What is Digital Identity
We identify in many ways: our races, our nationalities, our genders, and our favorite sports teams. Being able to articulate our identities helps us create 1) a sense of self, complete with goals and hopes, and 2) a sense of community, where we co-exist with like-minded people.
As technology advances, we find new ways to self-identify.
Take for example the NFT boom in 2021. It allowed entire clusters of people to identify as all sorts of cartoon animals and even aliens online. While we’re not going to get into how NFTs work, suffice to say that groups of people who had NFTs from the same collections found commonality with each other, strengthening their bonds.
The evolution of Digital Identity
Over time, as our digital identities evolve to be more similar to our real-life ones, it is important to discuss — beyond NFTs — how identity may evolve on digital platforms.
Digital identity has evolved over the past two decades and it consists of 3 phases:
Current
If you’re above 25, there’s a chance you’ve had experience with the first 2 phases.
★ Siloed Identity — Users create an account for every platform used, managing multiple usernames and passwords for each site.
Eg Neopets, Hotmail
★ Federated Identity — Users create an account with centralized providers that give them access to multiple sites, trusting the providers with their data.
Eg Google, Apple ID
Future
We are now at the cusp of an identity revolution, with the introduction of a new form of digital identity: the DID.
★ Decentralized Identity (DID) — Users create and own an account that has access to multiple sites, maintaining full ownership of all data.
Eg Next.ID
The current problems with Digital Identity
Having a Digital Identity on the internet today means having to deal with a few recurring issues, some technical and some behavioral. We’ll delve into them in this section.
- Censorship and sale of data without consent
Centralized organizations currently dominate the internet. Personal data is commercialized and placed into the hands of third parties who can do anything they want with it. This leads directly to the first problem: the censorship and sale of user data.
We use the internet to catch up with close ones, for work, and to stay up to date with current affairs. How we do this is by signing up with centralized services, clicking through their indecipherable terms and conditions, then “renting” their bandwidth to interact with others online.
It is “normal” at this stage to consent to giving our data away without a second thought, giving tech titans like Google and Facebook a final say over our digital footprints. As a result, our data is sold to third parties, any statements we make can be censored without cause, and our online profiles can disappear overnight.
- Identity Ownership and Privacy
How would you feel if someone could walk into your home at any time of the day, peer over your shoulder as you do your daily activities, then broadcast this information to anyone they wanted to?
That’s effectively what centralized platforms can do today, given how intrusive their terms and conditions are. Your private messages with a lover? It belongs to them. That post you wrote that unexpectedly went viral? It belongs to them. How often do you log in and at what times? Even this data, which you may not be privy to, belongs to them.
The relationship is extremely one-directional — they see and hear all we do. And in extreme cases, they’ve reportedly even used this data to shape political opinions at the behest of politicians — even during election seasons.
- Data security
Having user digital identities and data stored in centralised servers is a ticking time bomb. We’ve seen this in multiple hacks across the years, ranging from the probable to the improbable. Banks have been hacked. Tech giants have been hacked. Even government institutions have been hacked.
User data is quite possibly the single most valuable commodity in the world today. With the right amount of data, analysts can predict and possibly even initiate global and local trends. And yet, when centralized platforms succumb to hacks, there’s little they do other than apologise and — if we’re lucky — get a small slap on the wrists by relevant government regulators.
How does Web3 solve Web2’s Digital Identity Problems?
Not all hope is lost. In recent years, breakthroughs have been made in blockchain technology. The issues above are fixable using blockchain, cryptography, and decentralized networks. Here’s how:
- Blockchains allow all users to own — not rent — their space
In Web3, Digital Identities are created and stored on blockchains. Blockchains are decentralized networks maintained by multiple validator nodes (i.e. computers) that run 24/7. While platforms in Web2 run and maintain their networks, blockchains operate on a different incentive structure.
When blockchain users interact with the chain or any decentralized apps (dApps) that are built on-chain, they’re not required to “sign up”. They simply generate a private wallet using cryptography*, allowing the user and only the user access to the account. Using this account, users have permissionless access and are able to interact with anyone or any dApp they want to. This means that there’s no centralized entity that can censor your data, just as no centralized entity that can sell your data.
It is a new paradigm of freedom online.
*It sounds difficult, but dApps like MetaMask and WalletConnect simplify it for beginners.
- Identity ownership given back to users
Having our Digital Identities stored on blockchains means that all our activities cannot be tampered with. When an interaction is performed by a user, we know for a fact that the user was the one who did it.
The moment you have an on-chain wallet, your identity is sovereign. This means you control everything that you do — 100%. You cannot be compelled to perform a transaction you don’t want to and there are no mechanics in place that allows a third party to force you to do anything against your will. This means that even in the extreme case of having the world’s governments and tech giants wanting you to do something, you still hold the ability to say no.
There are downsides to this though. For one, you assume full responsibility for everything you do. This means you’ll have to keep your keyphrase (and password) secure because the moment a third party gets their hands on it, your identity is compromised.
- Decentralized nodes are almost impossible to hack
With multiple nodes running the blockchains, any malicious actor who wants to “hack” the system needs to take over >50% of the nodes. The difficulty of this varies from chain to chain, as some blockchains have hundreds of nodes, while others have fewer. Still, this is much harder than simply looking for a vulnerability in one centralized system.
Because of this, there is a drastically less likelihood of external hacks that lead to data compromise. Plus, blockchains are secured by the highest possible level of security: cryptographic signatures.
Key DID Players
- Next.ID
Next.ID is the world’s 1st DIaaS (Decentralized Identity As A Service) that connects and aggregates Web2 and Web3 accounts and addresses, allowing users to connect their Facebook and Twitter account to their Ethereum and SwapChat accounts.
- Lens Protocol
Lens Protocol is an infrastructure layer that uses social graphs to connect users — think of Twitter on Web3. Built by Aave, one of the OG DeFi teams, it builds out one possible way Web3 social can take shape, using NFTs as a base.
- Proof of Humanity
Proof of Humanity is a social identity verification system for users on Ethereum. It aims to solve one of the biggest problems plaguing the internet ever: bots. It does this by creating a verified network of human beings, using referrals and video proof to establish their credibility.
