• In the real world, reputation is everything. So, too, should it be in the digital realm, believes Animoca Brands’ Yat Siu
  • Blockchain could be the ‘elegant’ solution for certain data-privacy issues 
  • Animoca is bootstrapping the ‘digital identity layer’ by championing onchain reputational value 

 

If blockchain and asset tokenisation truly is to be universally adopted in the world of finance the way the world’s biggest asset manager BlackRock believes it will, then it’s likely you will start to hear a whole lot more about digital identity and digital property rights, too.

What do these things mean and why are they potentially very important? Yat Siu, chairman and co-founder of Animoca Brands, sat down with Stockhead to chat about it.

By way of background, Yat Siu’s Animoca Brands is one of the most recognisable companies in the web3/crypto space – a heavy investor and heavily involved project incubator, primarily across the metaverse and gaming sectors, with more than 540 investments to date.

 

That’s a hell of a lot of irons in the fire in what’s perceived as a volatile space, Yat. 

“That’s true, at Animoca we certainly have broad exposure in the space – we have hundreds of projects that have reached a certain scale and size. So through this approach we have built a more robust belief and optimism in the sector than if our concentration was far narrower, especially across market cycles where there are many unpredictable elements at play beyond technicals. Our approach is to broadly invest, but also widely and actively participate in the market and web3 sector as a whole.”

And is that participation still through the web3/crypto gaming, NFTs and metaverse areas Animoca has mostly been known to focus on? 

“Yes but with particular focus on the use of onchain digital identity. Through our Mocaverse and through Moca ID we’re trying to build, essentially, the digital identity layer.”

Just as an aside to readers, the Mocaverse and Moca ID, as we understand it, is Animoca’s interoperable, NFT-based infrastructure stack through which the company is developing an ID system that essentially works for users a bit like frequent flyer miles for web3, focused on ‘onchain’ activity. If that’s kind of it in a nutshell, what then, Yat, do you mean by the ‘digital identity layer’?

“Essentially, we can think of it as reputation as currency. And when you think about how we operate in real life, we have a reputation, and that reputation can give us opportunities.

“Whether you’re a journalist or a banker, a trader, or whether you went to this or that university, we’re all essentially creating value out of our reputation.

“That’s really the heart of it, but in web3 we really didn’t have a way of doing that, despite the fact we do a lot of things onchain [interacting on blockchains] that actually makes it possible to create a reputation score or value.

“And so we can do this with games, with portfolio products and in all sorts of ways. As in the rest of your life, when you have a better reputation you tend to get more opportunities.”

 

Good vs bad in a world of onchain reps

So, we’re talking about a reputational value that’s essentially recorded on the blockchain. What would the benefits of having a good reputation be for that? What might be some examples, and what would constitute a ‘good’ reputation? 

“So, for now, benefits can be as simple as gaining more airdrops [a way projects distribute ‘free’ tokens or coins or NFTs to specific crypto wallet addresses] because you might be a good player of certain games, or are really active in particular areas of the web3 space. And so a certain audience might say, I want that customer, based on the fact he or she is good at certain things – represented onchain.

“But the greater vision with all this is that eventually your reputation onchain could lead to opportunities that are more meaningful, like a new job or some other prospect. And that might come about as people want to come to you because you have a reputation that’s perceived as having some form of value.”

Okay, we’ll get back to the greater, grander vision for onchain identities in a sec, but we also want to know what a ‘bad’ onchain reputation might look like. 

“Again, I’ll use the simplest example at this moment, which might be if you receive airdrops from an early-stage project and you sell them right away, for example. We’re not saying that’s a ‘bad’ thing as such and that you’re not entitled to sell your assets. Of course you are and it’s up to you. However, there is an element around that, that projects might like to know about you, right?

“Some people might say, hey – great at making profit, because you know when to sell and buy. So there could be nuance there that’s not necessarily building a ‘bad’ reputation, just that you might not be someone contributing to the network effect of a project or community and might not be someone others wish to do business with in that instance. In that regard, it’s not so different from how it works in the real world as we know it.”

 

The power (and abuse) of anonymity, anon

Some governments are interested in digital IDs and many people are sceptical, particularly in libertarian crypto circles, of the motivations behind such ideas – much like they have fears of the overreach and control that central bank digital currencies could bring. There is a school of thought government IDs could potentially be an Orwellian abuse of privacy. Do you see it that way at all?

“So with governments and digital IDs and what we currently have in the web2 world and with Facebook, Google etc., what I think is that blockchain can solve the issues and concerns people have around privacy and data.

“So nobody will argue that as long as I’m secure in my own privacy and in the provenance of all my data that I generate, that basically you can’t abuse that, right?

“And so, blockchain solves it very elegantly, because right now the problem is that if I want to have access to current models – Facebook, Google – through logins, which are really there for convenience, I actually give all sorts of information to a central platform which obtains that power.

“With what we’re building it’s really about secure custody of your data and what you do with it – that’s the central idea.

“By onboarding users into the Mocaverse, we can start tracking their onchain activity but it’s anonymous unlike the data users give up in the web2 world.”

So in the Mocaverse example, users’ activities are free to be seen on the public blockchain ledger, but real-world privacy can be maintained through anonymity? 

“Right, and privacy is important in web3 – zero knowledge tech provides good ways of ensuring your privacy is protected while you still engage in the space onchain.

“But here’s the thing – there’s an issue in web3 in that anonymity can be abused – whereby there is no accountability or consequences.

“And so I kind of give an example of – you could do crimes in Hong Kong, and then you go to Australia and start all over again. That’s not really how the real life works, but that’s basically what can happen in web3 right now.

“You could be a bad actor on the Ethereum blockchain – hacks, scams, pump and dumps, whatever. And then when you go to Solana, nobody knows who you are, right? Or you could go to spin up any wallet, and what’s crazy is, if you spin up a new wallet, I treat you just like anyone else, because there’s no consequence for that.

“And so, the reason why reputation has value is because reputation is a layer. It is a layered experience. In other words, your reputation is essentially an investment that, over time, basically yields more returns because you’ve invested in it.

“If you don’t invest in your reputation, actually, your life’s pretty crap. So we think of the same parallel as a need for the web3 digital world – because if you have a reputation, you will protect it and want to gain value from it.

“And that means we have to create a system where your onchain reputation essentially becomes important for opportunities. So if you only choose to transact with people that have good reputations, it forces other people to essentially have an orderly society based on reputation.

“That’s basically how we live in real life. Otherwise, we’d be stealing from each other and doing all sorts of stuff because of no consequences.”

 

Going mainstream is a ‘foregone conclusion’

What will it take for the concepts of onchain digital identity and reputational value to get some serious take-up and go mainstream?

“Well, to me the idea that it will go mainstream is a foregone conclusion, because the benefits flow directly to the end user.

“People say, “Oh, well, you know, Google is so convenient”, but Google doesn’t pay you, right? So at the end of the day, I don’t want Google, Facebook to monetise my reputation, which is what they’re doing right now.

“You might have a million followers on Instagram, but it makes most of the value. You only get a sliver of that. So basically, if you put it on chain, you own that value and you can have control. So I see that as the kind of the high level with this.

“But then the next level, of course, is that whatever you build on chain, essentially, are elements to some kind of credit score that can have real life impact for you.

“Platforms like Google and Facebook, which own our data are actually monetising that data. They won’t reveal our email content, but they’ll be revealing, you know, for instance, certain aspects that we’re scored for. So, for example “he receives a lot of emails from this type of group of people, maybe he has a score of 20”. Or “if he receives emails from these types of people, he could have a score of 80.”

“That type of stuff is happening, except we’re not receiving value for it, and that’s part of the point here – if they’re already using and monetising my data, at the very least I should be getting a share in that.”

 

The reputation market opportunity

Any other final thoughts on all this, Yat? Is anyone else working on the digital identity layer? 

“Nobody else is doing this. So what we’re doing with the Mocaverse and Moca ID – we have a chance to really bootstrap these concepts with our own ecosystem.

“We can provide essentially rewards for people, inside games they’re playing for example and things they’re doing to add value to the network. Then what happens is you’re creating a reputation score that can accrue over time.

“What we believe this could eventually lead to is, when you have a good onchain reputation, it could open up markets for unsecured credit.

“And when you look at how unsecured credit works, you’re facing a decision based on reputation – have you paid your debts on time, what sort of job do you have, how much money do you make and so on.

“There are similar elements, for example digital assets, tokens, that can be proved in zero knowledge onchain without having to reveal your whole identity. But more importantly, you could then get some kind of immediate unsecured credit for that.

“I would argue that reputation, the reputation market, or value-generated reputation, is perhaps greater than, or potentially at least rivals, that of our actual physical assets.”

 

At Stockhead we tell it like it is. While Animoca Brands is a Stockhead advertiser at the time of writing, it did not sponsor this article. 

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