Decentralized Identity is a Blockchain-based framework used for identity management that gives users absolute authority over their data.
Why Decentralized Identity?
Day in and day out, digital transformation is migrating most of our processes. You'd have to confirm your identity online to enjoy many services; pay energy bills, travel abroad, or get a job. Yet, service providers don't establish a 'safe-enough' platform to keep sensitive information. Take SaaS platforms, for example. You'd have to provide sensitive details to each platform to use their services. Besides, memorizing passwords and usernames to access different platforms becomes laborious. Here are the risks:
- Corporate websites are susceptible to hacking. Thus, causing personal data breaches.
- Data is also subject to fraud, and phishing, amongst other cybercrimes.
- Zero user control and access regulation on personal data
- Businesses may struggle to protect customers' data. Thus, leading them to legal problems
- Inconvenient and distasteful user experience.
Even though solutions have emerged, it still fails to address many data privacy concerns. A new model like Decentralized Identity (DID) might be a way out of these problems. This is a single-entity and secure data repository that encrypts user credentials. Instead of providing all complete details to service providers. Users grant access to only relevant information via a DID stored on the blockchain.
What Is Decentralized Identity?
Decentralized Identity is also known as self-sovereign Identity. It is a Blockchain-based framework that allows individuals to manage and regulate access to their data. Users receive their digital credentials, i.e., certificates, ID cards or Passports, and visas from designated parties (government agencies, institutions). Then, they store these credentials in a digital wallet. Thus, they won't have to fill in their personal details and password to access a service. Instead, they present a cryptographic public key connected to their wallet. This key helps companies verify user identity before letting them into their websites.
How Does Decentralized Identity Work?
Consider John stores his driver's license using Decentralized Identifiers (DIDs). This key helps companies verify user identity before letting them into their websites. A car insurance company may need to validate this document. Using John's public and private keys, the company can verify whether he has a driver's license. Apart from the relevant information, they can't access or store other data about John. He gets car insurance without necessarily disclosing his identity. Alternatively, the insurance company can send a presentation request to John to verify his driver's license. At the latter's discretion, he can grant or revoke access to the data. Every validation goes through the decentralized Blockchain network. The user has absolute control by holding the private key and releasing it for verification.
Here Are The Stakeholders In A Decentralized Identity Solution
Attestations are your credentials. In this case, the driver's license issued by the government attests that John can legally drive a car. It is also known as Verifiable Credentials (VCs)
An authorized party that issues credentials. John's driver's license issuer is the Department of Motor Vehicles
This party provides a service by validating specific credentials. John's verifier is the car insurance company.
Subject / Identity Owner:
This is the user who creates a decentralized Identity and gets validated, i.e., John himself.
This is the software that stores and manages credentials and regulates access on behalf of the owner.
Public Key Infrastructure:
This mechanism helps generate public and private keys upon creating a Decentralized Identifier.
The distributed ledger facilitates the validation of DID. The public key needed for verification usually stays on the blockchain.
Benefits Of Decentralized Identity Project
Bridge Barrier To Access
People without proof of identity can acquire digital identities
Login with DIDs instead of filling email and password yet again
There is no way to multiply identity on a DID
Users regulate verifiers accessibility to their personal data
Companies keep less data, reduce risk and cut data storage costs
Major Players In The Decentralized Identity Project
Decentralized identity market size, by identity type, 2018-2028
Decentralized Identity is not a fully-fledged blockchain field. But it's expected to make waves over the coming years. A report by Research And Markets states that the Decentralized Identity market will reach a CAGR of 78.5% between 2022-2028. Thus, hitting an $8.9 billion value over the same timeframe. Today, multinational companies are amongst the major players in the DID niche. Organizations like Microsoft, IBM, DIF, IETF, and W3C have backed the network.
Decentralized Identity Foundation (DIF):
DIF is an engineering-backed organization. It facilitates the development of foundational tools to establish a decentralized Identity ecosystem. This ecosystem becomes useful for individuals, businesses, and applications.
World Wide Web Consortium(W3C):
World Wide Web Consortium is an international organization. Members on this platform are committed to managing and improving World Wide Web standards.
Internet Engineering Task Force:
This body is a standards organization. It comprises volunteers who manage the technical protocols of the internet.
Decentralized Identity Companies And Their Solutions
This is a toolkit for decentralized Identity based on the Ethereum blockchain. It works with Ethereum Name Service to create a standard SIWE option for web apps or websites. Using the Ethereum account, Spruce ID enables websites to provide a decentralized login option for their users. Instead of logging in with a centralized identity like Google and Apple, Ethereum-facilitated login becomes an option. It also has a data storage feature known as Kepler. Kepler helps store personal documents and digital assets. Then, it allows users to share them via smart contracts. SpruceID tweeted on September 13, 2021 to announce its Decentralized Identity project
“We're excited to announce our collaboration with @ethereum and @ensdomains to work on Sign-in with Ethereum.”
This is another decentralized identity project that offers an open source, distributed, and secure sign-in option on the phone. So, instead of signing in with Email and password or Google. You'd instead use an Authentiq mobile wallet to sign in and out of websites.
Civic is a Decentralized Identity Crypto platform. Civic Pass also helps companies verify user identities. While Civic help users can share only necessary data needed for verification. The platform also provides an on-chain asset management service. It has a Decentralized Identity coin known as CVC. Its price costs $0 1233/CVC.
Pravica is an Egyptian Blockchain startup that enhances privacy in conversation. It uses a decentralized identity solution to secure chats, storage, emails, etc. The network is built on the Bitcoin network. Its products include
- Pravica Messenger: For one-on-one private communication
- Pravica Club: For community interaction
- Pravica Messenger +: For secure enterprise communication.
Metadium is a public and decentralized Identity crypto platform that facilitates personal information management. It has an ID Blockchain that helps store and manage data on the ecosystem. Metadium has a decentralized identity coin. This token facilitates every in-house transaction in the Metadium ecosystem. A META-USD token costs $0.032341.
The Future of Decentralized Identity
It's no secret that the space is still being nurtured. And Decentralized Identity Companies are looking for ways to deploy this technology en masse. Reports projected decentralized identity market value to reach 8.9 billion in 2028. So, what does the future hold? A significant impediment could be adoption. Application providers must connect with decentralized Identity companies to input decentralized features in logins. They'd also have to improve customers' holistic view of the market to enhance adoption. Which could accelerate the general usage of DID. Regardless, here are emerging and new Decentralized Identity use cases we could see in the future.
Decentralized Identity Foundation (DIF):
Enterprise Identifiers: These are unique identities that organization issues to its employees, including
- Tax identification identifiers
- Global location number identifiers
- Legal entity identifiers, etc.
Educational Verifiable Credentials:
These are educational credentials and certificates that students can store and share for verifiers ie
- Digital Diploma from Harvard University
- Digital BSc certificate from the University of Oxford
Once someone dies, no protocol allocates their digital resources to another person ie heirs, benefactors, or courts. Decentralized Identity mechanism allows owners can link their digital assets to DID. Upon their death, such DID documents get allocated to beneficiaries. Thus, enabling the proper transfer of properties.
What Counts As A Digital Identity?
A digital identity includes the details you see in a traditional identity. It may include name, address, driver's license, marital status, or security number. It can also have your biometrics, including facial recognition, iris recognition, fingerprints, etc.
What Is Decentralized Authentication?
Decentralized authentication means you don't need a centralized authority to verify your identity. It uses a Decentralized Identifier that facilitates decentralized and self-controlled verification. Ie. It promotes Sign-in With Ethereum (SIWE) over Sign-in With Google
What Are The Benefits Of Decentralized Identification?
It grants users absolute autonomy over data. It makes authentication super-fast and easy. It also reduces barriers to identity access.
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