ICOs Will Benefit From Proper Amount Of Regulation – ShoCard CEO Armin Ebrahimibr>
Armin Ebrahimi is the Founder and CEO of ShoCard, a digital identity verification system that protects consumer privacy through patented use of mobile devices and the blockchain. An industry veteran, he brings more than 30 years of experience in scalable platforms, online services, mobile-development and digital advertising to the ShoCard team.
Before founding ShoCard, Ebrahimi was the CEO of Advertising.com Dynamic Retargeting, an AOL company. Prior to filling this role, he was Senior Vice President of Platform Engineering at Yahoo, with responsibility for Yahoo’s registration and anti-fraud platform services. He also built Yahoo’s original Display Advertising platform that served more than 20 billion transactions a day. Ebrahimi founded and was CEO of TRIicon Solutions, acquired by Tandem Computers. Ebrahimi holds a doctorate in organization management from Capella University, as well as Master and Bachelor of Science degrees in Computer Science from California State University – Chico.
BLOCK TRIBUNE: What is the problem with the existing approach to identity management?
ARMIN EBRAHIMI: The existing approach to identity management is problematic because it has not adapted to other advancements in technology. For example, the process of using usernames and passwords to access company services and personal information has remained largely unchanged for 40 years. Even the social security number is a concept that has not been updated since its inception 80 years ago. Though we have come so far as a society, we haven’t adapted these methods, which are crucial to functions in our everyday life, to reflect the advancements in technology available to us. So, although hackers have become more and more sophisticated and treasure troves of our personally identifiable information are stored in massive databases, we’ve been unable to find a long-term solution to protect the information that should be most valuable to us – the information that defines us.
BLOCK TRIBUNE: What is the competition like for identity management platforms in the market?
ARMIN EBRAHIMI: While there are a few blockchain-based identity management platforms on the market, there are even fewer with active use cases and products that are already on the market. Unlike its competitors, ShoCard is currently in use by real customers. ShoCard has partnered with two major global credit card networks, several banks and a multi-national credit reporting company, as well as a number of enterprise clients with its ShoBadge product. Additionally, the company is working with a major international airline and a government immigration agency to build a blockchain-based Traveler ID using the ShoCard IM Platform. ShoCard has also partnered with a major federated identity provider to expand the reach of this revolutionary technology to enterprises. The company also recently announced its partnership with RF IDeas to expand its enterprise solution to the healthcare, government and manufacturing industries.
BLOCK TRIBUNE: What are ShoCard’s unique selling points?
ARMIN EBRAHIMI: ShoCard enables a new approach to digital identity management that flips the ownership of identity information to be with the individual, rather than handled by and entrusted to corporations, a concept known as bring your own identity, or BYOID.
ShoCard offers an enterprise solution, ShoBadge, in addition to its SDK. ShoBadge is easily incorporated into existing SSO solutions, and protects against “man in the middle” attacks made by hackers. ShoCard also helps organizations meet some of the provisions of the EU’s General Data Protection Regulation (GDPR) – privacy by design and right to erasure.
BLOCK TRIBUNE: Can you tell us about your Traveler ID project?
ARMIN EBRAHIMI: With the use of a mobile app and facial recognition, travelers need to be only identified once, and can be quickly verified by non-affiliated airlines, airports or other agencies. Travelers’ data is kept private with them, on their phone, and only shared with their permission. Their data can be authenticated by other airlines using blockchain technology securely and without compromising traveler privacy of information.
With this approach, it is possible to shorten wait lines at airports while increasing security. The goal is to ultimately allow travelers to fly between destinations, spending less time proving who they are, and instead using the airport facilities to efficiently go to their destinations. Meanwhile, airports can provide greater security by eliminating human error and focusing their attention to the small subset of individuals who are a potential threat, versus the 99.9 percent of travelers who are good-actors trying to get somewhere.
BLOCK TRIBUNE: What inspired you to do an initial coin offering (ICO)?
ARMIN EBRAHIMI: The token offered in ShoCard’s ICO, ShoCoin, will provide a financial mechanism for users and service providers to securely engage in transactions that use an individual’s identity and other personal attributes with less friction. ShoCoins provide financial incentives to users and compensation to clients in order to retain customers and expand the market. ShoCoin is being integrated into the ShoCard Identity Management (IM) Platform. Users are more likely to perform platform operations, such as creating user identities, certifying users, and sharing certifications, when doing so enables financial compensation or generates financial incentives.
BLOCK TRIBUNE: Tell us about the ShoCoin Token, how does it work?
ARMIN EBRAHIMI: Fully integrated into the ShoCard IM Platform, ShoCoins enable identity management transactions by compensating users and service providers. There are five main “constituents” engaged in the token exchange who receive or pay tokens: Identity Owner, IMS, ShoCard-IP, Certifier and Verifier. There are a number of ways that tokens can be exchanged among constituents. Some exchanges are mandatory and established by the exchange system, and some are established by the service providers. In some cases, the service provider gives a token to incentivize the users to remain engaged in the ecosystem and profit from the value they create. In other cases, a verifier, such as a bank, compensates a service provider, such as a credit reporting company, for use of their certified credit reports for a customer. Ultimately, the ShoCard IM Platform creates efficiencies and saves costs for both the user and the service providers and enables a broader market for all by allowing micro-level compensation for specific identity transaction exchanges.
BLOCK TRIBUNE: How can you guarantee the price stability of ShoCoin?
ARMIN EBRAHIMI: It may be difficult to initially stabilize the price of ShoCoins given the environment in the crypto-markets. However, as the identity network usage increases, the natural value of the coins will match their utility usage. This may take some time to establish, but our goal is to enable a proper identity platform that uses the ShoCoins for its intended purpose. Accordingly, we are releasing a smaller set of coins rather than flooding the market just to raise the maximum amount of money. The reserves can then be used to increase supply as needed to keep the price of ShoCoins stable.
Additionally, all projects with coins have to execute on their mission in order for their coins to have value. We are no exception, and intend on continuing on the true value-creation that allows our coins to have real versus speculative value.
BLOCK TRIBUNE: Where do you stand on governmental regulation of ICOs?
ARMIN EBRAHIMI: While many are critical of government intervention and regulation in the crypto-markets, we think their involvement and regulation is a good thing. Blockchain and the crypto-markets are providing disruptions unlike any we have seen before and we are only starting. However, as much as these new technologies and economies are innovative and change-agents for something much better, they must coexist in the world we live in that entails regulation.
It is easier not to be hindered by regulation if everyone was to do things right. However, the ICO world, in a very short period of time, has proven that easy money and opportunity attracts both good actors and questionable ones. For the ICO market to survive and, more importantly, for widespread acceptance of tokens and solutions that leverage the blockchain with the promise of a better tomorrow, we will all benefit from the proper amount of regulation.
There are too many projects that have raised millions of dollars on promises to build something without having anything but a high-level whitepaper and a business plan that is simply untenable. If too many of these ICOs fail, the overall ICO economy will hurt. Regulation can put incentives in place for companies to do at least the basic due diligence and offer the ecosystem better transparency, disclosure and risk-management.
Not enforcing any regulation, however, is not good for the young, but more established, startups like us that are particular about following existing regulation and laws – whether enforced or not. We have a responsibility to our shareholders to obey the law. Having a mature board of directors in place with seasoned management and investors, we cannot and will not break the law, no matter how tempting, even if the law is not being enforced. This, however, provides competitors with lesser solutions, who could otherwise not compete with us on the merits of our respective technologies but are willing to break the law to be better capitalized, get an unfair competitive edge. Proper regulation in fact levels the playing field for all.
However, over-regulation can also cripple new technologies, the ICO economy and the benefits they have to offer. Cryptocurrencies are something new, and our existing laws were not designed to regulate cryptocurrencies, and, as we are seeing, existing laws are awkward as applied to cryptocurrencies. We have to work within the confines of our current laws, but urge the government and regulators to move fast to keep up with the pace of innovation. In the U.S., we compete globally with other blockchain projects – it’s important for us to find the right balance in regulation to protect consumers and investors, but at the same time not stifle its growth.
BLOCK TRIBUNE: What are your views on the US Securities and Exchange Commission (SEC) ICO probe, sending subpoenas to the companies behind the ICOs?
ARMIN EBRAHIMI: Clearly the probes have caused jitters throughout the industry. We don’t have enough information about the subpoenas to know what they are seeking. We don’t know how much of this is information gathering and how much is intended for enforcement purposes. However, these probes are probably long-overdue and will probably help shape the roadmap for crypto-offerings as we move forward.
For those of us who don’t see the details of the subpoenas, these probes should be a simple reminder that doing legal due diligence is essential and that we need to work together as an industry to promote best practices and comply with applicable legal requirements. If we collectively do this, we are more likely to have the SEC and the government work with us with a more flexible workable regulation that fits the token economy and its potential.
For ShoCard, it has taken us a long time working with our attorneys before we made our coin offering. We have done everything in our power to understand and comply with regulatory requirements as if we would one day have to defend our approach to the regulators. I think that is the right defensive approach that everyone should take. However, such defensive moves don’t come without a cost – it is harder to raise funds, it takes longer and it requires a lot more education. But, over time, that too will change as the general understanding of regulations and why we must comply with them becomes understood.
BLOCK TRIBUNE: What do you think the end game is on this probe – will it mean substantial fines, businesses closing, possible jail time or other sanctions for advisors or corporate officers?
ARMIN EBRAHIMI: That’s hard to predict and while anything is possible, it would be wrong to speculate. The first question anyone, be it an advisor or a corporate officer, should ask is, “Are we following the spirit of the law? And if we are, are we utilizing all the tools available to execute on that spirit?” These questions are prudent to ask and follow regardless of what specific actions a government body takes.
BLOCK TRIBUNE: What are your future goals for your business?
ARMIN EBRAHIMI: Certain verticals are primed to adopt blockchain IM first. Three factors, value-proposition, readiness of the industry and maturity of the industry, will lead the financial sector, travel industry and enterprise access sector to lay the foundation for further acceptance of blockchain IM and expansion into other verticals. ShoCard is currently working within each of these sectors, and expects its technology to continue to grow within them. On the horizon are the health, education, government assessors, document notarization and law enforcement industries, which ShoCard will target as its solution becomes widely accepted. In the future, ShoCard also intends on creating open standards, so that the ShoCard solution can be implemented by others as well as ShoCard, furthering the propagation of the solution and its adoption.