Online security can be a double-edged sword for users who want the benefits of having robust security and identification processes, but have concerns about the level of personal information they still need to provide to make this possible.
While the majority of these protocols are extremely secure, it is difficult to create an infallible system. Cyber criminals constantly explore systems for weaknesses and use sophisticated technology to attempt to gain access to user information.
This is where decentralized identity systems can be useful. Hacking into a site can yield massive results for criminals who can then access hundreds and thousands of users’ personal details.
Expending the same energy to access one user’s details would be almost counterproductive and acts as a deterrent in and of itself.
Self Sovereignty
Self-sovereignty is something that more users are finding suits their needs. Known as Self-Sovereignty Identity (SSI), this gives users control over their data and who it is shared with. This allows users a greater level of online anonymity, and its influence is being seen in a number of sectors.
The online gambling industry is extremely popular because of its accessibility and convenience. Crypto casinos that offer no verification casino payouts are an emerging market that allows their users to retain anonymity by providing access to games and payouts without users having to provide the casino with sensitive personal information. These options provide players with faster payouts due to the peer-to-peer nature of cryptocurrencies and the blockchain technology they use.
Decentralized Identifiers
Blockchain technology is used to create digital identities that are controlled by the user. Using a decentralized identity (DID) removes the need for central authorities to verify or manage data, improving security and privacy for the user. This information can be easily shared with online services without providing information that could be used if it were stolen.
Verifiable Credentials
Verifiable credentials, also known as VCs, provide users with a way to store a digital counterpart to physical ID documents. These can be stored safely online and facilitate selective disclosure, where only the relevant information is shown when required for transactions. This differs from physical IDs, where all information is presented on request.
Interoperability
The ability to carry a decentralized identity across different platforms or devices provides a seamless service for its users. This system is designed to give users greater control over their information and how it can be used, and it also helps to streamline processes that would previously be held up by manual uploads and checks.
Distribute Digital Identity Benefits
The immutable nature of blockchain technology makes it extremely difficult for the information to be deleted or altered by unauthorized users. This decentralized and tamper-proof option improves privacy by encrypting data and allowing users to prove their identity without sending over copies of physical IDs.
ID verification services are also streamlined by using automated smart contracts, minimizing the need for middlemen and creating a cost-effective, secure, and efficient service.
Distribute Digital Identity Use Cases
The use of distributed digital identities can help to transform how consumers, businesses, and services interact online, with a variety of excellent uses that benefit all parties.
It can be used to improve access to services for people who don’t have access to ID documents like passports, birth certificates, or driver’s licenses. Blockchain-based ID services will help more people be able to access online education, financial services, and healthcare facilities.
It will greatly reduce the risk of fraudulent activity and identity theft by minimizing the amount of information users are required to upload. While operators must adhere to security and GDPR to protect user information, there is still a risk that information can be compromised.
Blockchain technology also improves transparency and accountability, and those services that use it can be audited easily to ensure they behave ethically. This helps reduce the risk of corruption, and all transactions are recorded on a public ledger without revealing personal information.
Blockchain, cryptocurrencies, and distributed ID systems can also be a safe way to facilitate financial inclusion for consumers who have found it difficult to find secure and reliable banking facilities. This can be a serious issue for people in developing countries, and this system improves the potential for economic improvements.
As well as the benefits to financial institutions, it could also revolutionize political voting systems. DIDs can help to protect against voter fraud and improve electronic voting systems. This has the potential to increase turnout and provide greater confidence in results.
As users continue to explore the rapidly developing digital landscape, distributed identity systems can be used for digital ownership of assets like NFTs and other digital collectibles.
Potential Challenges of Distributed Digital Identity Adoption
As with all new technologies, there will be hurdles to overcome, including potential regulatory issues that could change in different jurisdictions. Integrating into existing regulations is a difficulty that many emerging technologies face, and regulators must create future-proof rules that can be easily amended to accommodate change.
The infrastructure required for widespread distributed identity system adoption cannot be underestimated. Not only will this be a complex task to complete, but it will also be very expensive. To make them cost-effective, there needs to be a large uptake among consumers. However, developers could find themselves in a catch-22 situation as investors will demand evidence of public support, while consumers will want a finished product that is user-friendly before they back it.
The potential for interoperability is there, but compatibility among opposing systems and users could cause problems for users. A selection of different users would create large amounts of data that could limit the usage and adoption among the public.
Conclusion
The potential for users to have ownership over their data is something that will appeal to many. As long as developers can integrate systems smoothly, this should be something that is widely accepted.
