One Of Blockchain’s Most Important Use Cases – Digital Identity Explored

The notion of digital identity has been on my mind a lot recently.

Suffice to say, I can’t shake this notion that it’s going to underscore a lot of our transition into the New Digital Economy.

Sure, there’s the obvious efficiencies and ways of replacing paper processes that are needlessly draconian, e.g., waiting 3 hours in line at the DMV (department of motor vehicles) here in California, only to find the entire process of identity and verification is done with paper.

“No sir, I can’t accept your digital tax return that clearly has your Social Security Number, address, legal name, date of birth, income, and other personally identifiable information (PII) because we only accept paper versions here. Yes, sir, I’m aware that Microsoft Word exists and you could literally forge anything before printing it out — we’re not paid to ask questions here.”

Ok, so poking fun at the DMV is an easy target, but I think it does neatly present everything that’s wrong with a system that distrusts digital — the alternative is costly, slow, bureaucratic, inefficient, and quite simply paper is a terrible way to store the most important identifiers in your life.

How much nicer would it be if we had a public / private key for this information instead? Why do I constantly have to repeat information about myself, such as my name, DOB, address, and all the other minutiae? Proving your identity should take microseconds — the Boolean of you being who you say you are is a very strict filer. You either are, or you’re someone else. Why is that complicated or reliant on bloated systems that enforce redundancy through inefficiency?

And, maybe I’m coming at this from the wrong angle.

Like Bitcoin, it’s not just about giving you a choice (though that’s pretty important). It’s about making sure what’s yours stays yours.

I can think of nothing more important to us in this life than that of who we are. Everything else is secondary.

So, protecting that identity, your identity, should be at the very forefront of this technological renaissance we’re embarking on.  

To that end, let’s explore Digital Identity and how it helps to keep you safe while also improving the efficiencies of systems.

For one, let’s look at the need here.

96% of hackers’ first priority is gathering information and intelligence. That means you’ve certainly had some part or all of your digital identity stolen. Pretty alarming when digital identity is exactly as it sounds — you as a digital facsimile.  

A digital identity can be an individual, organization or a single device made up from personal data and actions online. This data can be broken up into two distinct sets, Data Attributes and Account Actions and Activities. You can liken these sets to a real-life person, ‘Data Attributes’ being the person/body and ‘Actions’ are what you do and where you go.

Data Attributes include:

Username and Passwords

Date of Birth

ID Numbers

Medical History

Bank Detail

Account Actions and Activities include:

Likes and comments on Facebook

Photos on Instagram

Forum posts

Search queries

Geotagging

With even just this short list of information, you can see how quick it is to build up someone’s profile. Think about how much data you have put online in just the last year, not just to social media but everywhere. Online purchases, new apps, banking, job applications, government portals. It’s a lot of personal information all entrusted to a third party. Identity theft would be, and is, too easy if it fell into the wrong hands.

Where and How is Personal Data Exposed?

 

In 2019 alone tech giants Microsoft and Facebook have been exposed to data breaches. According to TechCrunch, Facebook exposed up to 540 million personal records on a public storage server, while hackers were able to access Outlook email accounts. If even these two behemoths struggle to protect our digital identities then something is wrong.

It is not just failing trust in third parties that you need to be concerned about. Various vulnerabilities exist within our own control that requires your awareness.

Public wi-fi and unsecured websites yield labyrinths of risky exposure points. Location sharing offers a very real immediate risk along with adding strangers to social media accounts. Let’s not forget to keep passwords updated and certainly use multiple options across your accounts.

It’s a nightmare to keep track of and 86% of people are concerned about security during online transactions, with 87% saying they would like a singular login.

The repercussions of careless data protection are incredibly galling. Financial theft, identity theft, false tax returns, credit card fraud can all be life-changing if not devastating.

Fortunately, most personal data is generally sold for marketing purposes. This is often, not always, legal. A reason to closely read privacy policies or uncheck marketing options on your account. The first reputable company you give information might be clean as a whistle. But as soon as they relinquish control and sell your identity, who knows what will happen.

How Blockchain Can Resolve Digital Identity Issues?

Blockchain and digital identity. A match made in heaven. Strange to think that the sometimes murky world of Bitcoin and cryptocurrency actually provides the basis for ultra-secure networks.

Bitcoin has many doubters about whether it is a viable option for currency and the world economy. The underlying technology is the real value. Blockchain.

84% of organizations believe blockchain to be more secure than conventional IT systems according to Deloitte’s 2018 Global Blockchain Survey

Decentralized blockchains are thought to be the most secure networks ever created, so far unhackable. Managed by a cluster of computers rather than a single entity, data is bound in blocks secured using cryptography. Once entered, data can never be deleted, edited or duplicated.

Blockchain Stops Digital Identity Theft

As we’ve discussed it is an incredibly secure way to store data including personal details. Since data can’t be replicated it provides an immediate way to combat fraud. It is the same principle as stopping fake bitcoins entering the network. For cryptocurrency, it is known as ‘double spending’. When the same funds or coin is used to conduct multiple transactions the network rejects the activity. That’s how it works with digital identities, two people are not able to use the same identity.

Blockchain Digital Identities Are Tamper-Proof

Record tampering is as old as the paper it is written on. Paper files and records have always been readily available to corrupt activities from theft, to modification and destruction. While record digitization aids storage and efficiency hurdles it is no more secure. In fact, if networked, the data tampering door opens to the whole world.

Blockchain offers the solution through the cryptographic hash function. Think of ‘hash’ as DNA. Each block of data entered into the network has a unique hash/DNA. A strict cryptography ruleset means that any changes made to the input hash seriously change the output hash. Each new data block links to the previous block via this hash. This creates a chain of blocks or ‘Blockchain’. When tampering occurs the entire chain structure is altered and the changes are rejected. It is an impossibility.

Blockchain Enables Trusted Data Use

So, we can make personal data safe and secure, but what about using it? That’s why it’s such a valuable commodity, fairly useless if it is just locked in a vault.

Meanwhile, new companies are emerging to develop a solution that will help both businesses and users to protect their digital identity. For example, Tide Foundation, are working on a way to make digital identity an asset, not a liability. They are handing users the control of their data and provide them with a share in monetizing it. Another interesting project is OpenSSL that developed and released different versions of general-purpose cryptography libraries to help secure communications over computer networks against eavesdropping or need to identify the party at the other end.

Large organizations are not going to just roll over and relinquish a profitable use of this data. It is either sold or used to immense power for marketing. We only have to glance sideways at Facebook to see how they became so powerful from data we so willingly relinquish. Now the consumer offers fake information, companies are misled and no one is getting the best results.

With blockchain solutions, users can take back control of their digital identity. Individuals can hold the key to the storage and control what happens to their data. Only the owner holds the permission allowing access and utilization to their identity. Perhaps it will be to simply prove your identity to banks or governments. Others may wish to make it an asset and get paid for supplying certain data sets to companies for specific pre-ordained tasks.

The world is still constantly trying to meld the old with the new and a substantial amount does not fit. Banking is antiquated, data storage is insecure and controlling ones digital security is nigh on impossible. For companies, the burden of data protection is growing as shown by GDPR. Many small and medium-sized businesses will be relieved with a solution that eliminates liability.

Blockchain is the next development in technology using smart automated networks to remove third-party trust and give back data control the real owner – you.