Back in the 1990s when the internet was seeing its first wave of mass adoption, one cartoonist for The New Yorker magazine captured the spirit of new-found freedom and anonymity with the cartoon featuring two canines and the caption: “On the internet, nobody knows you’re a dog.”

Dubbed “Cyberdog”, it is claimed to be the most-shared cartoon in the history of The New Yorker, and one of the most recognisable jokes about the internet.

Decades later, and with much of people’s lives and social interaction mediated online (and vast data harvesting by online firms), the question of maintaining the right balance of anonymity remains ever pertinent.

Tied in with this are questions as to the extent of our online digital identities. Beyond representations of governmental identity credentials, how should people be identified online and what guardrails should there be?

Back in January, Bermuda’s regulator, the Bermuda Monetary Authority, concluded a consultation regarding a proposed new regulatory regime for providers of non-governmental digital identities. The Consultation Paper itself provided a good snapshot as to the future landscape of Digital IDs in Bermuda.

End pain points, enter seamless services?

On initial look the BMA’s Consultation Paper points to a model of licensed digital identity service providers who will identify and verify persons and then issue and authenticate credentials, which can be used to prove an individual’s identity online and with other entities (without those entities having to conduct fresh customer identification).

This is in step with other international identity assurance and trust framework regimes and holds the promise for consumers of minimising lengthy onboarding procedures with financial service companies. For some individuals who may find it difficult interacting with onboarding processes, this could streamline their experience, while opening up potentially more online applications for Bermudian nationals and residents to access.

Trusted Assurance framework – for use in more than banking

The proposed regulatory regime is underpinned by attributes – characteristics of the person that establish the person’s uniqueness (such as name, date of birth, nationality and biometrics) stored electronically as credentials that provide secure forms of identification and can be disclosed selectively, with the subjects having more control of the use of such credentials.

Moreover, it need not be confined to financial services.

One of the more relatable use cases (and which I saw advertised whilst travelling in the UK over Christmas) was for digital proof of age – meaning that young people especially can dispense with carrying around plastic cards and use the credentials on their mobile phones to show proof of age. The on-phone credentials show only selective attributes (eg that the person is over the requisite age and the time of the credential assertion).

A boost for the digital asset economy (by fixing onboarding)

Bermuda’s digital asset economy (including businesses licensed by the BMA which issue, exchange, custody and provide services for cryptocurrencies) has been an outstanding success and streamlining customer onboarding has been highlighted as an area for further innovation.

The BMA mentioned this in its consultation paper but also it was David Burt, the Premier of Bermuda, who highlighted the issue at a number of conferences and speeches in recent years – with a vision of digital asset customers holding transferable identity credentials based on attestations by reputable providers (such as lawyers), to encourage interoperable and speedy onboarding.

In fact, last year a Bermuda-based lawyer was involved in a test attestation of a local tech founder’s identity documents on the blockchain using the Ethereum Attestation Service – which was submitted to one Bermuda bank as part of its account opening process. You can see each of the certification attestations which were made in the test – by the notional firm HamiltonCertifications.eth, at the following link – bit.ly/42jIYDW.

Future challenges with the roll-out of AI

In years to come one of the most important things you will need to prove while online is that you are a real person!

As use of AI systems are expanded and intelligent systems interact with users online, it will be increasingly difficult to distinguish between real and artificial users. This problem was considered by David Birch a thought leader on digital financial services based in the UK who argued that in a world full of bots and AI, an “IS_A_PERSON” credential will be the most valuable credential of all.

In September last year, a group of 32 researchers from institutions including OpenAI, Microsoft, MIT and Harvard University published a paper for one type of “personhood credential”, while a number of projects, including the Worldcoin (universal digital identity project), have been experimenting with various biometric enrolment programmes (including iris/retina scans, face and fingerprint scans) – in the case of Worldcoin partnering enrolment with a universal basic income scheme.

Thus Bermuda’s service providers will navigate the new landscape of digital identity and likely play an important role in developing online commerce. The latest steps by the BMA should help further develop trusted frameworks for businesses and consumers.

• Bourn Collier is a member of the corporate team of BeesMont Law specialising in digital asset business