Tokenization on the market that comes if we solve a problem: Blackrock Executive Director

If Larry Fink’s vision – CEO of BlackrockThe largest money manager in the world – becomes a reality, all assets from shares to bonds to real estate and others would be commercially available on a blockchain.

“Any asset – can be tokenized,” Fink wrote in his recent Annual letter Investors.

Unlike the traditional paper certificates, referring to financial property, the markers live safely on blockchain, allowing them to buy, sell and transfer without documents immediately or wait – “Many as a digital case,” he writes.

Fink says it would be nothing but a “revolution” to invest. Consider 24-hour markets and a trading process that can be compacted in seconds of a process that can still take days today, with billions of dollars being reinvested immediately back into the economy.

But there is one big problem, one technological challenge that stands on the road: the lack of a coordinated digital identity check system.

While technology experts say Fink’s idea is not incredible, they agree that the challenges of cybersecurity are ahead to work.

Verification of Asset Owners in the world of AI Deep Fakes

Today, it is not easy to check online that the person you interact with is the person because of the spread of AI Deepfakes and complex cybercriminals, according to Christina Hulka, CEO of Secure Technology Alliance, an organization focused on identity, access and payments. As a result, the presence of a single verification system would be useful, as there will be a cryptographic validation that people are as they say they are.

“The industry (financial services) is focused on how to build a zero -confidence framework for identification. You do not trust anything until it is checked,” Hulka said. “The challenge is to gather everyone about which technology to use, which makes it as much as possible and hassle -free for the user,” she added.

It is difficult to say exactly how a widely -based digital inspection would work, but in order to support a fully token financial structure, the system will have to meet the strict security requirements, especially those linked to the financial provisions such as your customer’s knowledge and the Point Wild Money Laundry, according to Zulfik Ram. Company.

At the same time, the system will have to be low rubbing and fast. Today, there is no shortage of technical tools, especially from the field of cryptography, which can effectively bind digital transaction identity, Ramzan said. “Fifteen to 20 years ago, this conversation would have been unsettling,” he added.

According to Ramzan, there have been some success with similar programs around the world. The Aadhaar Indian system is an example of a nationally -based digital identity framework. It enables the greater part of the population to certify transactions via mobile devices and is integrated into both public and private services. Estonia has an electronic ID system that allows citizens to do everything-from banking to vote online. Singapore and the UAE have also completed strong national identity programs related to mobile infrastructure and digital services. “While these systems differ in the way they deal with problems such as privacy, they all share a key feature: a centralized government guidance that causes standardization and acceptance,” Ramzan said.

Centralized personal data is a big goal for cybercriminals

While the centralized system solves a challenge, storing personally identifying information on information and biometry is a risk to security, said David Matthew, a strategic advisor in the AML fraud and practice at Datos Insights, which works with financial services, insurance and retail technologies.

In particular, there are reports of stolen data from the Aadhaar system in India. Last year, the government of El Salvador had the personal data of 80% of its citizens, stolen by a centralized, government -governed identity system. “Many security experts do not advocate for a centralized security system, as it is something like a pot at the end of the rainbow that every scammer is trying to get his hands,” Matthew said.

In the US, there is a long -standing preference for decentralized identity systems. On Face ID and fingerprint ID mobile devices, they are performed not by centralizing all these data in one place in Apple or Google, but by storing the data in a protective module on any mobile device. “This makes it much more difficult, if not impossible, for the scammers to steal this data massively,” Matthew said.

Digital driving licenses offer a warning tale

Significant coordinated efforts will be needed to come up with a national identity system used to check identity.

The US identity systems today are fragmented, Ramzan said, giving the example of state departments of motor vehicles. “To move forward, we will need either a united national strategy or a way to coordinate the identity of the state and federal levels better,” he said.

This is not an easy task. For example, take the efforts that many countries make to accept digital driving licenses. About a quarter of the United States today, including Utah, Maryland, Virginia and New York, publish mobile driving licenses, according to Mdlconnection, Online resource from the Alliance for Safe Technology. Other countries have pilot programs, adopt legislation or study the issue. But this endeavor is quite ambitious and has been running for several years.

For the implementation of a national identity check system would be a “mass venture and will require almost any company that makes a business online to adopt a government standard to verify identity and authentication,” Matthew said.

Competitive forces are another problem to fight. “There is an ecosystem of suppliers that offer identity and authentication solutions that would not want a centralized system for fear of getting out of business,” Matthew said.

There are also significant obstacles to the confidentiality of overcoming data. Countries and the federal government will need to coordinate to solve government problems, and this can cause Big Brother about concerns about the extent to which the federal government can monitor its citizens’ activities.

Many people have a “slightly allergic reaction” when something that resembles a national identity card appears, Ramzan said.

Fink press SEC to seem questioned

The idea is not brand new for Fink. In Davos earlier this year, He told CNBC that he wants Sec “For the rapid expansion of shares and bonds.”

There is a personal interest in Blackrock in the work and potential cost savings for the company and many others that Fink talks about. In recent years, Blackrock has been dragged into political battles and lawsuits because of his voting on a huge amount of shares held in his funds on ESG issues. “We should never vote again to vote on proxy,” Fink told CNBC in Davos, citing the “Blackrock tax”.

“Every owner will be notified of a vote,” he said, adding that this would reduce the cost of ownership of shares and bonds.

From the Fink decision, it is clear to this issue a prominent placement in his annual letter – even in third place in the order of the problems he covered behind the two The policy of protectionism and Increasing role on private markets – That he doesn’t let go. And what is needed to make it a reality, he claims, is a new digital identity check system. The letter is short in detail and Blackrock declined to develop, but at least on the surface, the Fink solution is clear. “If we are seriously involved in building an effective and affordable financial system, the very overlapping of tokenization will not be enough. We must also solve the digital check,” he writes.

Blockchain continues to develop and people learn to understand it better. Accordingly, initiatives are being conducted to think about how the United States can achieve a widely -based identity check system, Hulka said. There are technical ways to do it, but finding the right way that works for the country is a more challenge as it must be operatively compatible. “The goal is to get to a point where there is one way to check identity in multiple services,” she said.

In the end, there will be a turning point for the financial services industry where it becomes a business imperative, Hulka said. “The question is when, of course.”