How Blockchain Will Revolutionize Our Identities
Blockchain technology is one of the most important developments of the 21st century, with the potential to transform every facet of our lives, from the legal to the economic. Chief among these transformations will be the way we manage our identities.
?Today, a human being’s identity begins at birth and is assigned by the government. Sure, the parents might provide a name, but this is not necessarily unique. The government, on the other hand, will assign a unique identifier that sticks with this individual for life.
?But this form of government-sponsored identity has its own share of problems. For example, this identity can be stolen or copied. Perhaps even without the individual knowing.
?Cryptocurrency and the blockchain are introducing an alternative form of identity. One that is generated by the individual himself, not the government. But how is this identity validated and used in day-to-day life?
?In this article, I’ll start by describing the way identity is issued today, and some of the problems with this system. Then I’ll give an overview of the blockchain, its use cases in identity management, and some of the challenges to widespread adoption.
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What Is Identity?
Without identity, civilized society and the global economy couldn’t work. There are many reasons why, but one basic reason is that we need a way to define who did or owns what.?
?In our current state of affairs, identity is issued by a country’s government and consists of data points like:
Problems with Identity
Let’s review some of the major problems with government-issued identity.
?No access to identification
Government-issues identification isn’t widely available to every human in the world, particularly in developing countries. Some estimates place this number as high as 1 billion people worldwide. In other words, 1/7th of the world population can’t vote, own property, use banking services, or get hired. As you can see, this lack of identification severely limits their options in life.
?Lack of standards
In the real world, the government issues national identifiers. But in the online world, each application issues its own form of identification to its users. The problem here is that users end up having to remember and store multiple separate usernames and passwords, which makes them all the more vulnerable to hacks.
?Some countries, such as Estonia, issue digital identities that citizens can use to safely access online services. But so far, there is no universal standard that everyone can use across countries and applications.
?Identity theft
Identity documents in the real world are anti-forgery properties. Your government ID, for example, has your picture, signature and certain physical attributes printed on it. So even if it were stolen, a thief couldn’t get much use out of it. Your digital identity, however, oftentimes isn't linked to much other than your email. If a hacker were to gain access to your email, they could take control of most of your accounts.
?What we need is a form of digital identity that is no less valid that the one our governments issue. If we were looking to build a new system, starting from scratch, it would have to meet the following requirements.
?Identity on the Blockchain
In simple terms, the blockchain is a distributed database that records transactions. Let’s explore two unique capabilities that this technology brings to the table.
?Accessibility
The blockchain is freely available on desktop computers and mobile phones. All you need to get started is an internet connection.
?Immutability
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Each transaction, or block, in the blockchain is cryptographically linked to the previous one. This makes it extremely hard (but not impossible) for anyone to tamper with information in the existing blocks.
?Decentralization
Traditionally, a database is controlled by a single entity. This enables them to profit off of this data, or manipulate it to suit their own needs.
?On the blockchain, however,?transactions are recorded on systems that are operated by a network of unrelated participants. In other words, it has no single point of control or failure.
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Use Case for Identity Management
The most successful application of blockchain technology so far is cryptocurrency, where users can buy and sell valuable assets outside of the traditional financial system.
?But blockchain can do more than that. With its immutability and decentralization, blockchain could empower everyone in the world to take control of their own digital identity. It also solves many of the problems around accessibility, standards and theft.
?This is already being tested out in the real world. The Cardano project, for example, recently signed a deal with the Ethiopian government to digitize millions of academic diplomas on the blockchain. This will give future students the ability to verify their academic credentials from anywhere in the world, to anybody.
?Among many things, this self-sovereign identity will allow users to:
●????Prove the authenticity of their identity online.
●????Access their information and keep it up to date.
●????Choose what information to share, and what they prefer to keep private.
●????Transfer their data from one jurisdiction to another.
?Challenges with Blockchain Identity
We’re still in the early days of blockchain-enabled identity. Due to this, it’s going to take time before we can realize the full potential of this technology. Here are some of the challenges that are currently being worked through.
?Edge Case of Immutability
While blockchain is largely immutable, there is a hypothetical scenario in which records could be altered. The 51% attack requires more than half of all network participants to pool their resources to overwrite records. While this scenario is unlikely, it is still possible.
?Matching Online and Offline Identities
The blockchain can secure digital identities, but it cannot solely verify that an offline identity matches the online one. This requires the use of?some kind of third-party entity that is most likely centralized.
?The Business Case for Switching Costs
Online businesses develop moats around user data. This incentivizes them to make it as hard as possible for users to transfer their data over to other apps. For example, if you could easily transfer your music playlist over to a cheaper streaming service, why wouldn’t you?
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Gaining Control Over Our Identities
As you can see, blockchain technology can solve many of the problems we face with digital identity today. But these blockchain solutions still have their own hurdles to overcome before we can enjoy the benefits of self-sovereign identity.
?Do you think blockchain-based digital identity will overtake government-issued identity in the future? Let me know in the comments below!