Blockchain Identity Applications

Key Takeaway: Blockchain’s real-time ledger technology may hold the key to revolutionizing digital identity in an always-online world

The blurring of the thin line between the virtual and physical world, resulting in our “digital identity,” is one of the most significant social and technological developments taking place today. This identity has a very real impact on important events in daily life, from getting a new job to securing a mortgage or line of credit.

At the individual level, however, we have very little control over the information that compromises our digital identity. To make matters worse, we do almost everything online – from work to making purchases to requesting a loan and everything in between – increasing the risk that our data and identity is stolen. Businesses, likewise, continue to rely on password and secret question-based forms, such as the name of our first pet or the street we were born on, to protect customer data on inherently insecure systems. These systems are vulnerable to both traditional attacks, as seen in many of the recent high-profile data breaches, and crude-yet-effective social engineering schemes. At the government level, identity data is typically decentralized across multiple organizations and systems. The majority of these organizations use isolated and centralized databases making identity management, protection, and verification a cumbersome, costly, and risky (if not largely impossible) task.

So what value does blockchain bring to the table? A blockchain could give individuals much more control over their personal digital information by allowing them to provide only the minimum amount of information needed by a given party. For businesses, blockchain technology can reduce the effectiveness of phishing and social engineering attacks by increasing the steps needed to update information in an account and by increasing the number of “targets” that would need to be convinced, since a majority consensus is typically required before new blocks are added. No longer would a “hacker” be able to cause damage by chatting with a single customer service rep. Any new records are also automatically time-stamped, making it easy to later verify whether changes were in fact requested by the legitimate account holder. At the government level, blockchain technology can allow independent entities to rely on the same shared, secure, and auditable information database. Here are a few examples that illustrate how a real-time, secure ledger could be effectively used to store identity transactions:

#1: Government identification

A blockchain could be used to generate new digital identities, allowing users to easily and securely log into government environments. A citizen’s identity would be verified once, in person, at a government office using existing identification methods such as a driver’s license, passport, or birth certification. The organization could then create a verified digital identity that could be used across any number of different government websites and portals. In Estonia, for example, government organizations have already experimented using blockchain to aid development of a transnational e-residency program.

#2: Identity apps for consumers

A blockchain could be used as a kind of identity management application for individual consumers. This application would securely store identity data, such as information lifted from existing forms of government identification, using encryption and data hashing employed in the blockchain. After additional security and identification measures are taken, this information is written onto the blockchain itself. This application would allow individuals to carry with them their personal information wherever they go without exposing that information to the world. An individual could, for example, determine what information to share, such as their date of birth only for age-restricted purchases. Third-parties would likewise only be able to access the information contained in the block once pre-determined validation requirements have been met.

#3: A blockchain for blockchains

A blockchain could be used to connect different back-end and public systems to create a near-universal identity. This would be achieved by creating a blockchain consisting of multiple blockchains, thus helping to solve the problem of decentralized identity data.

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