I agree, it's past time we do away with Social Security numbers as a way to identify a person. They came up with that system in the 1930s, before TV was invented, before computers, and before anyone ever dreamed of the internet. We now live in a digital, interconnected world, and a digital certificate of identity makes perfect sense. If compromised it can revoked and reissued, unlike a 9 digit SS number and an 8 digit date of birth that stay with us for life. And if implemented in a reasonable amount of time a digital identity certificate would make the hacked Equifax data useless.
The future has nothing to do with banks or governments but with blockchain technology. One nice thing about producing reputation (including financial reputation) on a blockchain is that there could be competitive products out there and you as a consumer or lender can decide which to use and not to use. It would likely mean that Equifax and Experian each would have their own "reputation blockchain".
The big benefit/downfall is that anyone at any time could create a brand new reputation and leave a bad one behind, but the reality is that a 40 year old starting out with a clean slate crypto reputation would be less trustworthy than someone with some dings. Another benefit/downfall is that history could be forever unless the reputation contract included an age of removal of history.
It's tough to envision this today, but I think in 20 years it'll be the future of reputation, no than a "Yelp" for borrowers and inclusive in that would be a reverse-reputation system baked in: you could also leave reviews for your lenders for others to see, all permanently codified in an archive that is safe and secure (meaning you could give a creditor a one-time access code to look at your file, but never again, or you could issue them an access code that works for a period of time or forever).
Paypal actually patented a crypto reputation system back in 2014 or 2015. They're not the only bank looking into it.
I would favior a system that worked by something you have and something you know like a smart card/pin combo. Many CCCs are doin this now.
LOL maybe we could all have chips planted into us. I wouldn't mind but I know many would.
No question the system is broken as it stands. I didn't see it noted here already, but wayyyy back when the IRS started tracking by SSN the SSA told them not to do so.
Blockchain can not and should not happen because -- let's just face it -- everything out today will be hacked. Computers deemed secure 20 years, 10 years, or even a month ago are no longer. Look at the KRACK attack. Somebody figured out how to exploit a bug in the WiFi spec and overnight BOOM, almost every single wireless network in the world was vulnerable. (Almost every network meaning anybody who uses a password for their network rather than some alternative methods of authentication.)
Microchips also wouldn't happen (at least in the short term) because of objections (I would not accept it by any means) and requirement to have the person physically present in a government facility to be chipped or reissued. This is expensive.
The digital certificates are interesting, but
There's also the precedant being set of whether the government can force you to connect electronically. While I suspect most here e-file federal taxes, it remains voluntary. I don't e-file my state because it would cost more than the stamp. My grandmother does not have a computer and does all her taxes on paper and mails it in.
I had one bank account from when I was younger that had the wrong SSN (Two of the last 4 digits were reversed) and that was a pain to change, but looking back, they didn't ask for anything more than a driver's license.
I think what will end up happening is a system to allow reissue upon request and a law to require a drivers license (or other state ID) to open any new account.
Well, that approach leads us to believe that no matter what we try eventually someone somewhere is going to find a fault or outsmart the system anyway, so why bother trying?
But to say the KRACK attack made every wireless network in the world vulnerable is a gross overstatement of fact. It made every wireless network in the world (that was within range of someone who a) knows enough to exploit it and b) has incentive to do so) vulnerable. This substantially drops the number of people impacted.
You also seem rather against "microchips" for reasons I don't quite understand. You would not accept it by any means based on what? That it would violate your freedoms and privacy? And to require every person to visit a government facility at one point in their life is not nearly as insurmountable as you make it out to be. Show me one person that has never been inside a post office or DMV. Government has the unique advantage in marketplaces to force people to do what they want (drive demand) and be the sole provider of any particular service (control supply). In exchange for that, we ask them to be reasonable with their fees or we will elect officials that will put those controls in place. Checks and balances.
Digital certificates can be *both* digital and physical. There's no reason I can't carry around something that references an online verifier to a record. Credit cards are a de facto proof of concept for this. The card itself is a worthless piece of plastic but when inserted into a machine that lets a merchant know that Visa will cover my transaction up to a certain amount. I'm not sure why it would not be in the cloud. You'd have to realize that if you were to do any other configuration you would be endlessly administering machines and data centers and we do enough of that as is.
Think of a system that gives you two unique 13 digit numbers. One given to me at birth, which is a sequence of 13 numbers that gets calculated with a formula and has a control number at the end (kind of like credit card). This one is random enough for nobody to be able to guess anyone else's (for example, how many babies were born before you on your birth day in that region is a relevant factor in the formula) and is used with government entities and government entities only (it is illegal for the businesses to requirefrom you to provide that number to them to give you a service).
The second one is the national ID number given at 18 to serve as a proof of identity with the businesses.
And there you have it. Two distinct numbers. One for your government, and the second one for your dealing with businesses. Someone can't fake anything important (as in, government-related) with your ID, and businesses have a second number that is usually proven on the spot with the photo of you in your national ID.
Problem is solved. Should either number be compromised the other number can be used with additional verification steps as a back up.
And being a hold out for doing things on paper is great, but in the long run you're costing everyone else money by not getting on board. It may cost you less than a stamp personally to file, but you have to pay taxes to support an employee in a building also paid for with state/federal money to read what you wrote and just type it in themselves. Your grandmother may not have a computer but it would be no different than asking her to go a voting center to use a computer there to vote in an election.
Sorry to ramble I wanted to address all your points.
The one glaring gap here is why aren't the banks the one taking the hit here for "identity" theft. If someone comes up to me and says "hey, I'm your friend Bill. You owe me $20" and I give it to him only to find out later hey, that wasn't Bill at all.. should it be Bill's fault that I gave money owed to him to someone else? No, of course not. And should I then go around telling everyone else "hey don't give Bill any money, because he might not be who he says he is". No, of course not. That impugns Bill. But it's exactly how the credit bureaus and banks work. It should their problem when someone commits fraud. Not ours.
I remember WAY back when my original SS Card stated right on it " For Social Security Administration Use Only" Not to be used as Idendification". I also remember when you got pre-approved for a new credit card it would just show up in the mail with a letter that "You've Been Pre-Approved" and explained your limit and terms.. No application, Not even a call for activation, you accepetd the invitation for the account by simply usig the card the first time. Talk about lax security.