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Intro

Decentralised Identity, also known as Self-Sovereign Identity (SSI), is growing in use around the world. It allows individuals to stay in control of their data at all times, choose which third parties can have access to it, and be reassured that their sensitive information is less vulnerable to data breaches by malicious actors. This article will set out the challenges with traditional identity systems, explain how blockchain technology can help, and detail the progress being made worldwide.

Problem

The World Bank estimates that there are around 1 billion people worldwide who struggle to prove who they are [1]. This limits them accessing vital resources like financial services, healthcare and formal employment [2]. Additionally, refugees from disaster-stricken countries often lack identification documents such as ID cards, property deeds, and passports. This presents further issues down the line, such as an over-dependence on aid [3].?

Digital identification is a great alternative to physical papers, which can be lost or destroyed. However, digital identification relies upon siloed, vulnerable, and exclusive systems. These systems require individuals to re-identify themselves for each service, for example, showing your driving licence to rent a car or providing a bank with the documents required to open an account. Companies must store and manage all of this data in centralised servers. Also, these servers are vulnerable to cyber attacks that could lead to the leakage of sensitive user data. Whilst providing an increased amount of user protection, Data protection regulations place a large burden on companies’ data collection and management departments.

How Blockchain helps

Decentralised Identity systems remove the requirement for users to constantly upload documents or other information for verification. Instead, these documents and personal data are stored permanently on the blockchain in the individual's wallet (a unique address only accessible to the user). Verifiers request access to the specific data required, all users must do is accept those requests. Individuals can then change the permissions or revoke access to their data in real-time, without having to wait for the company holding the data to process a request.

Individuals save money on replacing physical papers and time spent communicating with third parties to re-identify themselves and manage their data. Users can prove their identity faster and more securely, and those without an identification can gain consistent access to vital services.

Companies can provide peace of mind to their users and lower the overheads related to adhering to data protection regulations. Governments will also benefit from a reduction in expenses in their data management departments, as well as being able to crackdown on fraud. Creating fraudulent documentation will be made almost impossible, as documents on the blockchain are fully traceable to the issuing organisation.

Other fraudulent behaviour such as identity theft will also be made nearly impossible. In traditional digital identity systems, the perpetrator would only need to provide the information/documentation required to defraud the victim. Whereas, in decentralised identity systems you must also prove you own the information/documentation. Blockchain acts as a ‘single source of truth’ (a database of information that cannot be manipulated), meaning that every piece of information can be verifiably traced back to the issuing institution and their unique addresses. This creates a framework of trust that goes far beyond physical or digital identity.

Traction?

The European Commission recommended a coordinated approach towards creating a European Digital Identity Framework using blockchain technology. This includes the regulatory, technical and operational aspects of the project, which aims to create a new means for self-identification and authentication, with a higher level of data protection [4].

The new European Digital Identity, and relevant wallets, will be used by EU citizens to access a number of services, such as requesting birth and medical certificates, opening bank accounts, filing tax returns, applying to university, renting a car, and more [5].

Decentralised Identity projects by government institutions are running in other countries such as Canada, Singapore, Thailand and Turkey. [6][7][8][9]. Companies are also trialling the technology, such as IBM, Mastercard, and banking institutions worldwide, including seven from South Korea [10][11][12].

Conclusions

SSI is set to change how users keep and share their personal data worldwide. It empowers users, reduces paperwork, and increases the security of one’s personal information. Government bureaucracy and companies’ human resources departments can be reduced and provide those without identity documents faster and more reliable access to crucial services and humanitarian aid.