*Update: following the completion of the sale and prior to launch, Valid announced it was changing its name to Vetri.
Valid is a personal data and self-sovereign identity management tool that will allow consumers to securely transact online using verified digital identities while also creating opportunities to monetize their personal data through anonymized interactions with brands, advertisers, and even marketing or research groups. Valid is the creation of privately held Procivs AG, a Swiss company working to establish decentralized and self-sovereign electronic ID services allowing individuals to manage their digital identities, with a particular focus on public-sector applications. While the complex, challenging issues of digital identity and individual data management have received considerable attention, with a number of groups developing strong projects, VALID nevertheless represents an innovative contribution to the field. Specifically, VALID’s combination of self-sovereign identity management, a mobile wallet allowing management of individual data, and the web-based VALID marketplace where individuals can selectively monetize their data, could make consumers more comfortable sharing data, allow them to generate modest revenue from their data, and provide data consumers with reasonably-priced datasets. VALID’s functioning prototype for self-sovereign identity, and partnerships with governments interested in its identity technology, illustrate the project’s advanced status.
VALID’s blockchain-agnostic system allows individual identity to be established through different mechanisms, in a sort of identity wallet that can itself contain multiple validations or attestations. For instance, users could establish government verified identity, maintain validations compatible with the emerging ERC-725 authentication standards, and include attestations from Sovrin’s permissioned blockchain network. The interoperability of these different authentication standards should provide VALID users with a wide range of options suitable for particular situations. For instance, a voting protocol may require government authentications, while a market research firm would employ validations from the Sovrin network.
A core element of VALID’s user experience is its mobile wallet, which is built upon the foundation of decentralized identity platforms being developed by Procivis. The wallet allows individuals to securely store and manage encrypted personal data ranging from identity information to subjective personal interests to discrete data streams, ranging from fitness tracker measurements to health records to browsing history, credit card data, or geolocation history. The VALID wallet acquires its unique value in relation to the VALID marketplace, where individuals can selectively monetize chosen aspects of their digital identities. Specifically, the VALID marketplace allows individuals to rent or sell select portions of their personal data–such as web browsing history, perhaps in combination with credit card transactions and geolocation data, yet while choosing to withhold other data, perhaps medical history, for instance–to data purchasers. This anonymized, yet highly detailed and in certain cases verified data allows brands, advertisers and market research groups to confidently interact with specific target demographics, yet in a smart-contract governed manner that prevents buyers from storing or even accessing the underlying data.
The wallet allows users to store their personal and identity information locally, where it is less at risk of being compromised by hackers. A system that aggregates user-supplied data AND identity information in a centralized location (even an external set of servers) is at risk of breach. This does open the possibility of users tampering with their data, potentially to make it more valuable, but Valid plans to allow external data providers to attest to data (“we recorded this geolocation at this time”) and have it hashed on the Ethereum blockchain. This would presumably require a complex set of integrations with third-party data collectors and devices, but if successful, it could drastically increase the quality (and price) of data on the marketplace.
The Value of Personal Data
The VALID marketplace is a timely, promising concept for several reasons. As the digital advertising industry currently operates, the value of personal data lies less in a single data point or even a single data set, but rather in the assembled profiles of individuals that data brokers make available to brands and advertisers after themselves acquiring and merging datasets. This is because the reliability, and thus utility, of individual data points exists only insofar as the broader or more complete profile establishes a relatively trustworthy context for the data.
VALID profoundly alters that relationship. Because VALID users (after defining parameters of their participation) are able to share demographic information such as age, gender, income range, place of residence, and potentially additional information, advertisers will be able to work with fewer data points but nevertheless be confident that they are interacting with an appropriate demographic.
Upcoming EU Regulations Will Change the Data Industry
The crucial context for questions of data management within a European context concerns a new regulation known as the General Data Protection Regulation (GDPR) that comes into force in May 2018. As this regulation will pertain to all businesses selling to or storing data about EU citizens, regardless of where that business might be located, it may quickly become a de facto global standard.
The general aim of this regulation is to give individuals more power over their personal data, and to limit the way that data is used. One component of the regulation places limits on data that can be collected, restricting it to data that are specifically related to the particular task of a program or app. In effect, this will end the abuse of unread Terms of Service authorizing virtually unlimited data collection, and should limit the amount of consumer data legally available for sale to data brokers. The second is the right of a consumer to be provided with an electronic version of all data collected about them.
By incorporating this electronic data into their VALID wallet, then reselling it themselves, and doing so alongside a wider range of data, some of it verified, VALID’s model that could well emerge as a challenge to the existing status quo in the digital marketing space, and in doing so place individuals at the center of a more circumscribed data collection process. Finally, the right of a consumer to have their information forgotten should also serve to limit legally available consumer data, bolstering demand for the kinds of data to be available through the VALID wallet.
All together, these regulations could make the existing industry of data collection somewhat obsolete very quickly. If third-party datasets cannot be updated, data buyers will need to go elsewhere.
Valid Concerns with a New Data Paradigm
Nonetheless, this method could pose challenges in assembling coherent and meaningful datasets. In such a marketplace, much data would suffer from self-selection: tech giants currently tracking activity can track people whether they want to be tracked or not, while with VALID, all data purchased will be that its sellers feel comfortable selling. It could also mean it’s challenging to get a standard set of variables across a wide population. VALID could enable a system where data buyers can request data from certain people: all users who fit certain demographics and also have fitness information could be sent a message with a proposed price for access. It’s also unclear whether users will actually sell their data if given the choice. Finally, it’s unclear whether the EU regulation will become more broadly accepted. Independent of government action, users don’t have much leverage to prevent data tracking and selling from large tech companies that control primary infrastructure, and those tech companies don’t have much incentive to threaten their data collection niche.
The Size of the Digital Marketing Industry
The size of the digital marketing space, including revenue generated by data brokers, provides a sense of the market opportunity. As VALID notes in their whitepaper, In 2016, for instance, an estimated $72.5 billion was spent on digital marketing. Some estimates anticipate this market growing to more than $100 billion by 2021. Other estimates note that digital advertisers receive only 44 cents of actual value per dollar spent, the rest being absorbed by various middlemen. This hints at another aspect of the opportunity VALID represents: even if marketers were to pay a larger amount per individual customer for data from the VALID platform, the combination of better targeted data and the removal of middlemen could present opportunities for greater results with a lower net spend. At the same time, consumers could enjoy both more relevant and interesting advertisements (assuming the data were put to good use), but also a far greater share of advertising revenue, which would likely further increase their receptiveness to the limited but well-targeted ads they could expect to receive within the system. While the emergence of a mature market around VALID’s data and identity ecosystem will undoubtedly take years, it will be interesting to observe the impact of its growth upon the data broker industry and its reported revenue of $156 billion in 2015.
Understanding VALID: Background, Structure, and Timeline
The projected ultimate form of VALID is as an open-source protocol residing within a Swiss foundation that will serve as a caretaker. The project’s roots, however, lie with Procivis AG, a private Swiss company inspired by the vision of a digitized society where individuals control their own digital identities while seamlessly interacting with companies and institutions. Understanding that background both provides context into the evolution of the ideas and technology behind VALID and insight into the timeline within which elements of the project can be expected to emerge.
Procivis was formed in 2016, with the intention of creating electronic ID and electronic government services. An initial proof of concept appeared in early 2017, exploring the potential of eGovernment services and applications such as voting on the blockchain. In mid-2017 an initial centralised beta version of an eGovernment platform appeared, focused on the issuance and management of electronic identities and initial services such as the electronic signing of documents. In December 2017, Procivis announced the initial testing of a pilot version of the eID+ platform, developed in partnership with the Swiss canton of Schaffhausen, allowing citizens to access services such as the local tax office. Additional services are to be implemented throughout the trial period which is scheduled to last through Spring 2018. A full version of the eID+ system is anticipated for late Spring of 2018, with a fully decentralised V2.0 of the eID+ system operating on the Ethereum network expected by the end 2018.
Several parallel tracks are unfolding while development of the eID+ system is advancing. One is that Procivis is in discussions with different blockchain-based identity focused projects, such as Sovrin, to incorporate of aspects of Sovrin’s protocol into the eID+ system, Other developments include extending the features of the eID+ system. Examples include efforts to develop, in partnership with the University of Zurich, a blockchain-based voting process that will both manage elections and provide voter education services. Other projects include the incorporation of healthcare records into the eID+ system, an effort being developed in collaboration with Atlanta-based HSBlox. Additional business development efforts have focused on establishing new relationships with government partners. The Procivis team indicated that three Memorandums of Understanding have been signed with three different nations, in three distinct global regions, that are interested in incorporating the eID+ system.
The crucial moment in the development roadmap occurs in late 2018 when a fully decentralised version of eID+ is anticipated to become operational. At this point, the project will be forked, with the eID+ system expected to be employed widely across a range of public sector contexts, and the other becoming the basis for the VALID system, with a user’s self-sovereign digital identity becoming the foundation of the broader project wallet and marketplace system.
Who is the Competition?
As noted, there are a range of companies developing products in both the identity and personal data sectors, each bringing unique approaches to these issues. Despite the fact that many of VALID’s competitors are well-known and relatively advanced, the existence of a functioning prototype in terms of Procivis’ eID+ beta platform represents one distinctive aspect of the VALID project. Moreover, VALID’s approach of crossing the divide between identity and data, a divide that seems to define most of its peers, is particularly distinctive. That said, a brief consideration of VALID’s peers can provide insight into the competitive landscape into which it is entering.
From the perspective of companies focused on self-sovereign identity controlled exclusively by the individual, three primary peers exist:
- uPort: a self-sovereign identity platform, uPort’s Zug ID project represents the first blockchain based self-sovereign government issued identity, in collaboration with the Swiss city of Zug.
- Civic: blockchain-based self-sovereign identity where individual identity information is verified by others within its network, Civic also intends to test a data marketplace during 2018.
- Sovrin: an international non-profit operating a permissioned blockchain focused on establishing self-sovereign individual digital identities.
In terms of data marketplace projects there also exists a number of projects pursuing different approaches:
- the Brave browser, which allows users to collect rewards from advertisers for engaging with marketing content, using the Basic Attention Token (BAT) as currency. The BAT is planned to function as reward for users sharing their personal information with advertisers, while advertisers will enjoy lower net rates because their spending will be highly-targeted and focused on consumers and individuals who have opted-in to receiving ads that are more relevant to them.
- Status: an Alpha-stage decentralized messaging app and mobile operating system for DApps where users can receive tokens for viewing ads, and with uPort’s identity protocols incorporated for users who desire to interact using verified identity.
- Datum focuses on the secure and private storage of data while allowing users to sell their data to a wide range of data consumers that extends beyond simply advertisers to include groups such as research groups or healthcare providers.
- Streamr: a data marketplace platform oriented towards continuously streaming data, such as traffic data produced by a vehicle or battery usage and status statistics from a device.
- Algebraix: currently completing an ICO using a SAFT agreement for a personal data management platform where users can be compensated for watching ads.
While each of these groups has compelling features, VALID’s working prototype, existing relationships with a Swiss Canton as well as memorandums of understanding with national entities appears to leave it in a strong competitive position.
What is the Token Being Sold?
The VALID token serves as a payment token within the VALID ecosystem. Consumers will earn VALID tokens through the sale or lease of their data, or by interacting with marketing campaigns such as when completing surveys or participating in studies. Initially consumers will simply sell the tokens into the marketplace where data purchasers will need to buy them, but later iterations of the platform are planned to include opportunities for third-party developers to offer services, such as data storage or analytics, that consumers will be able to access by spending tokens.
VALID’s upcoming token sale will see the company sell 50% of its total token supply of 1 billion tokens. Of this 50%, 160 million will be sold in a presale at varying discounts, with 340 million available in the main sale. The hard cap limit for the sale is $25 million, representing a $50 million valuation for the total token supply, relatively modest given both the ICO amounts and valuations of peer companies, as well as the scale of the opportunity.
Within the context of Swiss ICOs, where the average for the 36 ICOs completed during 2017 was $24.4 million, VALID also appears to be pursuing a relatively modest raise amount. That many of the 36 Swiss ICOs from 2017 were at a much earlier stage than VALID reinforces how VALID’s raise target is a reasonable one.
Of the 50% of token supply not sold during the ICO, 30% will be retained for a growth fund to incentivize early adopters of the platform, 9% retained as a bonus pool for Procivis AG employees, 9% for the VALID Foundation, and the final 2% to advisors.
Of the funds raised, 57% will be designated for salaries and team development, 17% for operations, 14% for marketing, 2% for miscellaneous fees, and 10% reserved as a contingency fund. In terms of maintenance and upkeep of the platform once it is operational and residing within the VALID Foundation, will be assured initially by the 9% of the token supply initially reserved for the foundation. The foundation will also be able to license the technology to secure additional funds, or perhaps to charge modest fees to third party developers accessing the platform. What the foundation will not be doing is extracting fees from users, as all funds from advertisers will be passed through to consumers, minus gas fees, without either the foundation or Procivis taking a commission.
Who is the Team Behind the Project?
Procivs AG, the Zurich-based creators of VALID are led by a strong and experienced team with extensive experience in the banking and technical worlds. CEO and co-founder Daniel Gasteiger spent 20 years in banking with UBS and Credit Suisse in a variety of roles before turning to blockchain opportunities. His co-founder, Yves-Alain Petitjean, also has a varied international career in international finance before co-founding Procivs in 2016 and assuming the CFO role. CTO Giorgio Zinetti brings a tech background from several years spent at UBS. Other key team members include Head of Business Development Patrick Graber, holder of a master’s degree in Business Innovation from the University of St. Gallen, and Senior Government Consultant Costas Vayenas, whose own international banking career saw him serve both UBS and Credit Suisse in different roles, and is considered an e-Government expert, having written the book Democracy in the Digital Age: How we’ll vote and what we’ll vote about. Finally, blockchain developer Sven Stucki, holder of a master’s degree in information Technology and Electrical Engineering from the Swiss Federal Institute of Technology (ETH) in Zurich, has considerable experience in cryptography and blockchain and smart contracts.
Procivs AG equally has a strong advisory board. Members include Michael Casey, advisor to MIT’s Media Lab, Kaspar Korjus, Managing Director of Estonia’s e-Residency Program, while an additional group of advisors have been assembled to guide the development of the VALID project. Amongst those are Malik El-Bay, former founder and CEO of Modum.io, that Smith + Crown discussed last fall prior to Modum’s $13 million ICO, Lucas Betschart, president of Bitcoin Association Switzerland, Thomas Bocek, with a PhD from the University of Zurich, is a blockchain expert and head of distributed computing at UZH and also an advisor to Modum.io, Eva Kaili, a member of the European Parliament, amongst others. The overall impression is of a strong and capable team, with a range of experience and possessing the resources to be able to confront the challenges before them.