Digital Identity, The Quality of Life, and The Blockchain

Digital technology is changing the way people do business. Today, an increasing volume of services are digitally delivered. From government services to e-commerce and bank registration. These developments demonstrate the potential of digitization.

Identity and the Quality of Life

About 1.1 billion people in the world would struggle to provide their identity when needed. 45% of people without identity belong to the poorest 20% in the world. There are hurdles that have kept over a billion people away from traditional identification systems. These include Complex identification forms, high costs, and lack of access and knowledge. Having a verifiable identity is important to enroll in school, obtain a passport, and access many government services. These could go a long way to affect the quality of life. For instance, a person who cannot prove his identity and as a result has no access to quality education would most likely have a low quality of life.

What is digital identity?

Digital identity is the information used to identify people, organizations, and devices. A digital identification should be unique to each person. This enables everyone to have a single identity and systems using the ID can be attributed to the same person. In addition, the users should be sure that their data is protected and that they have control over who has access to and uses the data.

Know Your Customer

As we move from physical identification forms to digital identification, businesses and government agencies are trying to evaluate the technology to use to streamline their processes. Rapid technological advances could result in cost savings across a wide range of industries.

Financial Sector

Banks and financial institutions have a responsibility to prevent fraud and protect customers. To achieve this, they put fraud control measures in place to screen customers and third parties at the beginning of new business relationships. KYC is an important focus for financial intermediaries operating in a highly regulated environment. The implications of non-compliance are regulatory action, fines, and potential reputational damage.

The current KYC methods in place can become difficult, inefficient, and expensive. Digital identities offer a great opportunity for verification purposes. It also eliminates the possibility of human error.

Why Blockchain is Important to Digital Identity

Blockchain, together with other technologies such as AI would play a key role in addressing the challenges of digital identity. The challenges today include data security, fraud prevention, and accessibility. Today, identification data is stored in centralized government databases. Most times, these are run on outdated software with known vulnerabilities. In addition, large centralized systems are an attractive target for hackers to gain access to millions of user accounts. Blockchain, being a decentralized ledger technology is a more secure alternative way to store such sensitive and valuable information.

In addition, the identity landscape is fragmented. Many users use different digital identities on different platforms. There is a lack of a standard way to use data generated between platforms. This presents an opportunity for people to create fake identities. The blockchain could help to eliminate the role of central data hubs and provide a better link between the digital world and the real world through proof. Other technologies are needed such as Biometrics, ID cards, and others. These would help to develop new identity solutions.

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