Two federal government departments have launched a project to test digital, blockchain-based credentials that could replace the paper documents Canadians currently use to prove their identity.

The documents necessary to verify someone’s credentials in situations like job applications or airport security checks are paper-based and “susceptible to loss, destruction, forgery, and counterfeiting,” states a challenge issued by Shared Services Canada and the Treasury Board.

The departments want bidders to come up with a solution that lets private businesses and governments verify information about a person’s identity or their credentials for free using a web browser or mobile phone, and without needing to rely on a centralized digital registry of people. Those getting their credentials checked would own their records and be able to transfer them between identification systems. While the challenge requires that all personal information must be stored in Canada, bidders are also required to incorporate a set of “emerging and/or mature specifications for interoperability that have been funded, tested and/or championed by the United States of America Department of Homeland Security.”

The system could be tested in a situation like aviation security, where there may be many agencies involved and different customs and immigration authorities on each side of a journey, the notice says.

While many companies and governments keep electronic records of names, dates of birth, professional qualifications and security clearance, there aren’t widely accepted or standardized ways to assign and check credentials digitally, according to the challenge notice. To encourage adoption, it suggests using blockchain or other types of distributed ledger technology—systems in which data is recorded and shared across many computers instead of being held in a centralized database.

The Treasury Board said it plans to work with the winner to figure out how the system could be used and standardized. “We want to deepen our understanding of the technologies and to see if a digital ecosystem approach along with common capabilities can be applied to many different contexts, including education, travel [and] professional qualifications,” spokesperson Bianca Healy told The Logic.

The departments will discuss how they could implement the technology once the challenge is concluded. “The degree to which the [government] will develop, leverage or contribute to a ubiquitous [identity verification] infrastructure remains to be explored,” said Healy. Shared Services Canada did not reply to The Logic’s questions by deadline.

Business groups and former high-ranking government officials have advocated for a country-wide digital verification system. The process of identifying citizens seeking services costs governments $482 million in lost time annually, according to a May 2018 report from the Digital ID & Authentication Council of Canada, whose members include major financial institutions as well as federal departments and provincial governments. In October, former federal chief information officer Alex Benay called for the country to develop a “trusted digital identity” system.

Among the eight firms that formally expressed interest in the project is SecureKey, a Toronto-based technology company whose Concierge login technology is already in use on the websites of the Canada Revenue Agency and Service Canada, which issues passports and social insurance numbers and runs many federal benefits programs. It declined to comment, since the procurement is ongoing, but in an unrelated January interview, CEO Greg Wolfond told The Logic, “This problem of proving who you are is pretty huge.”

He said it can be difficult for institutions to ensure that the person presenting a driver’s licence or health card at a service counter is the same as the one whose name is in their database, or whether a client has been the victim of identity theft. Sectors like banking and telecommunications and governments need to cooperate to solve the problem of ensuring that people can share their data securely, log in to services they need, and prove their identity and credentials, he said.

While the two departments manage most of Ottawa’s technology infrastructure, the government as a whole hasn’t made a decision on a single digital credentials system, and other departments are testing out different identity innovations. In 2018, the CRA ran a five-month test of SecureKey’s Verified.Me login system, which allows users to share the personal information held by their banks to prove who they are to other companies and the government.

Ottawa has explored partially replacing paper documents with electronic records. In 2018, an immigration department-commissioned study found mixed reactions to the idea of a virtual passport system, in which travellers would check in at airports using their existing booklets, then move through the rest of the building via facial recognition.

The challenge is being run through Innovative Solutions Canada (ISC), launched in December 2017 to help small Canadian businesses win government contracts. The companies chosen to work on the digital credentials project will get up to $150,000 each to cover six months of work on a proof-of-concept, with another $1 million and a year for a working prototype. Applications closed in early November. The Treasury Board said the two departments aim to finish reviewing bids in early 2020.