Blockchain and Identity Persistence

Abstract

The unique value proposition of 'smart contracts' based on blockchain technology is the creation of a permanent public record of agreed-upon transactions that cannot be changed retroactively. Though this is attractive in terms of reducing the potential for fraud, a person entering into a smart contract pre-commits both their current self and their future selves, no matter what changes occur to them or to their circumstances. The advantages of such pre-commitments can be substantial, but even in an age of increasing adoption of distributed ledger technologies, self-reinvention remains important. From a surveillance perspective, it is important to prevent governments from reliably associating a particular cryptoasset transaction with a particular person. For individuals, it is important to preserve the ability to assume new identities both formally and informally.

This book chapter encourages an expanded and refined understanding of what it means for a blockchain use case to "protect privacy," and in particular, how such use cases can encourage a notion of personal identity that is inflexible and matches poorly with individuals' notions regarding their identities. We review several proposed use cases (marriage, money laundering prevention and criminal justice record-keeping) that present this problem in an especially acute form, and highlight good practices to preserve space for self-reinvention.

Keywords: cryptoassets, cryptocurrency, identity, narrative identity, blockchain, marriage, money laundering, criminal records, decentralized identifiers, verified claims, transgender identity

JEL Classification: E42, K12, O33