Central Bank’s Digital Currency Is Coming, Will DID Be the First Path to Digital Economy?
With the launch of central bank’s digital currency, people start to re-evaluate the impact of blockchain technology on people’s lives. Perhaps, the development of digitalization will be faster than anticipated. The disadvantages of traditional account management system are obvious and it no longer be able meet the development needs of digital currency. Thus, as the first step to obtain decentralized application services, will DID be an inevitable trend and choice for digitalized development?
As a member of DIF (Decentralized Identity Foundation), DREP is committed to improving identity system interoperability and standards based on blockchain. Through DREP DID, it connects multiple platforms and blockchain accounts to enable users to enter blockchain network seamlessly.
Fiat Digital Currency Is Coming
On 18th, June 2019, Facebook announced its plan to launch a new digital currency — Libra with 27 multinational companies including Visa, MasterCard and Uber. Once the news was announced, global regulations started to put pressure on it.
On 27th, October 2019, Qifan Huang, vice chairman of the China International Economic Exchange Center, said that: “The People’s Bank of China is likely to be the first central bank to launch digital currencies in the world.” Subsequently, the details of Chinese central bank’s digital currency DCEP were also published.
On 30th, October 2019, Association of German Banks published a paper appealing to Euro zone to launch “digital Euro”. This association is composed of over 200 German private commercial banks and 11 member associations.
In fact, many central banks are paying attention to digital currencies. For example, the central banks in Canada, the Netherlands, Australia, Russia, etc. have already started research on digital currency.
According to a report jointly issued by IBM Blockchain Financial Services Corporation and Official Monetary and Financial Institutions Forum
(OMFIF), policy makers from many central banks around the world are seriously considering the development and launch of central bank digital currencies (CBDC). It is likely that a customer-oriented CBDC will be launched within the next 5 years.
Once the fiat digital currency put into practice, the application scenarios will penetrate the whole society.
Blockchain technology is the cornerstone of financial technology revolution including digital currency. DID based on blockchain will be the first path to digital world.
DID, the Density of Internet Development?
It’s been 50 years since the birth of the Internet and people are more concentrated on digital world rather than Physical world. In order to enjoy the convenience brought by network applications, users need to register an ID and reserve their own data such as phone number, identity information, consumption data, etc.
With the wide application of this service, its shortcoming began to appear. The first one is the high maintenance fee. A repetitive time and economic expense for one ID authentication service provided by ID authenticator (such as government, finance, and social basic services) and the relying party (service provider). The second one is the security risks brought by the password. It is reported that 10% of users on the network impersonate others to commit cybercrimes. The third is the data privacy and security problem. There are already many privacy leaks exposed in Facebook.
Just as people wish to solve the disadvantages of financial services through a decentralized financial architecture represented by blockchain, they also want to solve centralized application account management problem through blockchain distributed digital identity (DID).
There are 3 advantages of DID: 1. Decentralized. Based on blockchain, it prevents identity data from being controlled by a single centralized authority; 2. ID is autonomous and controllable. Based on DPKI (distributed public key infrastructure), each user’s ID is not controlled by a trusted third party, but controlled by its owner; 3. Trusted data exchange. ID related data is on blockchain so that the authentication doesn’t need to rely on the ID provider.
According to the 2019 report by We Are Social and Hootsuite, the global population is 7.676 billion, while 4.388 billion are Internet users accounting for 57%. A McKinsey research report on digital identity released in January 2019 revealed that, if digital identity is popularized and implemented correctly, it will benefit 78% low-income countries, especially for informal workers. Also, 110 billion hours will be saved from government services and social security.
In fact, governments and Internet giants have started the research and application on DID. For example, the first blockchain credit ID authentication platform was launched in Chancheng, Foshan, Guangdong to solve the ID verification problem for citizens. Some government institutions in India adopt a new platform, Lynked.World, based on blockchain technology. It provides blockchain ID verification solutions for ordinary users, employers, higher education managers and governments.
Microsoft released ION (Identity Overlay Network), everyone is able to create a decentralized ID based on this public network running on bitcoin blockchain. Recently, Baidu Cloud also released a DID applet digital identity wallet.
There is no doubt that DID has the advantages that the existing account management system lacks. No matter as a supplement for Internet service or the first path to the decentralized application, DID is the inevitable trend and destiny for the development of digital world.
DREP Reputation Protocol Effectively Enhances the Value of DID
To make users better benefit from blockchain technology innovation, as a member of Decentralized ID Foundation (DIF), DREP cooperates with technology companies such as Microsoft, Accenture, and IBM to improve identity system interoperability and standards based on blockchain and further puts forward DREP DID solutions.
DREP DID integrates user accounts in various public chains and it further expands to traditional platforms. It solves current pain points of identity management, allows more users to access blockchain and enjoy the convenience of decentralized service.
Based on DREP DID, users can not only manage transaction among different platform accounts through cross-chain interoperability, but also perform cross-platform management with traditional (centralized) platforms. Here, the asset and data integration, information encryption are achieved without changing the original platform’s numerical system, credit system, and economic system, forming a complete decentralized closed-loop ecology.
DREP introduces decentralized private key storage technology and zero-knowledge proof in DID to ensure the security of private data. The corresponding zero-knowledge proof is stored in the DID document as verifiable credential so that private data would not be exposed.
To enhance the long-term holding value of DREP DID, DREP launched a reputation system. By connecting user behavior with reputation and real-time feedback of user data, a complete user reputation portrait is formed without harming privacy and security. The application can achieve precise marketing by purchasing user reputation portraits, and users can also obtain revenue by selling their own data. The use value and reputation reward of DREP DID will encourage users to maintain their reputation and image on their own initiative.
Follow DREP WeChat account “DREP” to learn more about DREP; Join official community and add DREP client service: DREP_Foundation.
About DREP Foundation
DREP is committed to building “connectors” and “toolkits” based on blockchain technology, providing solutions that combine ease of use, flexibility and frictionless integration. Based on DREP Chain, DREP ID and DREP SDK, DApp R&D teams are able to release multi-public-chain asset versions, built-in wallets and asset trading platforms with one-click.