Trust On The Internet – The Solution Is Ahead

There is a need for a user-centric identity, privacy and trust on the internet, to power the digital economy. It’s a major issue, and a solution that relies on crowd-sourcing is being proposed by Respect Network.

Let’s first look at how trust works in the real world “brick & mortar” economy, then understand the issues with trust on the internet, and finally the Respect Network solution.

Trust and the “brick & mortar” economy

How do you ascertain of the identity of somebody? For example, when signing a contract? Or making sure somebody has the legal age to transact?

You will probably rely on some form of government or bank issued credentials – an identity card, a passport, a driver’s licence, a debit card, or something that an institution you trust (the local public library for example) has issued.  And, for sure,  you will attach varying degrees of trust to each of these tokens of identity. A debit card, with its pin, is a good proxy  in many day-to-day financial transactions. A passport is probably the token you will trust most in travel or real estate transactions.

Furthermore, once someone’s identity is clear, how do you establish whether you can trust him to perform the agreed action – such as paying the bill, delivering the goods, etc? In the real world, this is one’s reputation – is she paying regularly her bills? Is the company you’re dealing with healthy and reputable?  There are many possible ways to establish trust, going from personal opinions to rating agencies.

Trust and the open internet

Let’s now look at the online world. One immediate and major difference is that the online world is, by design, global. The person you are dealing with may be in your neighbourhood or may be on the other side of the planet. Establishing the identity, and the associated trust, is made very difficult because there are no central and inter-operable agencies or bodies, as we have in the real world.

A good example of this is the eBay reputation.  As a regular user of eBay, I’m very conscious of my reputation there. On eBay, one’s reputation is gradually built by the people one transacts with. Buyers will hopefully recognise a good seller (goods corresponding to description, fast shipping) or sellers will recognise  a good buyer (fast payment). In my case, the reputation of a seller of something I’m interested in is a key factor on whether I will bid for the item or not.

In other words, the eBay reputation is an asset with a lot of value, even if is not expressed in monetary terms. This is fine if you only deal with eBay. However, looking at this more broadly brings the following issues –

– there is no inter-operability. The eBay reputations is not something that can be easily used on, say, Amazon.com. So, people have to build these relationships all over again in many contexts. It’s the same with Twitter and Google+. When Google+ launched, many people went through the pain of re-building their Twitter relationships on Google+. Many people didn’t bother, as it can be a lot of work and time to do that.

– there is a potential lack of privacy. Indeed your assets end up residing in many places, and the more places, the more risk there is for these assets to be compromised.

– there is a lack of control and there is a missed opportunity. What do the companies that store you assets do with them?  Some of them are actively selling your assets for various commercial purposes, and, as far as I know, you as the owner never see any of that money.

The digital economy and the Respect Network

So, how can we establish trust on the internet? This is where Respect Network comes in.  It is a little bit of a complex construction of organisations and companies. Below is an overview, and why this is interesting for Innotribe and me.

Trust on the internet is the focus of OIX  (Open Identity Exchange),  a non-profit company organization founded by Google, Paypal, AT&T and others. Their business is to establish, standardise and manage “trust frameworks” – legal, business and social rules that enables parties unknown to each other to trust their respective digital identities. The trust frameworks are designed to be public, standardised and inter-operable, so that people and companies can play various roles in the framework and still manage trusted relationships.

Among the three trust frameworks currently available, an intriguing one is the “Respect Trust Framework”. The idea of this framework is to not only establish a digital identity, but also to provide individuals control over ownership and sharing of their data on the internet. The key to the framework is the use of a crowd-sourced, peer-to-peer reputation system. It’s really very simple – people can vouch for you (for example, say “I vouch for John Smith’s innovativeness”), or complain about you (“I complain about John Smith’s stubbornness”). Similarly to eBay’s reputation system, the peer-to-peer reputation system grows over time, and the more vouches and complaints about a particular person, the more precise the information is and therefore the trust level in this person increases or decreases.

Respect Network  is a project run by Respect Network Corporation and which uses OIX’s Respect Trust Framework to implement the first trusted personal data network. Notable partners include Neustar and Swisscom, and Innotribe is involved.

Users of this network own their data (unlike centralised social networks such as Facebook and eBay). Users then establish secure channels between their personal data clouds, under very strong privacy and security rules. All the software and protocols uses are open to encourage inter-operability and to prevent any single company taking control.

Respect Network also establishes a crowd-sourced peer-to-peer reputation system, implemented through a service called Connect.me (Connect.me is in private beta now and will be launched soon. You can request access on theconnect.me website).

The architects of the Respect Network include an impressive number of people, among which Drummond Reed (who is also a co-founder of connect.me), Doc Searls, Craig Burton, Phil Windley who I have all met at Innotribe events and respect enormously.

The peer-to-peer reputation network establishes naturally a chain of trust. The chains begin with a number of known people, called Founding Trust Anchors, who provide credibility. These are people whose identity is publicly verifiable – members of the Internet identity, security, and privacy communities who believe in the power of a peer-to-peer, socially-verified reputation network. Others are early users of the Connect.Me private beta. Others still (you?) will emerge over time.

Peter Vander Auwera of the Inntoribe team and I have been extensively involved over the last couple years with many of the above companies, organisations and people. Peter and I have the honour to have been elected Distinguished Trust Anchors – nominated by other people and trust anchors as individuals that “exemplify the spirit and principles of the Respect Trust Network”.  Proud to be in such company!

Peter’s and my readers will also probably recognise that many of the above concepts and components are part of Innotribe’s Digital Asset Grid project. The information on this project is now in the public domain.

The Startups That Will Change Our Lives

I was asked recently – what technologies are most prone to change the world in the next 3 years?

It’s the type of question where you’d naturally start thinking about artificial intelligence, 3D printing, robotics and other advanced science topics.

But, after giving it some thought,  I think what will impact us most is not new technology, but a very clever use of the technology we already have.

Namely: smartphones and the pervasive permanent connectivity that they bring.

Mark Pesce, a futurist who was with me at an Innotribe event last year , calls it “hyper-connectivity”.  Erik Kruse, networked society evangelist at Ericsson and another Innotriber, calls it “the internet of things”.

Because smartphones make each one of us a geo-located, connected, data beaming and data absorbing walking entity, they enable a complex person to person or person-to-business mesh or grid. This was not possible before, simply because we were not connected in the way we are now.

I’ve been privileged to be on the jury of the Innotribe Startup Challenge and the Accenture Financial Services Innovation Award, and I’ve seen three innovative uses of smartphones by startup companies (or startup units within larger companies) that illustrate what this hyper-connectivity means.

1. The truly remarkable effect of the hyper-connectivity is removing “friction”, to use another of Mark Pesce’s term, in the day-to-day transactions.  Peer-to-peer is replacing hub-and-spoke models for more efficiency, volume and convenience.

Uber is an excellent illustration. It’s an app produced by a start-up company that connects people in need of transportation with participating drivers of luxury vehicles. No intermediary needed. It started in San Francisco streets, and is expanding rapidly in other cities in the US and Europe. You can imagine what Uber does to traditional dispatch (hub and spoke) cab companies. And you can understand why the cab companies are desperately trying to stop Uber.

I’m watching closely Uber in its quest to make friction disappear.

2. Another additional clever use of smartphones is in the person to person (peer to peer or P2P) payment space . There was a lot of talk in the last couple of years about NFC and related technologies to enable P2P payments with a hardware proximity based sensors. But right now NFC proves to be more of a friction than an enabler, as it requires a massive upgrade of all the smartphones to support the technology. A feat that requires Apple and Samsung to agree to roll it out…

A Belgian payments company called Bancontact/MisterCash has not waited and is rolling out a P2P payment solution using a very simple thing – the QR code.

Rather than relying on the hardware, they realised they can solve the problem with onboard technology already available on smartphones:

• a high definition screen, on the vendor’s smartphone, to display a QR code with all the selling information (amount, nature, location etc)
• a camera, on the buyer’s smartphone, to scan the QR code from the vendor’s smartphone screen, and initiate the payment using Bancontact’s existing debit card payment scheme

This solution requires both the buyer and the seller to be part of the Bancontact scheme, and to have the Bancontact app installed on the buyer’s and seller’s smartphones.

In Belgium, these are very low, frictionless, requirements and I predict a big success to this scheme.

3. The last illustration of hyper-connectivity is in the couponing space – enabling consumers to manage and benefit the coupons provided by merchants.  When you think of it, coupons are nice – as they give you price reductions and other benefits at your local stores – but they don’t really empower the consumers that we are. We are supposed to collect coupons, store them, understand how and when to use them, understand how they can be combined etc. Rather than a benefit, coupons prove to be a headache in many situations.

Apple has released last year an app called Passbook that allows to store some of these coupons and other items such as boarding passes. But this is only scratching the surface. There are startups out there that use hyper-connectivity to enable much more powerful scenarios. The idea is that your smartphone realises through geo-location that you are approaching a participating merchant and, suggests, in real-time, how to best use the coupons you have on your smartphone. Truaxis, recently acquired by MasterCard, is one such startup. Fidelsys, in Belgium, is another startup providing innovative solutions in this space.

It’s amazing to see how the hyper-connectivity brought by smartphones enables innovation. The smartphones are a platform on which infinite and clever new business models can thrive.

It’s truly the Far West of the internet.