When users use online services and explore the internet, they end up creating a digital identity. This type of identification is then linked to central entities such as Google and Facebook, making it easier to share data with new services using simple login buttons.
While these digital identity management systems are convenient, they rely on central intermediaries that store and control user data. Personal identifiers and credentials are in their hands, and they may decide – or be compelled – to share this information with other parties.
Blockchains offer a solution: decentralized digital identities. They allow people to manage information associated with their identity, create identifiers, control who they are shared with, and store credentials without relying on a central authority such as a government agency.
A decentralized identity can take the form of an Ethereum account. Users can create as many accounts as they want on the Ethereum network without anyone’s permission and without storing anything in the central ledger. Credentials on the Ethereum blockchain can be easily verified and not tampered with, making it extremely secure.
There are other use cases as well. In August 2022, Binance launched the debate on decentralized identity on social media platforms after it launched the first soul-related token, BAB, which served as a Know Your Customer (KYC) user credential.
It remains to be seen whether decentralized identities will be the future of online activism.
decentralized identity management
Speaking to Cointelegraph, Witek Radomsky, chief technology officer and co-founder of Enjin’s non-fungible token ecosystem, said he sees a future in which the metaverse sees “a combination of social media, email, crypto wallet addresses, and decentralized applications.” Assuming there will be a mix of digital and decentralized identities.
According to Radomsky, the key to identity management will be “preserving and protecting sensitive information,” as different networks have “different technical ways of tracking digital ownership of data.”
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Radomsky added that people who trust protocols with their personal data should take into account that key business decisions will be made based on the company’s needs and philosophy, adding:
“Ownership of digital assets mimics assets in the physical world. As long as the owners act within the law, the government cannot infringe the digital ownership that supports blockchain technology.”
He added that a decentralized identity would play a role in maintaining an identity “based on proving that you are not a robot” and would have online activity as one of the “most compelling evidence to support this”.
The potential of decentralized identities
Managing your digital identity is a complex task as one mistake can easily lead to personal data leakage. Central organizations have been infamous targets: the recent case in which the personal details of the President of Portugal were stolen in a cyberattack. Using decentralized identities eliminates these risks, as only users are responsible for their data.
Speaking to Cointelegraph, Dmitriy Sukamera, co-founder of IDNTTY — a layer of decentralized public infrastructure that provides a decentralized approach to identity — said centralized digital identity providers are “competing with each other, which is really hindering widespread adoption,” which in End “User needs an ID for public services, an ID to interact with the bank, and an ID to work with a cooperative”.
Real-world examples showed a decline in adoption of digital identity programs shortly after their launch, for example Suhamera Gov.UK Verify was used in the UK where less than 10% of the population is registered. Suchamer said the use of eID in Nigeria was halted in 2017 due to problems with the public-private partnerships that were used to launch the programme.
According to Suhamira, centralized digital identity solutions tend to be “too expensive and present an unwieldy monetization model,” as users have to purchase and pay for national ID cards before they can be used digitally.
Suchamera added that using digital IDs across borders is also difficult as companies and regulators have to bypass red tape, which can be a slow process. Suhamera added: