Will digital identity help ease the usage of blockchain?

Ever since the internet was invented, it’s become a growing presence in our daily lives. In the latest iteration of the internet, the metaverse, our physical and digital realities may be united in an even greater way. Even now, we regularly make online transactions and share sensitive data in ways that can have significant consequences for our lives.

As transactions and other interactions that might have previously required in-person engagement and official government-issued ID cards move to online platforms, the need for a digital identity that carries the same level of assurance as a physical form of identification has grown. But with identity theft running rampant around the world, how can we both create and secure a trustworthy unique form of digital identity that can be linked to real-world applications like banking, taxes, income, and insurance?

What is a Digital Identity?

To create a secure digital identity, it must be something unique and difficult, if not impossible, to hack. We rely on government-issued documents like passports, driver’s licenses, or national identification cards in our physical reality. These ID cards are provided by entities in which we have invested our trust after providing proof in the form of something like a birth certificate that we are who we say we are.

Moreover, the agencies which create our physical ID cards take steps to ensure that it is challenging to forge so that when you present your driver’s license at, let’s say, a bank, they know what to look for to make sure it’s genuine. This same kind of care would be required in the creation of a digital identity.

Like the Concordium Blockchain Project, there are existing models that have created a process for digital identities that is similar to what you do to get your physical ID card. Just like in the physical world, to get your digital identity, you must first confirm your identification. This involves going to a digital identity trusted provider in the real world. This would likely be some kind of government agency like the Department of Motor Vehicles (DMV), the police, or some other official entity.

But unlike with your physical identity card, this registration authority would instead act on behalf of the entrusted provider as a Certificate Authority, or CA. What this CA is actually certifying is that your digital identity that they will create is linked to your real-world identity. The CA is also linking the public key to the digital entity’s private key.

So, your digital identity is your private key, and if you’re using your digital identity to make a transaction, the digital identity on the other side of that transaction needs to know that your digital identity is current and still valid. To do that, they would consult the public key, and the CA would be responsible for maintaining the status of the digital identities it has issued in the public key.

It’s analogous to your driver’s license. The DMV has to maintain the status of your license, and you have to renew it periodically. If you get too many tickets against your license, it may be revoked. A digital identity would work similarly. Just like the DMV, the CA would be initially responsible for verifying your real-world identity and issuing your unique digital identifier.

They would then also be responsible for maintaining the status of your digital identity. If it is revoked for some reason, or if you fail to renew it as might be required, then the CA would update the public key, and anyone verifying your digital identity for the purpose of a transaction would be alerted as to its status. You would also be able to check the public key for the status of any digital identities you’re engaging within a transaction.

What’s more, the CA would keep your actual personal data separate from your unique digital identifier. That identifier would be similar to a non-fungible token (NFT) in that it would be like a unique signature that is tied to your identity, but it wouldn’t contain your personal data, which remains off-chain. That means nobody can steal your digital identity, and if the transactions you make with your digital identity are stored using blockchain technology, they are traceable and also virtually tamper-proof.

What is Blockchain?

Another aspect of maintaining digital identities is recording and storing transactions of various kinds made between digital identities. Blockchain is a kind of database for doing just that. It gets its name from the fact that it stores data in blocks that are then chained together.

Because the blocks are built upon one another in this way, if even a single character is changed in a block, the resulting impact on all of the other blocks will make that tampering very clear. Moreover, the blockchain database is not stored on a centralized platform; rather, it is stored across a range of servers.

That means that if someone tampers with one server of stored data, it will be different from all the other locations where the same data are stored. That would alert everyone on the chain to a fraud attempt, and because the data are stored on multiple platforms, it would be ineffective since it requires that everyone verify the data, and they would simply reject the attempted tampering.

This is known as a distributed ledger technology (DLT), and because it is so effective at preventing tampering, it is what has enabled the success of specific cryptocurrencies like Bitcoin.

How Do Digital Identities and Blockchain Work Together?

Together, a CA for digital identities and registration combined with blockchain DLT form the foundation for the Decentralized Public Key Infrastructure (DPKI). Blockchain technology can be used to store the public keys as well as the certificates and for the maintenance of their status.

The decentralized nature of blockchain technology makes it very difficult for hackers to penetrate, and it can even offer a global solution for tracking digital identities. It could effectively streamline the digital identity process since utilizing blockchain technology could build upon existing public key infrastructure and certificate authorities that don’t require drastic changes to their underlying principles of operation; it just facilitates digitalization and storage of the data.

In this way, the move to digital identity will also facilitate the broader implementation of blockchain DLT. While challenges remain, such as the size of the bandwidth required to sync all of the nodes or servers storing blockchain data, solutions are already being rolled out and are beginning to take hold.

To Sum It All Up

The metaverse is already syncing our virtual and physical realities, and the need for digital identity is only growing. Data breaches of centralized platforms like credit cards and banks have already shown us the peril of failing to find a better way to secure our identity and personal data.

The use of a unique digital identifier, a kind of personal non-fungible token, which can’t be hacked seems to be an even more viable solution than simply avoiding the internet. The reality is that there is a growing need to accomplish certain things online, which has proven dangerous given the epidemic of identity theft that plagues our online browsing experience.

The combination of utilizing CAs as trusted digital identity providers in combination with blockchain technology for storing and maintaining digital identity information may make our identities even more secure than they have ever been.

Digital artist and 3d generalist