The Remarkable Solution to Identity Using Blockchain

The age of a bouncer bending an ID to ensure its validity may be on its way out. As technology advances, the way humans distinguish themselves from one another is changing as well.

For most of human history, the only identifier people needed was their name: Queen Elizabeth, Albert Einstein, Julius Caesar. Today, a simple string of numbers in the form of an IP address is enough to track down an anonymous internet browser’s location, name, and so much more. Despite the fact that there are more ways to ID someone today than in the past, there are still 1.1 billion people worldwide without a way to claim ownership of their identity. This means they are incapable of legally voting, owning property, getting a job, or even opening a bank account. Interestingly, of the 2.7 billion unbanked people in the world, 60% have access to a mobile phone. This presents a prime opportunity to restore rights to hundreds of millions of people through a solution to identification only requiring a phone, but we are going to need the help of blockchain.

If a distributed ledger technology like blockchain is to be leveraged to solve the identity problem facing the globe right now, then it should be able to address some of the current threats to identity security. Personal data is highly valuable to malicious actors; in fact, 97% of data breaches target personally identifiable information (PII). In its current state, this data is vulnerable and therefore highly accessible.

The very nature of blockchain with its encryption makes data breaches extremely more difficult. Whenever a transaction is approved on chain, it must be approved unilaterally by not only the user and the service provider but also all verifying nodes. Data within a blockchain is also immutable and permanent meaning there is no shady manipulation that can be done with someone’s data.

Now that we know blockchain offers a seamless solution to the problem at hand, how would an identity on chain actually work and be used? Let us run through a scenario. As the user, you set up something called a DID on the blockchain (Decentralized Identifier). This posts the DID on chain with a public key and then also creates a private key that only you have access to. You walk up to a bank to apply for a loan and need to get your identity verified as a result. The bank then scans a QR code that points to your DID encrypted with the public key. From here you will use your private key to verify the DID to the bank and done! An identity verification process fully trustworthy and all without the need of a centralized entity like a government.

An added benefit to DIDs is that there does not need to be a limit of how many one person can have. It may be reasonable to have three separate DIDs: one for all financial interactions, one for personal uses, and one for government interactions. The identities can be independent of each other and not require a person who may have their username on a videogame be seen when an employer is verifying their identity.

It is only a matter of time before the world wakes up to the immense benefits that moving identity services onto the blockchain will bring. Billions of people will be able to use their smartphone to have a claim to their identity and data will be more secure than ever before. The technology is here. It is up to the people to adopt it.

References:

“Blockchain for Digital Identity: Real World Blockchain Use Cases.” ConsenSys, https://consensys.net/blockchain-use-cases/digital-identity/.

Gupta, Deepak. “Decentralized Identity Using Blockchain.” VentureBeat, VentureBeat, 5 Mar. 2022, https://venturebeat.com/2022/03/05/decentralized-identity-using-blockchain/.