some object that must be used by different market players. For example, a higher education diploma is issued by one of a thousand universities, checked by one of a thousand employers and owned by millions of people. Or a safety certificate for electrical equipment, which is checked by a separate regulator and owned by some third parties, or, for example, a certain license or certificate, accreditation, certificate or passport for pets, technical passport for industrial equipment.
Those documents today in most countries of the world are the paper ones, not because there is no technology that will allow them to be digitised, but all because this technology cannot be imposed by one player. This requires a standard. That’s where blockchain becomes handy, since it is the technology that immediately out of the box provides the standardisation of some business processes.
As for our product, in this case it is engaged since it provides a tool for interaction between issuers, owners and reviewers of such documents. In other words, for example, a university, or a construction company, or a regulator can make a digital version of a document as legally strong as its paper copy, and which is verified using digital signature or encryption keys. And this document during its life cycle can be used by other market users, i.e., some other agents who need to verify the authenticity of this document.
- So, are you creating the infrastructure for the issuance and verification of certain digital documents?
- We are rather creating an ecosystem to work with those documents, thanks to which you can create them, sign them with various types of signatures, and also provide tools for storing, transmitting, verifying, and interacting with them on the blockchain. So, it can be done both within the public network and in the private one.
- How much has the demand for electronic registries and documents on the blockchain increased?
- Everything is pretty simple and obvious here. Demand is growing because paper documents are a universal and hated story by everobody, and there are ways to make it better. Another thing is that the adaptation process is longer and for some it can be a long sales cycle, especially when it comes to the public sector.
- One of the cornerstones of electronic document management is Digital ID. What are the risks associated with the implementation of Decentralised ID?
- Digital identity is needed only if we are talking about some kind of relationship that has nothing to do with the state. Because, if it’s any legal document, then the identity is the name of the person, his passport number, his digital signature and a decentralised ID is when we try to take these services away from the state, but, in fact, those are talks about the near future.
Now there is a lot of research and pilot projects in this direction, but I can’t say that it’s a big market. But there are also risks of frauds, since it is possible that someone can gain possession of someone’s key and sign an act on the sale of some property. However, often apartment scammers can steal a passport and do the same. So, fraud threats did not appear due to digitalisation, but because fraudsters are trying to adapt to new realities.
Decentralised ID is very poorly distributed and at least for now nobody actively uses it. You can also rant for a long time about the various technological issues of Decentralised ID. For example, what should a person do in case of the loss of their keys, because in the case of bitcoin, with the loss of keys, all funds are lost forever. And if it’s a passport - then there must be a way to somehow restore it. And so that the copy was really given to me, and not to some other person, and that it was the least painful and without the need to stand somewhere in the queue. But for now, that’s just a concept in its early stages.
- How important is it for a person in the modern world to own his data and have the freedom to dispose of it in the context of the development of blockchain technology?
- It’s a certain property that was necessary before, still remains and continues to be necessary. Over the past 5 years, only the fact that legislation has appeared in more or less in developed countries, for example, the law on the protection of personal data, GDPR, has changed.
It used to go without saying that if I had a passport at home or in my pocket, then it was mine. With the development of technology, however, personal data has become a tool for manipulation. For example, my Google profile is owned by Google. So laws have been passed that did not allow the company to own my identity completely. Public blockchain allows to do the same within the framework of a certain concept - to preserve the properties that the paper has on the documents released on the public blockchain: in other words, to make sure that the documents belong to me for life, and can be seen only with my permission, and that those documents provably belong to me.
- What is decentralised finances and how are they different from the traditional financial system?
- In fact, I think that blockchain has two applications that really work. The first use case is money and the second use case is documents or any other information that requires confirmation.
As for decentralised finances, this is a pretty synthetic term since the first and only decentralised finances in essence is Bitcoin only. It’s a kind of monetary system that exists in parallel with the state system. It has a number of properties, the main of which is decentralisation, i.e., using this monetary system I do not depend on any third parties, or depend on them less than in the case of using the banking system and fiat money. Of course, there are many projects that are trying to come up with new services, such as Maker Dao, 0x, but it is too early to take them into account, and so far only traders are using those tools. So far, it’s not quite a working industry.
- DeFi projects are one of the few resorting to certain standards. What is the role of standardisation in the crypto industry?
- I do not think that there are problems associated with standardisation. On the contrary, I think that the standard is not needed, because all these projects are Open Source, and so it’s clear how Bitcoin works, how Ethereum works. Developers do not need to come up with a standard among themselves, because they are not difficult to relate to each other, because any cryptocurrency
exchange, in principle, has the ability to work with BTC and ETH. In this direction, there are Cosmos and Polkadot projects that make it possible to create your own blockchain projects out of the box, which are interoperable with others. So far these products are in the early stages of development, but most likely in a couple of years everything will change.
- Does crypto regulation contribute to the development of blockchain projects?
- Neither hot nor cold. I do not think that there are any examples of crypto regulation in the world. There are laws related to the regulation of financial markets, for example, the state allows or prohibits companies from attracting investments through the issuance of
tokens on the blockchain. This regulation is aimed at ways to attract financing for a startup or company. But this has nothing to do with the blockchain. Yes, there is tax regulation that determines whether to pay taxes on bitcoin and how to pay them. And the number of the opinions equals to the number of the countries in the world.
Regulation always follows technology and so far it does not particularly affect this market, except financially, i.e., the work of traders, those who conduct ICOs and in places where there is a bridge with fiat.
- What trends will we see in the blockchain industry in the near future?
- I do not know what we will see in the future, but now one of the main trends is the Lightning Network. This area is growing very fast, it has a huge amount of investments and startups, as it is a tool for mass end users. A trend that interests me and that we actively study and communicate with teams from all over the world is Self-Sovereign Identity, that is, it’s a profile and facts about a person that belong to him personally, and which are universal, globally accessible and confirmed, and it’s a whole Technology Set: Decentralized Identity, Verifiable Credential, and Decentralized Key Management.