It is 20 years since the publication of the famous The New Yorker cartoon that summed up the essential anonymity at the heart of the internet. One canine, perched in front of a computer, says to another: “On the internet, nobody knows you’re a dog.”

It’s a pretty safe bet they do by now. The medium itself may have anonymity baked in, but most of what happens online these days is tied to making inferences about someone else’s identity, from the behavioural targeting of online adverts to socialising on Facebook and forging professional connections on LinkedIn.

The need to know exactly who you are dealing with online is about to get much greater. That is partly a result of the crisis in online security: the fact that packets of information cannot be traced to a verified source has made cyberspace perilous. But there are also big commercial opportunities that some companies are racing to grab.

One sign of the times was the news earlier this week that Airbnb, the site where people can rent out their homes to complete strangers, has plans to vet all 4m of its users to make sure they are really who they say they are.

The next phase of the internet’s development – the deeper integration of the offline and online worlds – will make this kind of verification increasingly important as reputation and trust built up in the virtual world starts to influence real-world transactions. It will also hand an advantage to any company that can set itself up as the repository of real identity.

Mechanisms for establishing trust have been around for as long as the internet itself, though they were not initially linked to any corollaries from the physical world. The web’s self-policing communities, for instance, have always tried to use peer pressure. The ultimate sanctions have involved expulsion from the community, which may have little deterrent value against the antisocial behaviour of some anonymous users.

It took Facebook to change everything. Suddenly it became essential to be known online for who you are. Yet Facebook, while officially requiring its members to cleave to their “real” identities, can’t guarantee they do so.

Full verification is the next step. Airbnb’s attempt to push all 4m of its users to show hard evidence of who they are, like a passport or driver’s licence, is designed to give it a leg-up over less-trusted sites where ordinary people transact with strangers.

If Airbnb is right and people crave reassurance about real-world identity, a race to the top will follow. One of the early hopes of the internet visionaries – that the virtual world could exist separate from and in parallel to the real one – will have been disproved.

There are drawbacks to the pursuit of verification. One is that it stands to make the costs of online identity theft much greater. When verified accounts are hacked, the higher level of trust invested in them can make the costs all the greater – as when the officially sanctioned Twitter account of news service AP was taken over by a group calling itself the Syrian Electronic Army.

Another potential drawback is the impact that the increase in verified traffic will have on the shrinking amount of truly anonymous communication. The ranks of the unknown will be made up largely of political dissidents, criminals and anyone paranoid about online surveillance. Particularly in politically repressive parts of the world, freedom of expression could get squeezed out along with other forms of illicit activity.

The commercial value of being the leader in verified identity, however, could be significant. Issuing this stamp of online approval could turn a company such as Airbnb into the equivalent of a virtual passport office, if others chose to trust its authentication system.

That would be of particular value in the world that Airbnb inhabits. The “sharing economy”, as it has become known, is a place where people rent out their homes, use their cars to give rides or carry out small tasks for others.

The eventual scale of this economy is hard to assess. As clever-sounding new apps run into real-world regulation – some forms of ride-sharing, for instance, could contravene taxi regulation– some will fall away. Others will fail because of the difficulty of maintaining high enough levels of quality in a world of personally-delivered services.

At some level, though, individuals on sites such as Airbnb have already voted with their feet. A new infrastructure will be needed to support this spreading economy, and trust will lie at the heart.

Richard Waters is the Financial Times’ West Coast Managing Editor

Get alerts on US & Canadian companies when a new story is published

Copyright The Financial Times Limited 2020. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article