February 14, 2023

The Government Getting On Chain?! Now, That Would Be Off The Chain!

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The Department of Motor Vehicles is not typically what comes to mind when you think about efficient or expedient processes, but California seems to be aiming to change that. California's DMV partnered with Tezos, an open-source blockchain, and Oxhead Alpha, a crypto-focused software development firm, to establish a blockchain platform to digitize car titles for California drivers and streamline the title transfer between car owners. Reportedly, within the next three months, California drivers will be able store their car title NFTs into their digital wallets on the Tezos blockchain.

Andrew Smith, president of Oxhead Alpha, explained that the move to the blockchain will not remove the DMV from the process. "While the end users are able to initiate transfers, the DMV still has oversight." Furthermore, as is the case in real estate where NFT real estate purchases are still limited by the traditional real estate transaction, NFT car purchases are also limited by traditional vehicle title transactions. Smith admits that there are still certain things that need to be done beyond obtaining the NFT "to effect a real transfer."

The involvement of state and federal government in the Web3 spaces certainly raises questions about decentralization and anonymity - some of the many attractions for crypto natives and NFT collectors. While it remains to be seen to what degree the government will use blockchain technology in their own processes (such as storing drivers licenses or passports on the blockchain), even the Web3 space seems to be migrating towards implementing the verification of identity. A digital identity that is not tied to a centralized marketplace or other institution is called Decentralized Identity (DI) or Self-Sovereign Identity (SSI).

For example, in the metaverse, DI or SSI will help you prove that your avatar is actually you. In the legal context, this may prove useful in solving some of the concerns related to serving a wallet with legal documents.

DI consist of two main components: (1) decentralized identifiers (DID); and (2) verifiable credentials (VCs). DIDs are like your legal name, an email address, or social security number and VCs are like diplomas, passports, or social media accounts. This information would reside on a blockchain, as opposed to a centralized marketplace or other repository. For example, Jane Doe earned her JD from NYU Law. She provided her legal name (DID) to be a part of her digital JD diploma and NYU Law published and verified her diploma (VC). Now if Jane Doe were to present this diploma to a prospective employer, the prospective employer can rely on the diploma without having to contact NYU Law directly. This is a rather simple example, but imagine the possibilities of implementing DIs in more complex examples, such as healthcare settings. If you want to learn more about use cases and requirements for DIs, check out the World Wide Web Consortium (W3C).

This process of verification is normally done manually (think of pre-Musk Twitter's blue check mark). However, implementation of DI would streamline the verification process and, in the context of NFTs, potentially reduce fraudulent NFT transfers that have been so common lately.

There's something big here, and it's being noticed. The US Department of Homeland Security has plans to develop blockchain security solutions for digital documents such as passports and green cards, using DI solutions. It might just be time to get re-excited about blockchain technology!

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