Blockchain

How Blockchain is disrupting identity management

28 March 2019

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How Blockchain and Digital Identity can cooperate to create Self Sovereign Identity

Former finance analyst, now Blockchain consultant, blogger and educator.
My mission is to show how Blockchain is shaping the way our children will live.

The identity concept

Identity is a concept that the majority of the citizens in developed countries take for granted. Every child can grasp its meaning, but the majority of the adults cannot debate it using the proper arguments.

Identity is a set of attributes or skills that univocally define individuals. In daily transactions we are asked for proofs. Those proofs certify that we are who we claim to be and typically this proof used to be physical like a passport or an ID.

Those are proofs of identity thought to work in a system of face-to-face transactions and stored in physical databases. In this system, centralized authorities like governments act as third party identity providers. They mainly collect and store information that identify people and authenticate identities.

In the digital space, the need for a digital identity becomes stronger and stronger as the technology progresses. Here, governments are no longer responsible for the authentication in the majority of the cases, but private companies such as Facebook or Google act as third party identity providers for many digital services.

Image result for facebook google single sign on — Single Sign On, *Magentrix*

This means also that physical proofs are no longer compatible with digital architectures and whenever they cannot be avoided, there are stretches that create costs and issues.

When identity becomes digital

In Fintech for example, the product delivered is digital but onboarding new users still needs physical documents. The verification of documents against governmental database represents a waste of time and resources, exposing companies to risk of mistakes and security breaches. With increasing use of digital channels, transaction complexity and connectivity, this gap could only enlarge. And costs and inefficiencies with it.

“The real advantage will be transferring data in a secure manner”

A possible solution to this issue might come from Blockchain. Blockchain combined with digital identity could give users Self Sovereign Identity (SSI), the autonomous control of identity data. First of all Blockchain offers the possibility to build a decentralized, fault tolerant and scalable data storage system. Differently from central servers and clouds, these features make it independent from single entities and invulnerable to traditional hacks and data breaches. It works as a shared database. A database very hard to tamper and encrypted so only accessible by the owner of the data. Eventually, the real advantage will be that transferring data will be safer. Hashing, the encryption technique at the base of Blockchain, provides strong protection and increases the reliability of digital transactions, lowering the risk of decryption of sensitive information.

Architecture of a verified Blockchain-Secured Self Sovereign Identity

Hence, it means that individuals can choose the information they want to disclose. As well, individuals could transport identity data across different storage solutions and use them for multiple applications. This would represent an advantage for individuals and companies connected to different services that need to communicate sensitive data to each other. SSI idea represents a paradigm shift. Instead of disclosing who we are, we could disclose only the necessary information. Just this specific information that allows us to use specific services, without providing further sensitive data about ourselves would be required.

Finally, SSI and blockchain have intertwined destinies: Blockchain technology can improve the way identity is stored and managed on digital systems. On the other side, an effective identity management on blockchain would enable many new applications and services.