In this latest blockchain application series, we will explore the real-world use case of identity management. This article series has covered other areas like the insurance business, the government, the Internet of things, the health sector, and financial services.
Identity is the combination of attributes, looks, elements, or features that differentiates one person, object, or substance from another. The notion of 'identity' has existed since dawn, even before commerce activity in communities and states.
How the concept of identity worked in ancient times is similar to what we have today. We still apply these same ideas today though in a much broader scope. The only thing that has changed over the years is the technology that controls how identities are verified.
Modern-day use of the idea of identity has incorporated technology such as bioprint scanning, digital ledgers, and even artificial intelligence, the Internet of things (IoT), cloud computing, and more. Computer programs, in a split second, can now verify digital identities.
Personal identity is slowly becoming a treasured commodity, closely guarded to prevent access from malicious actors. This is also why it can be synonymous with currency. It needs close guarding like our bank accounts.
The value of protecting our identity has created the need for people to find ways to safeguard their private and sensitive information. And this is why we have identity management.
Identity management is the network of resources or framework an organization puts in place to ensure that only the right person, item, or group can access the unique identifier assigned to them. These structures facilitate the recognizing, confirming, and approving individuals or groups who want to access specific applications or systems by linking user rights and limitations with defined persona or data.
Source: Data Recovery Institute
Modern-day identity management has evolved over the years to include access control lists, cloud computing, artificial intelligence, IoT devices, and blockchain technology. The use of more sophisticated methods for managing identity is imperative because of how vital information sharing has become today.
For instance, an organization with a server room would ensure that only authorized persons enter that room. The organization's operations may be highly compromised or even aborted if an intruder can easily access the room.
| S/N | Current Identity management systems | Blockchain Identity management system |
|---|---|---|
| 1 | Creates digital clones of identity whenever a person has to enter the same information on different web pages | One digital identity for all platforms, with no clones left behind, can be stolen or manipulated. |
| 2 | Data privacy is not guaranteed, as a user cannot control who accesses his data after it has been shared on a platform. | It gives the user the option of creating encrypted identities that cannot be shared |
| 3 | The issue of identity theft is prevalent as the user cannot create a self-sovereign identity as authentication is done via a third party. | The user can also create a self-sovereign identity that is managed by the user alone and not subject to theft. |
| 4 | Intermediaries who act as identity providers pose a loophole in the current system, as a hack to their servers would affect the database of users. | No middleman in the system, as the individual stores and manages every piece of information on the blockchain. |
| 5 | The current system creates room for redundancy in its attempt to improve security. | Eliminates redundant compliance protocols through the smart contract feature. |
This concept allows individuals who are not residents or citizens of a particular country to access business opportunities and public services available to citizens of that country. Although the limitation in the type of services that E-residents can access, this framework allows them to set up businesses, open bank accounts, pay taxes, and digitally sign documents.
Source: Cryptolicense.com
The E-residency program - famously pioneered by Estonia - requires capturing much information about the interested individual, including health records, professional information, and others. As such, it needs a robust platform that will provide adequate security and seamless operation and integration.
Even though we can use web applications to run this program, more is needed to adequately address the complete breadth of security parameters in organizing an E-resident program.
Verifying identities is one of the vital functions of identity management. All the processes to assign unique 'identities' will only be useful if proper verification methods exist.
A popular method of identity verification is the Know Your Customer (KYC) or Anti-Money Laundering (AML) policies. These systems help to prevent identity theft. That occurs when someone steals the information of an existing person to perform illegal transactions or other nefarious activities.
According to the U.S. Federal Trade Commission (FTC), there were about 444,602 identity theft cases in the United States in 2018 alone. While in 2016, the U.S. lost over $6 billion to cases of fake identities and synthetic identity fraud.
Blockchain applications in the verification of identity can help solve the problem of identity theft or fake identities by eliminating a crucial weak point in the current verification process - the access of personal information by centralized service providers.
This problem can be easily solved using blockchain technology. Instead of storing personal information in a service provider's portal that is centralized and vulnerable to hacking, users can enter their information directly into the blockchain, which will be decentralized, encrypted, and highly secure.
To understand this application better, let us examine a blockchain verification app like Blockpass. It allows the user to scan their unique Blockpass QR code on a service provider's page after the user has entered his/her initial information on the Blockpass blockchain, which runs on the Ethereum network.
Source: medium
This concept allows individuals to store their identity information on devices owned and controlled by the individual or group without relinquishing control to a third party to validate or manage their data. The self-sovereign identity method is beneficial as we approach a stage of decentralized internet usage due to the influx of more decentralized apps.
People now seek to define how they want to be identified rather than the identification they get from a central authority like the state or an employer.
Individuals who use SSI can decide to monetize that data, i.e., exchange their data for some financial gain instead of leaving it with service providers, who end up selling it to other parties without sharing the proceeds with the customer who initially owns the data. Civic is an example of a blockchain app working towards realizing a self-sovereign identity.
Source: Goodaudience.com
Data control is a critical aspect of identity management, as combining different data sets constitutes a unique identifier that separates one item, person, or item from another. When personal identity theft occurs, it is often because the perpetrator had access to some or all of the personal data stored somewhere.
In recent years, big companies have been victims of a different kind of data breach on their centralized server, which has consequently exposed customers' information to potentially fraudulent use. One of the most notorious private data violations in recent years is the Cambridge Analytica scandal.
The nature of blockchain applications, fundamentally decentralization, provides a solution to the issue of centralized storage, which paved the way for the kind of breaches we saw in the last decade. PeerMountain is an example of a blockchain app that provides decentralized data storage that users can use across chains.
source: Slideshare
Different organizations and governments are exploring the possibilities that blockchain integration offers to their security architecture. As more transactions migrate from paper operations to online channels, we need to secure our data from unauthorized use, as one compromised data can lead to substantial financial losses.
It is coming to the stage where the adoption of blockchain technology will be not only for tech-savvy individuals but for everybody who wants to protect their treasure.
