While bitcoin is going through some growing pains right now, that shouldn't deter entrepreneurs from starting a digital currency business. As we detailed recently, many VCs are on the lookout for business partners in the burgeoning space.
One notable hurdle, though, is that regulators are looking closely at what should be done about decentralized money. This means that for even the most intrepid entrepreneurs, fear and uncertainty surrounds planning for the many possible scenarios of legislation that could take shape.
Palo Alto, California-based BlockScore, however, aims to take some of the regulatory issues already at hand and automate them. BlockScore offers an identity verification API that startups can easily implement into a product or service.
Alain Meier, co-founders of Blockscore, explained his company's value:
"We just make it absurdly easy to implement identity verification for anybody.”
Learning from experience
Meier learned firsthand how difficult it is to implement identity verification into a bitcoin-based business. Prior to BlockScore, he was working on a potential bitcoin remittance business.
When it came to verifying identities for anti-money laundering compliance while working on his project, it presented a challenge. He quickly discovered that solutions on the market were “a blast from the past. It seemed like it was all made in the 90s”.
"Most of these (verification) sites, there’s no API docs, there’s no pricing information. Just getting pricing is incredibly difficult."
Because of this experience, BlockScore has built identity verification that aspires to make starting simply, while also plugging in with technologies that startups are currently using.
“We have a very nice standard JSON and RESTful API that people have gotten used to over the past couple of years."
Many of the incumbent identity verification systems on the market today use antiquated frameworks such as XML or SOAP APIs. Meier described these as "clunky".
“We make a bunch client libraries for the types of languages startups are using. Ruby, Python, nodeJS. We onboard people usually within the same day," Meier said.
BlockScore's ID System
Many users will find the company's identity verification similar to, but more simplistic than, other offerings.
The verification system is a two-part product. There is identity verification, then a knowledge-based authentication.
"Identity verification just makes sure that the information is correct. The knowledge-based authentication asks you questions that are much more difficult to ascertain if you just used someone’s stolen information."
The questions could include what car someone owned during a particular year or in a previous zip code. This is data that is much harder for an identity thief to readily answer during the verification process.
Meier says that bitcoin ATM operators are one of many BlockScore BTC customers.
With so many bitcoin ATMs popping up, it's easy to wonder how these operators are handling compliance. Meier says the feedback has been very good from BTC ATM operators who have been using BlockScore for compliance.
"We’ve heard some very, very good feedback. Essentially, when they implement our stuff, people just don’t need to worry about half of the compliance they had to worry about before.
People have been very receptive to that."
BlockScore is also working on a system that helps any money transmission business easily complete AML reports. This includes suspicious activity reports (SARs) and currency transaction reports (CTRS), both part of AML requirements.
Businesses file those by going to the government’s website and filling out PDF forms. The SARs, for example, can have nearly 100 form fields. BlockScore streamlines this cumbersome process, Meier said:
"Because we’re doing identity verification, and we have information about the businesses who sign up with us, we can fill out all but 20 of those 98 fields."
Subjective information, such as why a transaction is suspicious, is part of the 20 fields that still have to be completed.
"It’s an insane reduction in the amount of form fields that they have to fill out, and makes it easier to submit them."
Meier says that one of his customers is testing BlockScore’s new reporting system. That company has been able to reduce the time it takes to submit SARs from over 20 minutes down to 5 minutes.
Not Just Bitcoin Anymore
BlockScore started purely as a company that served businesses operating in the bitcoin space. But, other startups took notice of the company, and now its APIs are being used across different industries. Said Meier:
"We actually started off targeting just bitcoin companies like exchanges, wallets miners, stuff like that. Then, we actually had people finding us on Google."
The first customer outside of bitcoin was a ridesharing application. That company came to BlockScore asking if it offered service for non-bitcoin companies. Meier said it was logical to help anybody who needed the company's services.
"We changed the branding, and now we are generalized for anyone who needs identity verification. But we do love to help bitcoin companies in particular."
The media's portrayal of bitcoin hasn't always been favorable. Although the company is now profitable, that hasn't always been helpful for BlockScore's growth. Meier says the company's roots are in bitcoin, so it will always be servicing cryptocurrency customers.
"To be honest, being involved in bitcoin has sort of been a detriment. But we still love bitcoin, so we’ll never give that up."
Check out BlockScore's easy registration and transparent pricing on its website.