Digital identity is the online profile or presence of who, what, or where a person, organization, or device is in the digital world.
Its various elements (attributes, behavior, and information) uniquely identify a person or entity within an online network or service. These identifiers can be broadly classified (e.g., usernames, passwords, social media profiles, email addresses, etc,) and include digital behavior (e.g., browsing history, transaction records).
Table of Contents
Digital Identity Components
- Credentials: Usernames, passwords, and multi-factor authentication that controls services.
- Personal Information: Name, birth date, address, and government ID numbers were demographic and identifying data.
- Biometric Data: Physical characteristics that can only be matched as a fingerprint, or checked against facial recognition.
- Behavioural Data: Types of things such as typing speed, online purchases, and browsing history, that can also assist in identifying who someone is.
Digital Identity Management
Today, several technologies and standards seek to allow individuals more control of their digital identity, moving towards self-sovereign identity based on blockchain, biometric authentication, and decentralized identifiers (DIDs). There are also other serious issues to be raised about privacy, data security, and identity theft in digital identity.
A blockchain solution to digital identity management means more secure, decentralized identity solutions, with more control over how the identity can be used.
In traditional digital identification systems, our identities are typically managed by centralized authorities such as governments, banks, and social media platforms. This compromises privacy and introduces security issues, giving us little control over what happens to our identities.
A blockchain-based identity solution attempts to solve these challenges by providing a framework wherein individuals can manage, secure, and share their identities.
Blockchain as it pertains to Digital Identity
- Decentralization: Unlike familiar databases protected by central control, blockchain is a peer-to-peer network. For digital identity, there is no single entity that controls all of the identity data of a person, reducing risks from data breaches and misuse of data by central authorities.
- User Control: Often blockchain-based identity management systems support self-sovereign identity (SSI), with individuals owning their identity data. The privacy here is improved as it restricts unwanted data sharing, and users can decide what data is appropriate to share, and with whom.
- Immutability and Security: By recording data on a blockchain, once it is done you are pretty much locked in. Since verifiable claims (such as certifications, and government IDs) are extremely efficient to be stored in blockchain and you have a trusted identity verification system, blockchain is highly effective.
- Interoperability: This is an especially nice touch when using digital identity because it means that users can use their identity credentials across different services without having to verify their identity every time.
- Privacy and Selective Disclosure: The blockchain solutions facilitate selective disclosure, where information can be exchanged when required only, not the whole identity.
Important blockchain-based digital identity concepts
- Decentralized Identifiers (DIDs): DIDs are a decentralized identifier that makes it possible for anyone to create and own their own digital identity. The DID itself is unique, and verifiable and can be mapped to identity data for example.
- Verifiable Credentials: Digital verifiable credentials are digitally signed statements (i.e., self-attested assertions) that prove a user is who they claim to be, or have what they claim to have. Using blockchain these credentials can be issued and verified in a secure and tamper-proof way.
- Zero-Knowledge Proofs (ZKPs): In other words, ZKPs are cryptographic methods that enable users to prove a truth without disclosing the content being proved. This is helpful when it comes to identity attribute verification in digital identity systems in a way not compromise privacy.
Blockchain in Digital Identity — Use Cases
- Government Identification: Government-issued ID cards, national ID cards, and passports can be turned into secure, digital versions via the use of blockchain. Estonia has a blockchain-based digital identity system to facilitate its citizen services.
- Financial Services: Financial institutions can use blockchain to simplify their Know Your Customer (KYC) process. After their identity is verified, a user will utilize their blockchain-backed identity across different banks / financial platforms.
- Healthcare: Through blockchain-based identities, patients could securely share their medical data with any healthcare provider they chose, and on a need-to-know basis, while critical data would be maintained privately.
- Employment and Education: Educational and professional credentials can be verified by blockchain, cutting out some processes for employers and other institutions to just check up.
ID2020 and Blockchain in Digital Identity
The ID2020 global partnership harnesses blockchain to deliver secure, portable, and user-controlled digital identities. It’s an initiative that wants to help us securely enable people who never had a local identity with a decentralized digital identity.
That’s useful because if you’re displaced, for example, a refugee, or if you’re in a country where infrastructure is lacking in terms of making and verifying an ID, this would solve that problem. Users can use data across borders with a digital identity on the blockchain.
How ID2020 Works
- Digital Identity Creation: Blockchain is being used in ID2020 projects as a way for individuals to create a digital identity that remains on a blockchain. This identity involves verifiable credentials — like fingerprints, for example, or facial recognition — but without storing sensitive data on a central server.
- Self-Sovereign Identity (SSI): Owners of their identity can also manage it by using a digital wallet to themselves on their mobile devices. This identity enables them to access critical services such as healthcare, and banking, without a central authority.
- Selective Disclosure: The blockchain identity is self-sovereign, so users can choose to reveal some, or just some of, that information. Let’s say they might give proof of age without revealing their full birthdate, or that a health care provider could view a vaccination record without seeing other personal information.
- Interoperability Across Services: ID2020 intends to scale across multiple stakeholders including NGOs, governments, and service providers, while maintaining the use of the same digital identity for multiple services.
Applications of ID2020
- Humanitarian Aid: Lost ID documents may be reasons why refugees don’t need to resort to traditional paper documents for receiving aid or to get medical services. This has already been taken up by organizations such as the UN, which have started to use blockchain-based identities to track and verify aid recipients, minimizing fraud and ensuring aid goes to the right people.
- Vaccine Credentials: Once, blockchain was used in some ID2020 programs to produce a verifiable, digital record of vaccination.
- Financial Inclusion: The digital identity can also be blockchain-based, in which case individuals who couldn’t even access banking services because they couldn’t prove their identity will be able to prove their identity to financial institutions that will open bank accounts for them or allow them to pay microloans.
A blockchain-backed digital identity system that enables individuals, including marginalized people, to take part in the global economy and society securely and assignably.
Blockchain is specialized in a decentralized nature which is protected from tampering or unauthorized access to user data, while interoperability helps to use one digital ID across various services and borders.
A real-world example of blockchain’s potential in the world of digital identity, the ID2020 Alliance demonstrates how blockchain can be used to address pressing identity and accessibility issues at a global scale.
Challenges and Considerations
Despite its potential, blockchain-based digital identity systems face challenges, including:
- Scalability: The more transactions that grow on Blockchain networks, the more likely that these networks can become slow and expensive; factors that potentially can make these networks unsuitable to be used with identity solutions at large scale.
- Regulation and Compliance: Regulation also plays a part in the extent to which countries allow for the introduction of digital identity, privacy, or blockchain technology.
- User Adoption: Managing your private keys, while important, can be difficult to do for users, especially if it’s lost or misused.
Future of Blockchain in Digital Identity
As Blockchain is going to become more user-centric, secure, and interoperable, so blockchain is going to change the digital identity systems.
As blockchain continues to develop, the potential for it to be a pivotal element in building a universal, digital identity structure that is secure by design, private by default, and puts the user in the driver’s seat means becoming even more of a force to be reckoned with.