Why Latin America is well placed to unlock Web3 identity

We stand at a pivotal moment in history. In 2011, Marc Andreessen famously proclaimed that "software will eat the world" and now, in 2023, Yuval Harari warns that "AI could rapidly eat the whole of human culture." As we witness the potential dangers of AI large language models capturing billions of people who may feel abused or manipulated, we are also in the midst of a transition towards Web3, the next phase of the internet aiming to empower people with privacy-preserving, verifiable and tamper-resistant digital information. However, we must ask ourselves: Are we accelerating in the right direction?

Language models have sparked global regulatory discussions, challenging the status quo of the attention economy, where data accumulation influences behaviour modification. Some countries, such as Italy, have even imposed complete bans on their use due to concerns about societal polarisation, mental health issues and the erosion of democracy. When it comes to Web3, regulations have mainly focused on decentralised finance (DeFi) due to the volatility and scandals surrounding cryptocurrencies. Unfortunately, other meaningful applications of blockchain-based decentralised technologies, which disintermediate and remove the centralised players that dominate the 'attention economy,' are receiving very little attention when compared to its transformative potential.

Unlocking the potential of Web3 does not necessarily require new regulations, but a reevaluation of existing ones that hinder innovative solutions that can enhance digital trust. We must consider decentralised government services (DeGov) and reimagining identity systems without central intermediaries. While regulating AI can indeed boost digital trust, fostering, rather than blocking, the meaningful adoption of Web3 shields against any potential distrust. This is where Latin America takes the lead, as the region's regulatory environment is more conducive to innovation.

Outside of Latin America, trust frameworks leveraging blockchain capabilities are emerging to create verifiable documents and unique digital assets that represent ownership and identity itself. These frameworks aim towards a theoretical value where Web3 identity helps to reduce bureaucracy (fewer inefficiencies), build a more resilient democracy (facilitate secure online engagement), to create more secure data environments (less cybercrime) and unleash a trillion-dollar opportunity for our global economy that will bring social benefits and higher incomes for everyone, not only for private citizens but for governments to have a greater capacity to provide public services, such as education, health care and other social assistance programmes.

Notable examples include UK Digital Identity, European Commission EBSI, Canadian DIACC and New Zealand Digital Identity, among others. As these examples gain credibility worldwide, Latin America's public sector has shown increasing interest. So, what could happen if you raise the interest and credibility of a region that has no regulation blocking the transformative potential of Web3?

One illustrative example of what is possible is the Province of Salta in Argentina, which in April 2023 launched its government online services portal allowing its 1.4 million inhabitants to 'connect their wallets.' This pioneering move involves decentralising identity and official documents through blockchain-verifiable credentials. Additionally, cities, such as Monterrey, Mexico; Buenos Aires, Argentina; and Bogota, Colombia, are collaborating to make decentralised identity an official identification number. Together, they are building a public-private ecosystem centred around QuarkID, a regional identity standard that leverages decentralisation to facilitate seamless cross-border digital services. This is promising in two ways, firstly, Latin America is starting to move at the speed that language models demand for an institutional upgrade. Secondly, these use cases are moving the needle from current Web3’s theoretical value to real impact.

In the coming months, we anticipate more governments in Latin America will follow Salta’s lead. Achieving widespread adoption, however, requires significant educational efforts and a focus on user experience as big sovereignty comes with great responsibility. Moving from familiar systems, such as email and passwords, to decentralised identifiers, private keys, wallets and passphrases requires the learning and teaching of a new language. Just as people may not be aware when language models manipulate their behaviour, they may also be unprepared to take responsibility for their data in the Web3 era. Nevertheless, if we aspire to forge digital trust, foster economic growth and strengthen democracies, we must be bold and embrace the possibilities of Web3 identity as a foundational gateway.

To the investors seeking promising ventures, the politicians crafting forward-thinking policies, the leaders championing transformative change, the boundary-pushing academics shaping our future and the entrepreneurs daring to dream — embrace this pivotal moment in history. Latin America has the social, economic, political and regulatory conditions to emerge as a thriving epicentre of innovation. Our institutions yearn for an upgrade, our communities crave innovative solutions and our entrepreneurs eagerly await support. The time is ripe to seize the immense potential of this convergence and invest in a prosperous future. Together, we can rise to the occasion with an unwavering determination to navigate the uncertainties that lie at the heart of emerging technologies, emerging markets and B2G business models. By doing so, we will unlock a world of unparalleled opportunities that will shape our digital future.