Building Trust in the Digital Age: The Foundation of Self-Sovereign Identity

14 min readApr 11, 2023

Exploring Decentralized Identity Management, Verifiable Credentials, Decentralized Storage, and Cryptocurrency Wallets as the Pillars of a User-Centric and Secure Digital Identity Solution

The concept of self-sovereign identity and its importance in today’s digital landscape

Before defining the foundational pillars of Self-sovereign identity there needs to be an understanding of what it is and why it’s important. It’s primary values include the following.

Privacy Protection:
In today’s digital age, it is clear that our personal data is scattered and vulnerable to being exploited by unknown entities. It’s unsettling to know your private personal information is not secured and can be accessed or manipulated without your knowledge or consent. Taking back ownership and control of personal data is critical to personal privacy protection. Self-sovereign identity tools and system being developed are beginning to offer solutions to place control over personal data firmly in the hands of the individual. By using SSI, individuals will choose what data they share, with whom, and for how long. This level of control empowers individuals to safeguard their privacy, protect their personal information from being misused, and ultimately ensure their safety and well-being in a world that is increasingly reliant on digital transactions and interactions.

Fraud and Identity Theft Reduction:
Centralized identity systems have long been a prime target for fraudsters and identity thieves because a single point of failure makes it relatively easy to compromise large amounts of personal information. These centralized systems can be exploited through various means, including hacking, data breaches, and social engineering attacks. In contrast, self-sovereign identity can be built using decentralized mechanisms with encryption and digital signatures to verify the authenticity an d integrity of personal information. Multiple copies of encrypted data files greatly reduce the possibility of losing data. Decentralized systems are extremely difficult to compromise, as they are not reliant on a single point of failure. By adopting SSI, individuals can take control of their personal information and protect themselves from the ever-increasing threat of fraud and identity theft.

Enabling Interoperability:
Traditional identity systems have long been plagued by vulnerabilities, making them easy targets for hackers and cybercriminals. Federated open-id systems, for example, are often siloed and difficult to integrate with other systems, leaving them exposed to cross-site scripting attacks [1] , session hijacking [2] , and data breaches where copies of data are scattered across federation members. In contrast, self-sovereign identity offers a more secure leveraging open standards and decentralized systems. Decentralizing identity management removes the need for different systems to rely on a multiple centralized authorities to verify identity. Personally owned Decentralized IDs (DIDs) enables authenticating across many systems and applications providing greater interoperability and easier integration while minimizing the risk of centralized vulnerabilities. This approach to identity management offers a more secure and flexible alternative to traditional systems, empowering individuals to take control of their personal data and protect their privacy and security in the digital age.

Empowering Individuals:
SSI empowers individuals by giving them control over their own identity, enabling them to manage and share their personal data on their own terms. This allows individuals to participate more fully in the digital economy, access new services, and protect their own interests in a more secure fashion where personal data is much less likely to be compromised.

Four Foundational Pillars

Decentralized Data Storage
Decentralized storage refers to data storage where data is distributed across multiple nodes in a network, rather than being stored in a centralized location such as a data center. This enables greater security, privacy, and resilience, as well as reducing the risk of data loss or corruption.

Decentralized storage can be implemented using a variety of technologies, including peer-to-peer (P2P) networks, blockchain, and distributed hash tables (DHTs). Overall, decentralized storage provides a more secure, private, and resilient alternative to traditional centralized storage systems. By distributing data across a network of nodes, rather than relying on a single centralized location, decentralized storage enables greater control and ownership of personal data, as well as reducing the risk of data loss or corruption due to centralized failures or attacks. Ensuring privacy and security of personal data is crucial for SSI solutions. This involves implementing robust encryption methods and employing decentralized architectures that reduce the risk of data breaches. Some existing implementations of decentralized storage include:

IPFS (InterPlanetary File System): IPFS is a P2P network protocol for storing and sharing files. It uses a content-addressed system, which means that files are identified by their unique content, rather than by a location or address. This enables files to be stored and retrieved from any node in the network, rather than relying on a centralized server. IPFS is heavily used today for storing traded NFTs. [3]

Swarm: Swarm is a decentralized storage and communication platform that is built on top of Ethereum using smart contract for data discovery and Kademlia routing across a network of P2P nodes to improve data access speeds. Swarm is designed to be censorship-resistant and fault-tolerant, with no single point of failure. [4]

Storj: Storj is a decentralized cloud storage platform that uses blockchain and P2P technology to enable secure and private storage of data. Users can rent out their unused hard drive space to the network, and in return, earn Storj tokens as a form of payment. Storj is designed to be highly resilient, with data encrypted and distributed across multiple nodes in the network and able to provide CDN like performance. [5]

Decentralized Identity
Decentralized identity refers to an identity system where individuals have ownership and control over their own identity data, rather than relying on centralized authorities or intermediaries to manage and verify their identity. In a decentralized identity system, individuals can create and manage their own digital identities, which are based on verifiable claims about their attributes and credentials, such as their name, address, age, or educational qualifications. Decentralized identity is based on the principles of self-sovereign identity (SSI), which emphasize the individual’s right to control their own identity data, and the need for interoperability, privacy, and security in identity systems.

Decentralized identity has numerous benefits, including increased privacy and security, reduced risk of identity fraud, secured and authorized access to verifiable services and resources, and greater control and ownership over personal data. By enabling individuals to own and manage their own digital identities, decentralized identity systems can also reduce the reliance on centralized authorities and intermediaries.

Some existing identity products:

Sovrin: Sovrin is a decentralized identity network built on a public permissioned blockchain. It provides individuals and organizations with the ability to create and manage their own digital identities, and to share verifiable claims about their attributes and credentials with others.

Microsoft’s Identity Overlay Network (ION): Microsoft’s ION is a decentralized identity network built on top of the Bitcoin blockchain. It enables individuals to create and manage their own digital identities, and to use them to access services and resources across different domains and platforms.

Hyperledger Indy: Hyperledger Indy is a decentralized identity platform designed for use in identity-critical applications. It provides individuals and organizations with the ability to create and manage their own digital identities, and to exchange verifiable claims about their attributes and credentials with others.

Verifiable Credentials
Verifiable credentials are a type of digital credential that allow individuals to securely and reliably share their personal information with others, such as organizations, without having to rely on a central authority to verify the information. These credentials are created using decentralized and can be verified cryptographically, ensuring that they have not been tampered with or altered. They can be used in a variety of applications, such as identity verification, access control, and digital signatures, and have the potential to revolutionize the way we manage and share personal information online. [6]

Verifiable credentials are a digital way to prove that someone is who they say they are, or that they have certain qualifications or permissions. An individual is at the center of a trust triangle where
— an issuer trusts an individual
— an individual trusts a verifier
— the verifier trusts the issuer
Credentials are obtained by an individual from an issuer, such as a government agency or educational institution. The individual can then present the credential to a verifier, such as an employer or service provider, who can use the credential to verify the individual’s identity or qualifications. This process helps to establish trust and reduce the need for repeated identity verification.

Some development in the verifiable credential world

Indicio: Working toward building tools which support managing cryptographically secure, peer-to-peer transactions using open standards in the banking and financial services vertical.
[7]

GLEIF: Global Legal Entity Identifier Foundation (GLEIF) manages a network of partners, the LEI issuing organizations, to provide trusted services and open, reliable data for unique legal entity identification worldwide. GLEIF services ensure the operational integrity of the Global LEI System.

W3C Verifiable Credentials API Specification: The Verifiable Credentials standard defines a way to securely and privately represent digital credentials so machines can verify them. the lifecycle management of a credential is defined. It also includes rules for using APIs and protocols to create, confirm, share, and control Verifiable Credentials.
[8]

KERI: The Key Event Receipt Infrastructure (KERI) is a digital ledger technology designed to provide secure and decentralized key or credential management. It operates using a cryptographic protocol that generates verifiable receipts for each key event, providing a tamper-proof record of all key-related activities. KERI’s main goal is to enable secure, decentralized identity management and data sharing without relying on centralized authorities. [9]

Cryptocurrency Wallets
A cryptocurrency wallet is a software program that allows users to store, manage, and transfer digital assets, such as Bitcoin, Ethereum, or other cryptocurrencies. Cryptocurrency wallets use public and private keys to securely send and receive digital currencies, and they can be used to store multiple types of cryptocurrencies at the same time. Wallets can be accessed through a variety of devices, including desktop computers, mobile phones, and hardware devices. In essence, a cryptocurrency wallet is a tool for managing one’s cryptocurrency holdings, making transactions, and monitoring their balance.

There are many wallets in use today. Some of the most promoinent and widely used currently are:
Trezor: A hardware wallet that stores cryptocurrency offline, providing increased security. [10]

Ledger Nano: A popular hardware wallet that offers secure offline storage and a user-friendly interface. [11]

MetaMask: An in browser extension that provides a secure and easy to use interface for storing, sending, and receiving Ethereum and other ERC-20 tokens. [12]

Web3Auth: Web3Auth itself is not a wallet, it is wallet infrastructure that can be plugged into your own wallet. Web3Auth results in a standard cryptographic key provider specific to the user and application. This key provider can be used to sign transactions, messages, or making any other wallet transaction. [13]

Real World Examples
You could discuss how decentralized data storage allows individuals to control their personal data and protect their privacy, how decentralized ids provide a secure and unique identity that is not tied to a centralized authority, how verifiable credentials allow individuals to share their personal information with others while maintaining control over it, and how a cryptocurrency wallet allows individuals to securely manage and use their digital assets.

Decentralized Storage
Decentralized data storage enables individuals and entities to control their personal data and protect their privacy by removing the need for a central authority or intermediary to manage and store their data. With decentralized data storage, encrypted data can be stored across a network of nodes, each node only holding a small piece of the data, making it much more difficult for unauthorized parties to gain access to the complete dataset. For example, IPFS (InterPlanetary File System) is a decentralized storage system that allows users to store and access files across a distributed network of nodes. Because data is stored across multiple nodes, there is no single point of failure, and the data is much more resistant to attacks or data breaches. This level of control and privacy is particularly important in scenarios such as healthcare and finances, where sensitive information needs to be protected from unauthorized access or manipulation. Decentralized data storage provides a promising solution for individuals and entities to securely store and control their personal data.

Decentralized IDs
Decentralized identity provides a secure and unique identity that is not tied to a centralized authority. the IDs are managed by the creating entity, such as an individual or organization. This provides entities with greater control over their identities, and reduces the risk of identity theft or fraud. One example of a decentralized identity solution is the Sovrin Network, which uses a decentralized ledger to enable individuals to create and manage their own identities. The Sovrin Network [14] provides a secure and scalable infrastructure for digital identity management, without relying on a centralized authority or identity provider. Decentralized identity solutions provide a promising alternative to traditional identity management systems, as they give individuals and entities greater control over their identities, and reduce the risk of identity theft or fraud.

Verifiable Credentials
Verifiable credentials provide individuals with the ability to share their personal information with others while maintaining control over their usage. Individuals may acquire credentials from trusted issuers or create their own the may be accepted within a trusted circle. They can manage their own digital credentials and control who has access to them. One example is uPort [15], which is a self-sovereign identity platform. uPort enables users to create and manage their own digital identities, which can be used to access a range of online services and applications. The platform uses decentralized technology to ensure the security and privacy of user data, and is designed to be interoperable with other identity systems.The use of verifiable credentials ensures that individuals have control over their personal information, and can choose which credentials to share with different service providers, while protecting their privacy and security.

Cryptocurrency Wallets
Cryptocurrency wallets are a key component of self-sovereign identity (SSI), as they enable individuals to securely manage and use their digital assets, including cryptocurrencies and other digital tokens. Existing wallets use strong encryption methods to secure user data, and are designed to be user-friendly and accessible for all individuals, regardless of their technical expertise. Providing individuals with full control over their digital assets, cryptocurrency wallets enables them to manage their financial assets in a decentralized and secure way, without the need for a centralized authority or intermediary. This is particularly important for SSI solutions, as it enables easy transactions for selling and purchasing information or assets, paying service or subscription fees, and financially supporting organizations or projects.

Challenges and Criticisms

Slowness of Decentralized Systems
A criticism that reliance on decentralized technologies can make SSI systems slower and less efficient than traditional centralized systems. The architecture includes many nodes distribute on the internet potentially leading to increased latency in communication and slower response times. This can make it challenging to achieve mass adoption of SSI, especially in developing countries with limited access to high-speed internet. the Also, the verification process in SSI systems that rely on decentralized technologies can be slower than traditional systems. In an SSI system, verifiable credentials are cryptographically signed and verified by multiple parties to ensure their validity. This process can take longer than traditional systems that rely on a single centralized authority to verify credentials.

Despite the potential for slower processing times and increased latency in SSI systems that rely on decentralized technologies, the benefits of increased security, privacy, and user control over personal data outweigh these potential drawbacks.

Traditional identity systems are often centralized and rely on a single entity to store and manage user data. Despite there being Cloud technology in the implementation, a single, or a few entry points into the system creates a single point of failure vulnerable to cyber attacks and data breaches. If exploited, access to entire large system can be shutdown. In contrast, decentralized SSI systems distribute data across a network of coordinating nodes, making them more resilient to attacks and harder to compromise.

As decentralized technologies continue to evolve and become more efficient, the potential drawbacks of slower processing times and increased latency in SSI systems are likely to diminish. For example, the use of blockchain layer-2 scaling solutions, or swarm connection in IPFS [16]. These and other innovations can improve the speed and scalability and performance making SSI more suitable for real-time applications.

Reliance on Verifiable Credentials
The reliance on verifiable credentials assumes that issuers of credentials are trustworthy and reliable, which may not always be the case. It can also be challenging to establish a universally accepted standard for verifiable credentials, which could lead to fragmentation and lack of interoperability.

However, the use of decentralized technologies in SSI systems provides a significant level of security and trust in the credential issuance process. Verifiable credentials can be cryptographically signed, encrypted and stored on a decentralized network of nodes, making them very difficult to tamper with or forge. The an immutable record of credential issuance can be stored on a blockchain and ensures that only authorized issuers can create and sign credentials. SSI systems provide mechanisms for revoking or invalidating credentials in case of compromise or revocation. This ensures that even if a credential is compromised or the issuer is found to be untrustworthy, the credential can be quickly revoked, reducing the risk of misuse or exploitation [17].

A decentralized network of validators and verifiers can ensure that the validity of a verifiable credential can be independently verified by multiple parties, providing a higher degree of assurance that the credential is authentic. The count of valid or invalid verifications of an individuals credentials can be tracked to identify potential misuse, fraud, of counterfeiting of credentials.

Fear of Cryptocurrencies
Cryptocurrencies have been criticized for their volatility, lack of regulation, and association with illicit activities. These concerns are not unique to cryptocurrencies and are often addressed through measures such as improved regulation, and enhanced security protocols. The benefits of using cryptocurrencies in self-sovereign identity systems, such as greater security, privacy, and control, can outweigh the potential risks. As more users become familiar with cryptocurrencies and their benefits, and as mathematical contracts open for review continue to evolve, the adoption of cryptocurrencies in self-sovereign identity systems is likely to increase.

Decentralized Storage
While concerns about data privacy and security with decentralized data storage are valid, it’s important to note that there are plenty of examples of data breaches, security issues, and loss of personal data in centralized cloud systems. The Facebook-Cambridge Analytical data scandal is just one example [18]. Decentralized storage systems are often more resistant to data breaches and cyber-attacks, as they are less susceptible to single points of failure and are designed to provide greater control and ownership over personal data. While no system is completely foolproof, the use of decentralized storage with encryption and additional security measures can provide a more secure and privacy-enhancing alternative to centralized data storage.

Summary

Self-sovereign identity (SSI) is a powerful concept that enables individuals to retain full control over their personal data and finances. Building SSI applications requires foundational pillars, including decentralized data storage, decentralized identity, verifiable credentials, and interoperability with cryptocurrency. It is also important to consider key supporting concepts, including decentralized identity management, privacy and security, open standards, and user-centric design. Decentralized identity management is crucial for SSI solutions as it provides individuals and other entities access control and management of personal and proprietary information. Privacy and security are critical to ensure that personal data is protected. Implementing robust encryption methods and employing decentralized architectures can reduce the risk of data breaches. Open standards are also important. It allows open investigation and proof of how a system is implemented. Using open standards helps ensure many intelligent ideas are implemented in a structured and verifiable way. Finally, SSI solutions should be designed with the user in mind, ensuring that the technology is accessible and easy to use for all individuals, regardless of their technical proficiency.

The foundational pillars of SSI, along with the supporting concepts, provide a compelling argument for the importance and potential of SSI in today’s digital landscape. By implementing these principles, we can build secure, decentralized, and user-friendly systems that empower individuals to take control of their personal data and finances.

Resources

[1] https://www.csoonline.com/article/3269028/what-is-xss-cross-site-scripting-attacks-explained.html

[2] https://us.norton.com/blog/id-theft/session-hijacking

[3] https://ipfs.tech/#how

[4] https://www.ethswarm.org/why#how

[5] https://www.storj.io/

[6] https://en.wikipedia.org/wiki/Verifiable_credentials

[7] https://indicio.tech/verifiable-credentials-digitally-transform-banking-finance-and-payments/

[8] https://w3c-ccg.github.io/vc-api/

[9] https://identity.foundation/keri/

[10] https://trezor.io/

[11] https://www.ledger.com/