Despite the recent malaise in the crypto market, several Web3 firms are pushing ahead with the development of blockchain technologies.
One such startup is NEST. Founded in 2017, the London-headquartered company is developing next-generation blockchain infrastructure to facilitate confidential, distributed identity and cross-chain asset control.
KrASIA had a chat with NEST founder and CEO Charles Anderson, who shared his thoughts on the current trends in the Web3 space.
This interview has been consolidated and edited for brevity and clarity.
KrASIA (Kr): Tell us about your background and how you started NEST.
Charles Anderson (CA): I was born in Papua New Guinea and have lived in mainland China, the US, and the UK. My parents used to work at the United Nations Educational, Scientific, and Cultural Organization, so we moved a lot.
I went to the University of Melbourne and studied media communication, law, philosophy, and film. But I got a job with Google, so I ended up doing search engine optimization, and working on backend development. After that, I ran an art collaboration service for seven years.
Around that time, I got annoyed with smart contracts. They were “smart” but were really just static, monolithic things. This got me thinking: If you take something like a service or sales contract or an engagement in the real world, how do you make that not just private but secure and “immutable”? How can somebody with zero knowledge of blockchain own and control their own contract, and have that facilitated with crypto or fiat?
This is the problem that NEST has defined and is exploring.
Kr: SSDID looks like a key feature of NEST’s platform. Tell us more about that.
CA: People don’t understand SSDIDs, and in a way, they have been misappropriated or misused. So we have to focus on their practical implementation before introducing them as something that people can grasp.
There’s a DID, which is a decentralized ID line—if you go on a service and request a DID, they generate it on demand and give you the key so you can use it and sign in. But they hold your private key, so it’s actually centralized, and you are just running around with a single ecosystem signature; it’s more like getting a cookie from Facebook than an actual DID. When we say SSDID, as far as I know, it’s the first self-sovereign capacity to not only hold but also generate those verified credentials.
The structure that we have provides users with the choice of generating or exchanging credentials. If you are a bank, you can come up to me, and I have my parent SSDID, and start an onboarding process with you so I can use your servers. That parent creates a single-use child DID. I can provide you with the necessary information from here without ever disclosing this information to the parent and by using a single-use anti-money laundering (AML) or know your customer (KYC) certified authenticated DID that I control. I have all my verified credentials, and I never divulge my primary one—the parent wallet.
Kr: What do you think will be the most common use cases for NFTs in the long term?
CA: I think it will be membership NFTs. You can combine SSDIDs and NFTs to create a QR code for on-site, real-world engagement interactions. You can do that with ticketing. Let’s say your ticket comes with five free drinks and a free T-shirt. You can scan a QR code and have an auto-authenticated point of sale. I think there’s that ongoing interaction for real-world engagement, ownership, and control.
After that, I would say it’s closer to what is happening with Soulbound tokens and user identification, credential management, and verification. But I doubt that’s really going to last.
In the long term, I believe they will be used for “data-as-an-asset.” Having this capacity on my phone means that I can take something like my browser history and personal data, bundle them up, and then sell them to whomever I want. This creates the potential for various kinds of individual monetization—secondary markets for tickets, collectibles, and even personal data, with real-world, tangible uses.
Kr: Critics of Web3 say that it focuses on monetization. What are your thoughts on this?
CA: Practical implementation is usually the missing piece. When you look at, say, NFT ticketing, it has a tangible utility because people can show up and enter a venue; there is an inherent value to it. But if you’re talking about the economics of things, it’s back to the days of the initial exchange offerings, when you’re relying on utility and expecting the next guy to pay more than you did.
So the question is: Is there a practical utility to it, or is it just hype? Mostly, I don’t see the practical utility, or to me, for many projects, it’s not immediately clear.
Kr: Another criticism is that Web3, especially DeFi, is not really decentralized. Do you agree?
CA: Yes, 100%. We did a lot with gamification, gaming, and its structures, and even in that space, people don’t appreciate that the whole ecosystem or network is only there because of the players and their individual participation. Whether you’re talking about DeFi or something purely centralized, the underlying ethos is that unless that person has a choice, it’s not decentralized.
In terms of SSDID ownership, master file ownership of NFTs, or encrypted data, NEST allows storage to be a kind of quantum-proof network led by its users. We call it a kind of fail-safe. We allocate, for example, a hundred megabytes on your phone, which lets you store chunks of other people’s structures. If any single network were to go down, you could always get your data back, and you’re the only one who could put it back together.
That’s how we were approaching it, while saying that we have private key retrieval and decentralized structures. But they’re all in walled gardens. Ethereum or Cardano do have wonderful structures, but they’re still within their walled gardens.
That’s another thing with proof-of-stake; having enough money can allow one to take over that walled garden. From the pure definition of decentralization, I would say it’s usually more distributed, but it’s not decentralized.
Kr: What are your thoughts on having that kind of balance as opposed to a more centralized structure with regulation?
CA: It’s very hard to speak about what works for different environments and different people. I would say my focal point is giving people choice and control.
If you have your personal encryption, only you can divulge the transaction that you’ve made. You alone can carry out authorization; having a sense of agency is necessary for anything to work.
But when they take that choice away, that’s when you’re really getting into trouble. That’s when the technology holds no value because you might as well go back to regular ledgers, which are essentially a centralized service.
Kr: Is there anything in particular that you find exciting at the moment?
CA: Seeing how the NEST team is growing and things are coming together is one. I’ve been heads down in the garage for four to five years, and that was a period with an insane amount of stress while not having any validation if my ideas were right.
What really drives me and gets me excited is the introduction of choice and control for people. I’d never imagined that a bank would ever use AML or KYC, and then provide privacy control. When you break down that capacity for engagement and control and reposition the power of that structure, and see how it extends to markets and niches, and the way people use it; seeing all this change really gets me excited.