Is Blockchain the Solution for Digital ID?

In a world that's becoming increasingly digital, with discussions around the implementation of official Government Digital IDs ongoing in multiple countries, the subject is not just shrouded in privacy concerns, but also in the ability to control data and several other areas.

Despite these concerns, existing systems are often flawed, sometimes unsafe, and typically spread across multiple institutions with inconsistent identification and, in many cases, conflicting information. Simultaneously, it's increasingly common to worry about data breaches, fraudulent accounts, and identity theft.

It's estimated that globally, approximately 850 million people still lack legal identification, which means that in many cases, their access to services that most people take for granted, such as banks and certain government services, can be limited.

The solution to this could be Blockchain technology, the technology that powers cryptocurrencies. Blockchain has the potential to transform the way we produce, establish, and utilize our identities.

Centralized databases, which are relied upon by traditional identification systems, are single points of failure that can be hacked or misused; in contrast, Blockchain operates as a decentralized network. Typically, with most blockchain-based identity systems, the actual personal credentials are not stored on the Blockchain, but the cryptographic proofs are instead. This keeps personal data securely in the user's digital wallet.

Blockchain presents itself as a solution with self-sovereign identification (SSI), which enables individuals to own and govern their own digital identities, rather than simply being users of a private government solution that could potentially share data with undesirable third parties and ultimately be controlled by others. With SSI, users can save verified credentials, such as IDs, degrees, or licenses, in secure digital wallets, thereby avoiding the need to share their personal information with businesses or governments. When they need to prove anything, they can communicate a cryptographic proof that is verified by the relevant issuer or party, not the data itself. It's a significant change that makes identification portable, private, and under the user's control.

The main benefits of a Digital ID based on Blockchain technology include:

1. Trustless Safety

There is no central server that can be hacked. Decentralized networks can store identity data, making it more difficult for attackers to access multiple systems simultaneously. Each record is signed with a cryptographic key, which means it can't be changed or removed without permission. Notably, most Blockchain ledgers are append-only.

2. Control and Privacy

One of the key features of Blockchain-based digital IDs is that, in addition to being under the user's control, it becomes possible to choose which data is revealed and shared. Zero-knowledge proofs (ZKPs) enable users to verify facts, such as being over 18, without disclosing their birth dates or other sensitive information, which not only provides a level of privacy but also the freedom that is often lacking with centralized ID solutions.

3. Compatibility

An ID based on Blockchain can be used across different platforms, eliminating the need for multiple apps and offering greater flexibility. New standards are being developed, including Decentralized Identifiers (DIDs) and Verifiable Credentials, to ensure that trusted identification data is always in a consistent format. This makes it possible to use one safe ID for everything, including logging onto social media and banking.

4. Being included

Blockchain can help the estimated 850 million people who lack formal identification documents prove their identity. To participate, a smartphone is all that is needed. This could change the lives of refugees, those without bank accounts, and people living in underdeveloped areas by providing them with access to digital and financial services that were previously out of reach, simply by having access to a smartphone.

5. Less fraud

Each ID on the Blockchain is linked to a unique cryptographic key, making it almost impossible to impersonate or falsify. As trust and authenticity become easier to verify, fake accounts and bots may become a thing of the past.

Examples from the Real World

While this sounds like something that could be complicated to implement or lacking tangible examples, forms of Digital ID are already being implemented, actively used, and actively adopted.

Worldcoin: Proof of Being a Person

Worldcoin is one of the most ambitious digital ID initiatives. It strives to deliver to everyone on Earth a safe, verifiable "World ID." It produces an encrypted IrisCode, a unique digital signature that proves a person's uniqueness, using an iris-scanning device called the Orb. The approach employs zero-knowledge proofs to verify someone's identification without disclosing any personal information. World ID enables individuals to verify their authenticity, ensuring they are not bots, while maintaining their privacy. If it reaches global adoption, it could serve as the foundation for a worldwide trust layer on the internet.

SPACE ID: Making Web3 identity easier

SPACE ID provides users with decentralized domain names, such as alice.bnb, to use instead of lengthy wallet addresses in the Web3 environment. It serves as a digital passport that operates across multiple blockchains, connecting a user's identity. This makes it easier to participate in crypto ecosystems while maintaining decentralized ownership. It's a modest yet essential step toward a basic form of identification, even if it is focused on wallets.

Use Cases for Humanitarian and Civic Purposes

Governments and nonprofits are also exploring the use of Blockchain for civic identity. Estonia utilizes blockchain solutions to enhance the security of its national ID system, and the World Food Programme (WFP) has notably employed Blockchain for aid and cash transfers through its Building Blocks program. These kinds of solutions demonstrate that Blockchain can benefit not only technology but also inclusivity and human rights.

The Journey Ahead

Blockchain isn't the answer to everything. There are still problems with adoption, privacy, and standards. However, groups and organizations worldwide, including the W3C, are working on global standards to ensure that blockchain identification solutions can interoperate with each other.

Meanwhile, improvements in zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge) provide individuals with new ways to protect their privacy, enabling them to prove things about themselves without revealing the underlying information. These new ideas make the argument for Blockchain as the backbone of a worldwide ID system that protects privacy even stronger.

Conclusion

Is Blockchain the answer to digital ID? The evidence is increasingly pointing to yes. Blockchain enables users to authenticate their identity safely, anonymously, and globally, without relying on a central authority, while granting ownership of data to the individual and providing digital access to billions of people.

Blockchain identity systems are a step toward a future where the internet itself is trustworthy. They can help prevent fraud and identity theft, and they provide a way for those without bank accounts to access the global economy. The journey is still underway, but the direction is clear: Blockchain has the potential to transform how we interact, verify, and communicate with one another in the digital age.

About Chain

Chain is a blockchain infrastructure solution company that has been on a mission to enable a smarter and more connected economy since 2014. Chain offers builders in the Web3 industry services that help streamline the process of developing, and maintaining their blockchain infrastructures. Chain implements a SaaS model for its products that addresses the complexities of overall blockchain management. Chain offers a variety of products such as Ledger, Cloud, and NFTs as a service. Companies who choose to utilize Chain’s services will be able to free up resources for developers and cut costs so that clients can focus on their own products and customer experience. Learn more: https://chain.com.

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