KYC: Hatred to the deepest is love? From compliance costs to value engine

Author: Zhang Feng

In today’s era where the wave of digitalization is sweeping across the globe, the concept of “KYC” has long transcended its traditional boundaries. From compliance procedures in financial institutions, it has gradually evolved into a standard feature for user management on internet platforms. However, the vast majority of platforms still understand KYC merely as a “compliance tool”—a one-way, static, closed identity verification mechanism. Platforms collect users’ ID documents, phone numbers, emails, and other information to “know” their identities. The core purpose is to meet regulatory requirements and prevent risks, rather than genuinely serving user value. Essentially, this kind of KYC is a “defensive” strategy—it builds walls around data but fails to construct bridges to value.

True KYC should go beyond compliance and focus on value. It should not be a one-time identity collection but a continuous process of understanding user behavior, respecting user rights, and returning data sovereignty to users. It signifies a leap from “Know Your Customer” to “Keep Your Customer Value”—continuously safeguarding and amplifying user value. Achieving this transformation hinges on liberating user behavioral data from “islands,” quantifying, rightsizing, and circulating it to build a “value network” where users, merchants, and ecosystems all benefit.

1. From “Data Recording” to “Value Co-Creation”: Rebuilding the Logic of KYC

In traditional internet models, platforms are the “monopolists” of data. Users book flights via airline apps, check into hotels through mini-programs, write reviews on OTA platforms—each action is recorded by the system but rarely assigned real value. These data are stored in separate servers, forming “data silos.” Users have no sovereignty over their data nor any benefits from it; platforms optimize services and boost ad revenue using this data, while users, as data sources, become passive “data providers.”

True KYC begins with recognizing that user behavior itself is a form of value creation. Every purchase, share, and interaction should be recognized, measured, and rewarded. This requires platforms to redefine what constitutes “valuable behavior” and establish a fair, transparent value measurement system.

Unified value measurement: issuing ecosystem tokens. We propose issuing a blockchain-based “Cultural and Tourism Token” as a universal currency for the entire ecosystem. It is no longer a proprietary point system of a single platform but a circulating value carrier across scenarios. The token essentially maps user behaviors into digital assets, concretely representing their contributions within the ecosystem.

Defining and quantifying “valuable behaviors.” For example:

• Spending 100 yuan at partner hotels: reward 1 token
• Purchasing a scenic spot ticket: reward 2 tokens
• Publishing high-quality travel blogs: reward 5 tokens
• Completing designated check-in routes: reward 3 tokens
• Providing suggestions that are adopted: reward 10 tokens

These actions are automatically triggered via APIs and smart contracts, recorded on the blockchain with transparency and immutability. At this point, KYC is no longer a one-time identity registration but a continuous record of behavior and value mapping. The platform’s “understanding” shifts from static identity labels to dynamic, quantifiable user value contributions. Users evolve from passive “data objects” to active “value co-creators.”

2. From “Platform Ownership” to “User Sovereignty”: Reshaping the Trust Mechanism of KYC

In traditional models, even if user behaviors are recorded, data ownership still belongs to the platform. Users cannot carry, transfer, or use their data across platforms. This “pseudo-KYC” essentially locks users inside walled gardens, creating a hidden form of “digital servitude.” Truly effective KYC must transform data into assets and realize data rights and user sovereignty through technological means.

Creating a user’s digital identity (DID). Users no longer log in with phone numbers or emails but with decentralized identities. This DID acts as a digital “passport,” fully controlled by the user, independent of any centralized platform. It is not just an identity marker but a symbol of user sovereignty in the digital realm.

Binding assets to DID. Every “Cultural and Tourism Token” earned is automatically sent via smart contracts to a digital wallet linked to the user’s DID. NFTs such as badges (“Gourmet Expert,” “Adventure Pioneer”) are also stored under the DID. These assets are recorded on-chain with clear ownership and are non-privatable.

Outcome: Data no longer belongs to the platform but becomes a digital asset owned by the user’s DID. Platforms can still utilize data to optimize services, but ownership, control, and benefits are in the user’s hands. This is genuine KYC: not just “knowing your customer,” but “respecting your customer”—respecting their rights, acknowledging their value, and returning ownership of that value to them.

3. From “Isolated Rights” to “Circulating Ecosystem”: Unlocking the Potential of KYC

If user assets can only be used within a single platform, they remain tokens in a “digital cage,” unable to realize their full value. True KYC must promote asset circulation within the ecosystem, transforming them into “universal rights” across merchants, scenarios, and applications.

Tokens as “universal currency.” For example, tokens accumulated from flying miles could be used to offset car rental fees; tokens earned from reviews could be exchanged for NFT digital souvenirs at cultural stores; users holding large amounts of tokens could get priority access to special experiences at popular scenic spots.

NFTs as “universal rights certificates.” For instance, a user with a “History Enthusiast” SBT (Soul-Bound Token) could automatically access professional audio guides at another city’s historical museum; a user holding a “Diamond Member” NFT from a hotel could enjoy discounts at partner scenic spots.

Data (via SBT) as “credit and preference assets.” Users can authorize homestays to view their SBT info (e.g., “damage-free record,” “top creator badge”) to facilitate quick bookings and receive tailored services.

At this stage, KYC is no longer a proprietary tool of platforms but a “digital identity” managed by users themselves. It carries not only identity but also credit, preferences, history, and rights. With their DID and on-chain assets, users can seamlessly navigate the entire ecosystem, enjoying personalized, high-value services. Platforms, by integrating into this open network, gain richer user profiles and more precise marketing channels.

4. The Technical and Commercial Foundations for Achieving Value-Based KYC

Building such a user-centric value network requires robust technical architecture and collaborative business mechanisms.

Consortiums and standards. Establishing a “Cultural and Tourism Digital Ecosystem Alliance,” composed of industry leaders, tech platforms, and standard organizations, to develop token economic models, data interface standards, and mutual recognition protocols. Only with unified standards can platform barriers be broken, enabling cross-scenario interoperability.

Underlying blockchain infrastructure. Serving as a trusted clearing layer, ensuring all tokens and NFTs are issued and circulated transparently. The choice between consortium chains or public chains should balance performance, cost, and compliance, ensuring data immutability and traceability.

Smart contracts. Automate reward distribution, rights exchange, and revenue sharing without intermediaries. Transparent, executable code is key to building user trust.

User wallets. Unified, seamless, secure wallets embedded within apps or mini-programs, managing DID, tokens, and NFTs. The user experience should be “invisible technology, tangible value,” allowing users to manage their digital assets effortlessly without understanding blockchain intricacies.

5. The Ultimate Goal of KYC—Returning to Human Value

Traditional KYC is for compliance and platform security. True KYC is not only about compliance but also about value—about respecting users.

For users: Every transaction and participation is the start of accumulating personal digital assets. These assets can be “carried with them” across the ecosystem, exchanging real, diverse benefits—truly realizing “My data, My assets, My rights.” Users’ contributions in the digital realm are continuously recognized, elevating their identity from “passive consumers” to “active value co-creators.”

For merchants: They gain access to a high-loyalty user network, issuing rights to acquire precise customers and marketing channels, and earning revenue sharing by serving other ecosystem users. Merchants no longer need to invest heavily in building their own membership systems but can share in an open, vibrant digital economy.

For the ecosystem: It creates a powerful value loop. Users leave behind assets that circulate freely; merchants attract users, forming a self-reinforcing, expanding digital community. Data and value flow freely within the ecosystem, driving the industry from “zero-sum competition” toward “coexistence and win-win.”

This is no longer a collection of isolated “data walls” but an open, symbiotic, prosperous value network. Here, KYC is no longer a gatekeeper but a bridge—connecting behaviors and value, users and merchants, data and rights. It redefines the relationship between platforms and users and reinterprets the meaning of “trust” in the digital age.

True KYC is not for compliance but for value—seeing, respecting, and amplifying each user’s worth. Only organizations that truly understand and practice this philosophy can earn long-term user trust and continuously create value and lead transformation amid fierce competition.