Decentralized identity may be critical for the success of Web3

by Li Jun, Founder of Ontology

The Ontology Team
OntologyNetwork
4 min readAug 10, 2022

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Image Credit: Yuichiro Chino/Getty

Every time we unlock our phones or open our laptops, we are prompted to enter passwords, codes and captchas to access our data held in servers far away. Within our increasingly interconnected world, everything relies on our identity. For this reason, we are always asked to verify who we really are — both in the physical world and on the web. Traditionally, we do this by typing in passwords online or flashing our passports and licenses to government officials. We surrender our personal information in exchange for services and permission to do certain activities, online and offline.

Web2 has forced us to accept that the cost of using so-called “free” services such as Google and Facebook comes at the expense of exposing our identity. Once we agree to the privacy policies of websites, our data gets stored in centralized centers owned by a handful of institutions.

Most of us accept that giving these companies access to our identity is preferable to not having access to the majority of the internet. This means not being able to access social media sites like Facebook and Instagram, book concerts and events online at Ticketmaster and Eventbrite, make travel plans on TripAdvisor and Booking.com, or shop online through Amazon and eBay. Especially in our web-reliant world, this would heavily limit services we can access — or at least make our lives inconvenient.

Although we have become all too aware of the inherent risk of storing information in a centralized data storage system, the majority of us have simply accepted the fact that our data could be (and has been) compromised at any given time. Moreover, despite legislative breakthroughs such as GDPR in Europe and CCPA in the U.S., it could be argued that globally we have become increasingly flippant about data breaches because such news is so constant; it merely exists as a buzz in the background.

Web3 and decentralization — what it means for you

Now, imagine not having to log in every single time you move between different apps and platforms. Imagine not checking your phone for two-factor authentication. Imagine not worrying about the inevitability of a data breach. As we move from Web2 to Web3, decentralized identity solutions provide a gateway for a seamless experience where users can easily and safely traverse between different platforms.

The concept of decentralization is a core tenet of Web3 technology. Decentralization provides users with ownership, access and control of their own data without relying on Big Tech intermediaries.

This concept of decentralization can also be applied to how identity is stored and verified. Instead of relying on third-party servers, users have complete control over their personal information stored only in their wallets.

Digital wallets built on blockchain technology provide a secure way to upload verified information confirmed by trusted authorities on your device without relying on third parties.

Besides being encrypted securely on blockchain, additional information about the user is not relayed to others when proving something is true — a concept known as zero-knowledge proof (ZKP). With such technology and security, users will be able to access goods and services in the click of a button that previously required stacks of paperwork.

Determining your eligibility for a loan or a mortgage will be made easier through seamless verification of your credit history and proof of employment stored in your digital wallet. Getting reimbursed by insurance providers will be made simple through digital receipts and medical records. Applying for college will be made faster with your education history and extracurricular achievements stored in your digital wallet. These are tangible, real-life use cases that will deliver more efficient and effective processes.

Bringing trust back to the internet by eliminating bots

Not only will the concept of decentralized identity make the user experience of Web3 streamlined, it will also make it a more authentic place. In a Web3 world, fake, spam and bot accounts could be confined to the past. At least, they may decrease if sites require their users to authenticate themselves using the information attached to their digital wallets to prove their identity.

This might lower cybercrimes and other serious issues online such as catfishing, financial scams and intentionally spreading misinformation, among other things.

Although the industry is making history and taking strides in creating Web3, there are still issues the industry has not quite yet figured out. We must be realistic and acknowledge the ample room for improvement that exists when addressing ethical challenges and the lack of regulatory frameworks, among many others. Trailblazers of Web3 and its users should be consulted by lawmakers and lobbyists to create laws applicable on Web3 and in the metaverse.

Nonetheless, the possibilities for Web3 are endless. The convergence of the physical world and Web3 would create an immersive virtual-reality experience supported by decentralized identity. Decentralized identities could make our digital and physical world much safer and more convenient, providing an immersive space for all, free from the negative externalities presented by big tech giants.

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