Blockchain Identity for Dummies

Blockchain is hot. Fortune magazine screams “Block-Chain Mania” on the cover of its September issue and it just created a standing section on it site called The Ledger. Blockchain Identity is even hotter in my opinion.

Blockchain Identity also gives a great example of why blockchain is changing tech and business. With all the hype it seems that everyone is just doing an “add blockchain and stir” trick with systems. Adding blockchain for buzz isn’t going to change a thing.

Using blockchain to break down barriers that couldn’t be broken down before is where the magic is.

So let’s use digital identity as an example of the impact that blockchain has had.

Background (the pre-Blockchain Identity times)

As a bit of background I’ll describe where digital identity stands right now. For decades digital identity has been fractured. I personally have over 800 accounts stored in my 1Password system. Years ago I invested a big chunk of time, focus and cash to dive into the new world of “federated identity” in the hopes of solving the massive disconnect only to find that it was a more expensive way to share identity that just having different accounts. Various “login with ____” (Google, Facebook, Twitter, etc.) have appeared and seem to be disappearing.

Here’s the problem with digital identity in the pre-blockchain world — it isn’t yours. It is someone else’s version of your digital identity. Google and Facebook own your identity and they have no reason at all to be nice and share — with you even, let alone across their own siloes (or Stacks a la Bruce Sterling). Why would they share? It would undercut their business model — they make money when you are in their stack.

Other solutions (e.g. Canadian government uses bank and telco accounts to log you in) are trying to “federate” but it doesn’t work at any scale at all. Largely due to the expense. Additionally, the approaches that I have seen are often “rent-seeking” since they charge large fees for a captive audience but add little real value.

What’s the big problem here? The big problem is that nobody wants to deeply share the databases behind the various digital identities that they let you use. There are loads of good reasons for this. It’s complex and sometimes has a lot of deeply proprietary information tied to their version of you. Sharing competitive information isn’t exactly a brilliant business move. Further they would incur expense — so why would they ever do this?

Shared Digital Identity — The Problem

Some ideas have been pushed around about a shared database — but the problems there were huge too: massive security target (the ultimate database to hijack), who pays, and more. The main problems were always there:

• Designed to not be shared.
• There is no “official” identity for you. Just a selection. Even your government doesn’t create a digital identity for you to use elsewhere (hint: some tried — it was way too complicated, too expensive, creepy, and the companies didn’t want it).
• When shared they tied a company’s version of you into their stack even tighter.
• Enabled the surveillance economy.
• Cross-organization sharing is basically impossible due to politics and competitive nature of the digital identity owners.
• Adding in identity for organizations and “things” (think Internet of Things / IoT) was unthinkable.

Digital Identity became a very difficult thing to manage. Most companies have come to look at digital identity as an expense and a liability.

Blockchain Identity Arrives

So then this blockchain thing comes along and blockchain identity becomes possible. But what does blockchain allow here? First off it allows a globally shared ledger so we can all see it. We also can agree that the information on this ledger hasn’t been messed with (i.e. what’s there can’t be changed — it is immutable), and anyone can use it. It also allowed a very subtle, but crucial shift — you and I could actually own our own digital identity.

Blockchain identity means that we can start to gain control of the digital identity that we use in the world. We could certainly share a bit of information before. But the owners were in charge — you could tell Facebook that you would allow some sharing, but it wasn’t you that did the sharing. You do that through Facebook’s version of the digital you — and they can turn that off at any point.

Blockchain Identity players (Evernym*, Sovrin*, uPort, Civic, Cove, etc.) are claiming that they are solving the problem of making your digital identity portable. The general idea is that they pin your digital identity to a blockchain of some sort (Bitcoin, Ethereum, or a bespoke ledger). What it really means is that you can be assured that your digital identity is pinned to a shared place that won’t go away.

What Blockchain Identity Means

Before the advent of blockchain technology this global availability of your digital identity wasn’t possible. The barriers between companies and organizations were insane. Blockchain Identity is all about sharing now. It’s about you controlling your digital identity. Meaning you control what you share (or don’t share) with the various companies and people you deal with.

Here’s the funny thing — we’re realizing that companies never really needed to own our digital identity. They did it out of necessity. Businesses are beginning to figure out what this means — and those that are wrapping their heads around blockchain identity are poised to succeed. The best are realizing that Blockchain Identity, particularly Self Sovereign Identity, is shifting the business view of digital identity. Digital identity is shifting to become a revenue driver, cost cutter, and even an asset.

As for me — I’m deep down in the consulting side at the moment, helping some of these leaders figure out how their business changes with blockchain identity.

*disclosure: I advise a company that has invested in Evernym and I advise Evernym. I volunteer with the Sovrin Foundation’s Trust Framework Working Group.

Originally published at Darrell O’Donnell, P.Eng..