I’m just reciting this to myself so I don’t forget the logic behind it, figured I might as well stick it on my blog.
When conducting direct trade, the market does not require either party to identify themselves to the other.
When borrowing on the other hand, at least one of the parties must identify themselves in order to prove their worthiness before property will be handed over to the debtor.
In a networked world, an anonymous digital identity would be sufficient to conduct trade. For direct person to person exchange, a smart device could be used to transfer a digital payment as the purchased goods are handed over. For an online trade, an address is necessary for a delivery to take place, but a name is not required.
This digital identity would build up a transaction history, along with seller and buyer ratings. As a person sells goods online, their anonymous digital identity would be credited for the sales they conduct, while the same would be true of purchases they make, or paychecks that they receive.
At this point, should a person desire to take out a loan, they could then use the same anonymous digital identity’s transaction history to prove their credit worthiness by simply proving to the lender that they are in fact the actual owner of that digital identity. This could be done through either a third party verification or by proving they have control over the account’s password/security checks.
Thus, a person could chose to remain entirely anonymous by not engaging in trade that requires disclosure of account ownership, or they could disclose ownership of an identity to specific parties under a non-disclosure agreement in order to prove credit worthiness.
How this identity is crafted, maintained, and implemented throughout society would be rather different than the identification we use today. For starters, it would only be possible to have such an identity if the currency a person is transacting with is also anonymous and digital. Obviously something like Bitcoins would fit the bill here.
Just thinking out loud to myself here, perhaps some kind of an Open ID user account that is tied to several Bitcoin wallets. A commercial service could identify a specific user’s transaction history with them through implementation of an Open ID type system, even though they are getting paid in an anonymous currency. The ID system could then store additional information about transactions, besides simple Bitcoin transfers between anonymous wallets. The ID could be credited with ratings, promotions, etc..
What makes the ID special is that it would maintain this history across platforms and vendors. The ID would act as a measure of a person’s reputation for various things.
Consider a merger of these services:
Such an ID service could represent what you know (college degrees, courses taken, various verifiable accomplishments), who you’ve done business with and your reputation, along with your banking history. The beauty of such a system is that a person could maintain multiple entirely separate identities if they wanted to. They could “switch characters” as easily as one does in a video game.