I’ve been looking into buying some bitcoins and have been navigating the vagaries of identity confirmation. The market I’ve heard the most about is Mt.Gox. Getting money to the exchange is done through Dwolla. They require a copy of a photo id. Mt.Gox also has a verification process which requires a photo id and a proof of residence.
The proof of residence is a utility bill or a voter registration. Say for instance you’re a student who rents. You could not be able to trade. I’ve been thinking of an alternative. A person creates an account online and requests a code to be sent to them via mail. Once that code is entered back into the system, it verifies a person’s address.
This same process could be combined with the voter registration process to provide an electronic component to civic interactions. Rather than everyone voting on every bill, people would still specify proxies for most of their decisions. The process could be more dynamic, however, and with more granularity in expertise. Rather than a single politician making decisions about a broad spectrum, votes on issues could be divided up and proxied to different people.
Another application could be in conjunction with a housing site. It could be used to verify that a particular account controls a particular address.