The Myth of Electronic Identity

Conventional thought is that transactions occurring over a distance create problems that are new and unique to those posed by face-to-face transactions.

The reality is that both of these transactions face the same problem: verifying the identities of the parties involved.

Many may take issue with this simplification of the ‘identity problem.’  ‘Of course,’ you’ll point out, ‘the underlying problem is identity.  The unique and new problems posed by distance transactions are the ways in which identity can be verified.’  And you’d be right.

The problem is that people take for granted the long-held rituals and customs our society has in place for verifying identity in face-to-face transactions.  We become complacent because the person is tangible, in front of us, and we can see him.  We witness the signature, we hear him say his name, and we shake his hand.

These rituals were based on small, knowable communities. Imagine colonial and post-revolutionary New England.  Small towns dominated while serving, and being served, by rural farms.  These communities were discrete and knowable.

The scene, in some ways, resembled Anatevka from the ‘Fiddler on the Roof’ — everyone know each other, and each town had their cast of ‘characters.’  This meant identity was easy to ascertain.  The Smith’s down the street have been there for two generations and are pillars of the community, so of course I know it’s them who signed the contract supplying my horses with shoes.

The evidence of how tight-knit, small communities relied upon being able to know each other is apparent in the outsider-theme.  Outsiders, such as northern carpetbaggers, could not be trusted and would take advantage of you.  Outsiders, such as those in the west, will make deals and then break them.  Outsiders, such as Professor Harold Hill, will sell us on a kids’ band to solve our Pool problem.

Technology expanded the boundaries of these communities and brought them into contact with more and more outsiders. Cars, planes, and trains increased mobility.  With more mobility, the more outsiders were able to invest and transact business in foreign communities.  There were more and more Professor Harold Hills, fewer and fewer Tevyes.

Mobility was not the only way technology expanded community boundaries.  New technology, such as plumbing and sewage and electricity, allowed larger and large cities to be built.  New York City, as an example, increased in population by roughly 1 million per decade from 1890 to 19301 — a time in which sewer sanitation advances allowed for increased population densities.

Technology met these communal changes by providing solutions to the ‘identity problem.’ These solutions came in forms such as ID cards (driver licenses, passports, et cetera) and ID numbers (such as the ubiquitous Social Security Number).

Whereas we once held out our handshakes as our bond, and our names as our identity, we now show our driver’s licenses and passports in an effort to verify our identity.  Police officers don’t take your name on faith, they take your driver’s license.  Transportation Safety Authority screeners don’t take your ticket and name on face value, they rely on your passport, its picture, and their faith in the federal government to properly issue passports.

These technological adaptations to verifying our identity are a form of electronic identity.  Our names are attached to numbers kept in databases and our numbers become our identities.  Lenders, sellers, and the bouncer at the front door of a bar all take these new identities on faith once they see my papers, my card, my technological identity.

The internet has further broadened the number of people with whom we can make contact and enter into transactions. No longer does one need to be face-to-face, instant communication and transactions can occur on the other side of the world.  This renders obsolete the technology of faith of old; no longer do licenses and passports suffice, for they can not be verified in person.

This represents an inexorable march away from transactions occurring on a face-to-face basis towards a system where transactions are far less personal.  The psychological implications of no longer having to hand over cash or coin for a purchase, or being able to invest in a project, company, or product that you never see, are the subject of numerous other articles and disciplines.2

Important for this essay, however, is the way broadening our ability to contact people, broadening our potential sphere of business relations, has created an inability to trust those who we deal with because of our inability to really know who those people are.  We no longer interact with our neighbors down the street, we interact with our global neighbors down the international commercial highway.

Technology has once again led the way to solve the ‘identity problem.’ Identity is verified through encrypted keys, usernames and passwords personal to an individual, or some other ‘single-source identifier’ mechanism (bank account numbers, email addresses, or more).  Gone are the guarantees of the government implicit within a driver’s license or passport; here, now, in this internet world, is the guarantee of a middle man.

Third party organizations have risen up to act as intermediaries to trade and transaction. 3  They function to guarantee identity so no longer are we required to transact face-to-face in order to be sure of our deal.

These third parties, and all other technology intended to solve the ‘identity problem,’ are really no different than those original customs and rituals solemnizing and confirming identity in the transactions of our great-great-grandfathers. The handshake is now digital, the familial knowledge is now outsourced, the signature now encrypted.  Ultimately, each method of identity serves to provide security, peace of mind — faith — over who the buyer is, who the seller is, and who will be at fault if something goes wrong.

These new forms of faith, however, function no more securely than the old. Just as someone might lie about their credit worthiness in the past, or even pass themselves off as someone they are not, so too can bad actors lie, cheat, and steal in the electronic age of identity.  Just as driver’s licenses can be faked, passports doctored, so too can user accounts be hacked, PGP keys decrypted and re-used,4and third-party intermediaries duped or duplicated.5

Each method of verifying identity, both old and new, serves a purpose.  This purpose is important, and each method serves it well in its own limitations.  That purpose is providing a basis for a buyer or seller’s faith that the transaction is legitimate.

In the end, the idea that electronic identity can solve outright the ‘identity problem’ is a myth. The problem will persist forever and always, for each of us is an independent person at his or her most inner core; and each of us shall always have dark, inner thoughts and motivations beyond the reach of the outside world.

This idea, the idea that electronic identity can overcome the fundamental hurdles of identity, is the myth of electronic identity.  Ultimately, electronic methods of verifying identity rely just as much on faith as the older rituals and customs society built around face-to-face transactions.

  1. See Wikipedia’s Demographics of New York City, http://en.wikipedia.org/wiki/Demographics_of_New_York_City#cite_ref-42 []
  2. For example, see Supriya Singh, Impersonalisation of electronic money: implications for bank marketing, 22 International Journal of Bank Marketing 504 (2004).  For more on behavioral economics, see Dan Ariely’s website Predictably Irrational. []
  3. For some general background on electronic identity middlemen, see Wikipedia’s article on the Global Trust Center. []
  4. Although, admittedly, this is not an easy thing to do.  See Keith Parkins, How Secure is PGP?; but see Slashdot, Cracking PGP In the Cloud. []
  5. See Mike Harvey, Fraudsters profit from financial crisis by using fake websites to steal bank details, Times Online. []

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