ERC725
Self-Sovereign Identity is a concept that aims to achieve the realization of individual control over personal identity information. In October 2017, Fabian Vogelsteller, an Ethereum developer, made a significant move towards this goal by publishing ERC (Ethereum Request for Comment) 725 on GitHub, a web service for source code management. ERC725 is a proposed Ethereum standard for self-sovereign identity, and Vogelsteller explains its benefits as follows: Currently, all players, including financial institutions and other service providers that require personal information, obtain fragmented personal information and individually verify the identity of users. This leads to excessive collection of personal information due to the lack of appropriate systems. By introducing standards like ERC725, all players can perform automatic checks, eliminating the need to retain detailed personal information as long as the issuer is trusted.
Leading financial institutions have been making efforts to address the challenges associated with the collection and verification of personal information. These institutions hold large amounts of detailed and sensitive information and are widely recognized as authoritative entities. However, due to the nature of the services they provide, thorough KYC (Know Your Customer) processes are required. To facilitate transactions, financial institutions use a code called Transaction Subject Identifier (LEI) to uniquely identify the parties involved. In January 2018, regulations on financial services in the EU were tightened, making it mandatory for all corporations and funds engaging in transactions to obtain LEIs. In response to the inefficiency of individual LEI verification by each financial institution, some major institutions, including UBS, initiated projects to enable the mutual use of data held by each institution. One such project is called MADREC (Massive Autonomous Distributed Reconciliation), which operates on Microsoft's cloud platform, Azure. MADREC allows financial institutions to share the verification results of LEIs they hold by writing them onto the Ethereum blockchain. This means that the LEIs themselves do not leave the institutions that hold them and are not shared among financial institutions. The reference data recorded on the Ethereum blockchain is also hashed, ensuring anonymity and privacy.