How Blockchain will Disrupt Digital Identity
Blockchain Use Case Series (5 part series — PART 4)
Digital identity is a critical component in service delivery. However, relying on physical identity documents and conventional approaches in a digital age is not only cumbersome and tedious, but also expensive.
Furthermore, as we spend more and more time online, fraudsters and hackers are gradually discovering new ways to access sensitive personal information and use it for selfish gains at the expense of legitimate users as well as their online service providers.
These challenges call for new approaches in identity verification. Let’s dive in and explore how Blockchain will disrupt this industry:
1. Self-sovereign ID
To begin with, most websites have an option of login and sign-up before you access their services. The login option is for those already having an account and the sign-up option is for those would like to register for a new account. The sign-up option enables you to create a unique identity (password) that you can use to navigate through the website.
Nevertheless, the truth is even though you own your password you don’t own your identity. Your Identity is in the hands of a central point that is vulnerable to attacks anytime. You can wake up any day and find that your identity is gone!
Blockchain has an appealing trait for identity. It offers an avenue where only you and you alone is in control of your identity. You will be able to update it at any time; and you can choose to make it public or private.
Your identity is available to you at any time and it cannot be accessed by anyone without your consent. And best part of it is that no third party will ever be involved when it comes to your identity. A good example here is VALID.
VALID is a platform that aims to offer you, as a user, self-sovereign digital identity. It enables you to own and control your data. You also have a secure and transparent marketplace that matches you with data consumers. Your information is available only in a VALID wallet on your phone. And since there is no single point of failure, you are assured of the absolute safety of your data.
2. Reduce Identity Theft
Thirdly, identity theft is an ugly experience. It takes you from a hundred to zero in a matter of minutes. Then you have to go on resetting everything. Call your credit card companies to have all your cards changed. Dispute charges that you know nothing about. It is not only unfair, but very frustrating.
Blockchain powered solutions are decentralized and have no single point of failure, this means there is no way a hacker will be able to hack into the system and access your information. Civic, is a good example of a Blockchain based solution that aims to reduce fraud and protect users from identity theft.
As a user, Civic will offer you a platform where all your information will be secure. First, it will verify the legitimacy of your information. After verification, a cryptographic hash of your information is captured by Civic and transferred to the public Blockchain and simultaneously erased from their servers. Thus your personal data is protected in case of any malicious intrusion to their servers — because it was never stored on the platform but on your device.
3. KYC and Digital Identity
KYC involves the process of banks verifying and validating your primary documents as an act of due diligence. The problem with this approach is that the process of due diligence always has to start afresh for every financial institution. This process is not only time consuming but cumbersome too.
Blockchain makes it possible for financial institutions to access customers’ information without always starting the process of due diligence again and again.
It will also allow for the creation a digital identity for customers. With a digital identity, financial institutions will be able to monitor your transactions, as a customer, access relevant information about you and reduce false positives. Furthermore, financial institutions that identify fraudulent transactions will be able to notify other financial institutions globally, preventing more fraudulent activities.
4. Property buyers and digital identity
Perhaps you might have heard about digital identities augmented with individual credit score to facilitate buying and selling of property. The elements in question here include; income, loan repayment information, social media data and more.
A smart contract with complete details about the property as well as the willing buyer’s digital identity is put up for auction on the Blockchain for prospective financiers.
The buyer is a liberty to take the best offer possible and the financier is rewarded for accepting the risk. Here only information necessary to evaluate the creditworthiness of the user will be disclosed prior to the offer being accepted.
5. Governments and Digital Identity
Last but not least, governments have also been vocal in their efforts and commitment to become more digital- and the pivot of this commitment is on digital identity. Secure digital identities will go a long way in boosting government service delivery; irrespective of the user’s location- this includes services that would initially require their physical presence.
For instance, governments will be able to incorporate digital identity in their voting system making it easy for honest elections. Also, the process of accessing government offices for services will be easy and quick. Having digital identity ensures that the required information is submitted on time and services rendered on time. It will not only save the government money but also give the citizens better services.
Final Word
In a progressively digital world, digital identity is indispensable necessity. Blockchain offers the technology to guarantee trust and security into digital identity systems. As such, it enables the storage of sensitive personal data and provides a vital link to facilitate the transfer of assets.
However, since Blockchain is a recent technology, still at the cradle stage, a few challenges should be expected even as we replace the antiquated applications of identity management with contemporary technology.
Blockchain Use Case Series (5 part series — PART 1): How Blockchain is Revolutionizing Finance
Blockchain Use Case Series (5 part series — PART 2): How Blockchain Is Changing The Gambling Industry
Blockchain Use Case Series (5 part series — PART 3): How Blockchain Is Completely Disrupting The Gaming Industry
