Meet the man fixing fraud with crypto as his sidekick
Dan Sutherland has worked in technology for 25 years. His deep knowledge of how things are done is met by a rigorous questioning of why things are done that way, often with surprising results.
An early foray into unconventional thinking came when his managed hosting company was running services for eBay. In the days before cloud computing he realised that for them the data centre was horribly inefficient, so he persuaded them to move to a utility model, a forerunner of cloud computing, which was faster, cheaper and greener.
“It worked so well that in 2005 we took the decision to pivot from being a managed hosting business into a very early cloud company.”
He ran this business for another 11 years, before selling it to Six Degrees in 2016. Dan admits he enjoys working with cutting-edge technologies – where he can tackle big challenges.
Introduction to the world of crypto
Crypto came into his life through a photographer friend in Vancouver who took payment for some corporate photography in Bitcoin. Initially, Sutherland was sceptical, but by 2015 he simply couldn’t ignore it. Convinced blockchain would change many things he invested and waited for the right opportunity.
“We were thinking about identity. Because in real life, I know who I am and other people know who I am. Humans have a desire to trust each other and we rely on instinct and observation to build that trust. So the question isn’t about recreating identity, it’s about reimagining trust.”
Sutherland gave the example of the good old days, where customer might shop with a local greengrocer on tick, only paying for the produce at the end of the week.
“That works – there is trust. We wanted to figure out how we could take that human concept of trust and replicate it for the online world.”
At the same time, Sutherland was exasperated by hundreds of iterations of his online identity, all held in different formats and with slightly different or unmatched details.
“I was now thinking about replacing all of the versions of me buried in databases across the internet with just one electronic self that was provably true and owned by the person it related to.”
Outdated databases and smartphones present an opportunity
Sutherland argues that technology has missed a trick. “While processing speed has grown exponentially, today’s databases are still really just card indexes. Back in the day you had to collate data to be able to query it. It was the best option. Now, it’s inaccurate, and risky.”
Again, he began to ask questions about this approach: “Why does data need to be centralised where it’s most at risk? Databases are honeypots for hackers. And after all, we now have superfast internet connectivity, so data can live anywhere and still be accessed quickly.”
Coupled with the smartphone operating like a supercomputer in everyone’s pocket, Sutherland made the leap of moving users’ data onto phones and using the network for access. “Blockchain, with its underlying complex cryptography, made perfect sense to provide the solution.” Sutherland had found his opportunity.
Then came the pandemic. He and his team had to adapt to a very different reality.
“Not knowing how long things would last, we took our feet off the development pedal and pivoted instead into a research and development team.”
Taking time out allowed the team to look at things differently. They realised that Web3, with its decentralised structure, was the perfect model for the network, and they modelled parts of the data distribution on Theta, a distributed video platform used for the PlayStation Network.
“We began to imagine a decentralised Web3 network that was user-owned and controlled by a DAO. This would allow much greater flexibility than provided by a traditional corporation. Users could build trust, share verified data and communicate freely without the threat of a bad actor coming in and taking over the network.”
Another beauty of the network is that it is non-custodial – all the data is held on the individual’s own smartphone.
“Self will never own or retain the user data. It’s about allowing people to securely share their own data, in ways they see fit.
“Personal data and identity are not products in my opinion. Selling identity is a bit like selling air. It infuriates me when I’m told my identity has expired and I need to renew it. I’m like – I haven’t expired, what are they on about?”
Again, Sutherland takes the road less travelled. When individuals speak with institutions, they are often quizzed by the institutions to confirm their identity. The individuals don’t get to ask for the same assurance in return from the institutions.
“Why not, why isn’t the process symmetrical?” argues Sutherland. “What if we could provide a service that is symmetrical and both sides can confirm the identity of both parties? That alone takes down whole swathes of fraud”
Gated access granted anonymously
Sutherland has broad ambitions for the Self project. For individuals, Self focusses on their free app to help people protect themselves against fraud, by making communication safer and giving people control of their data. In the case of children using the app, delegated permission from parents or school enabling them to discover the wonderful world of the internet without the present threats online. This thinking extends to facilitating groups setting up gated communities online.
“You can use your Self membership to create, for example, a Telegram group where you know the other members are humans. But the project is open-sourced so users and developers can extend trust into whatever their community needs, from better parent school communications to a means of proving and sharing your education and employment history.”
A big part of Self is the level of anonymity that is possible. “If I’m buying a pair of sneakers, I don’t necessarily want to disclose personal data to a shoe company, not even my address. It’s just not necessary. Personal data should be shared on a purely need to know basis, so a retailer could ship shoes to my Self account, the courier could ask me to confirm a physical delivery address, but the courier does not need to know my name or even the contents of the package. That way I can easily change the delivery address in case I am out of town and want my package delivered to me there?”
Currently, the consumer app is live in both iOS and Android stores as beta versions. For companies, they have released both developer tools and portals and their first commercial products are with launch customers.
Fraud, the key thing that Self fights, is often seen as an accepted cost of doing business. Organisations, even big ones like banks, feel that it’s cheaper to bear the cost than to fight it. Sutherland has priced Self to change that maths. Now instead of adding a premium to cover the cost of fraud, it’s cheaper just to prevent it. If one considers that by GDP, fraud is the third largest economy on Earth after China and the United States, then it makes sense to rethink how to attack it.
“Don’t just add a premium, tackle it at the source.”