Decentralized Identity¶
What is Decentralized Identity?¶
Identity, in both the digital and physical worlds, serves as a means of distinguishing and authenticating individuals and entities.
Digital Identity:
- Includes online personas, accounts, and digital certificates.
- Verified using usernames, passwords, and other authentication methods.
- Relies on electronic data and cryptographic methods for authenticity and security.
Decentralized Identifier (DID):
- A semi-anonymous identifier for individuals, companies, objects, etc.
- Protected by a private key, with only the key owner able to verify ownership.
- Allows for multiple DIDs to prevent tracking across different activities.
- Example: One DID for gaming, another for credit reporting.
How are decentralized identities secured?¶
A crucial aspect of securing decentralized identities is cryptography. In cryptography, private keys are known only to their owners, while public keys are widely distributed. This pairing serves two main purposes. First, it enables authentication, allowing the public key to verify that a message was sent by the holder of the corresponding private key. Second, it facilitates encryption, ensuring that only the holder of the paired private key can decrypt a message encrypted with the public key.
Benefits of decentralized identity¶
- Increased Individual Control: Users have more control over their identifying information without relying on centralized authorities or third-party services.
- Trustless Verification: Facilitates a trustless, seamless, and privacy-protecting method for verifying and managing user identity.
- Blockchain Technology: Uses blockchain to create trust between parties and provides cryptographic guarantees for the validity of attestations.
- Portability of Identity Data: Identity data is portable; users can store attestations and identifiers in a mobile wallet and share them with any party of their choice, independent of the issuing organization’s database.
- Compatibility with Zero-Knowledge Technologies: Supports zero-knowledge proofs, allowing individuals to prove ownership or actions without revealing specifics, enhancing trust and privacy for applications like voting.
Decentralized Identity Use Cases¶
| Industry | Traditional Process | Problems/Risks | Verifiable Credentials Solution |
|---|---|---|---|
| Supply chain | Utilizes physical IDs and documents to prove compliance, leading to inefficiencies. | Documents can be easily falsified and are challenging to authenticate. The manual verification process is slow and error-prone. Unapproved and non-compliant medical supplies can enter the market, endangering public health. | Verifiable Credentials are tamper-proof and can be verified instantly without needing to contact the issuer, greatly reducing time and costs. |
| Finance | To access financial services, individuals must undergo compliance screening by submitting personal details in physical form, which are stored in large databases and shared with multiple third parties for KYC and credit checks. | Individuals have no control over the security, sharing, and access of their data by third parties. | Credentials are cryptographically secured, tamper-proof, and can be verified, ensuring data integrity and security. |
| Healthcare | Employers manually verify paper-based licenses and certificates for healthcare providers. | Traditional verification processes take weeks or months, delaying the filling of essential healthcare positions. | Medical licenses can be issued as digital credentials by regulatory organizations, allowing healthcare providers to easily share them for immediate verification by hospitals, clinics, or medical departments where they seek employment. |