Identity is crucial in our daily digital life, from accessing websites and applications to establishing our credentials online. Traditional identity systems are no longer trusted as a result of numerous data breaches and unethical corporate usage of consumer data for advertising, market research, and algorithms.
Enter decentralised identity, a novel concept aimed at improving data privacy and user empowerment.
In this article, we will delve into the world of decentralised identity, describing its principles, important components, and how decentralised identity systems backed by blockchain technology are being used to transform the way we use the Internet.
What is decentralised identity?
Decentralised identification, also known as self-sovereign identity, refers to digital identities that are owned and controlled by individuals rather than centralised third parties.
Decentralised identity technology seeks to ensure that each individual has complete control and privacy over their identification information. At the same time, the technology aims to create a universal and trustworthy system in which digital IDs may be effortlessly utilised for personal verification both online and in person.
Blockchain technology serves as the foundation for decentralised identity solutions. This is because public blockchains offer nearly immutable databases that may be used to store and retrieve data in a decentralised fashion. Blockchains, such as Bitcoin and Ethereum, use distributed databases with a broad and global network of participants to verify and process transactions. The decentralised nature of these public blockchains makes it extremely difficult for a centralised party to obtain control, modify, or alter the system.
Modus operandi
A decentralised identification system relies largely on its underlying network, known as a trust system, which can be either a blockchain protocol or a non-blockchain protocol. In the case of blockchain, the various independent nodes that maintain and update the blockchain ledger in a decentralised manner contribute to a trustless system.
Decentralised identification systems can also be implemented in non-blockchain infrastructure. For example, Nostr is a non-blockchain, open protocol that enables developers to build decentralised social media networks.
A decentralised identity system consists of two basic components: decentralised identifiers and verified credentials.
Decentralised identifiers: Decentralised identifiers can be compared to the existing use of email addresses and social media handles when logging into a website. However, these Web 2.0 identifiers are not intended to protect user information or privacy.
In contrast, each decentralised identification is intended to be globally unique and verifiable on any platform. These decentralised IDs offer users (near-)immutability, censorship resistance, and increased security. Additionally, decentralised IDs will allow users to erase data related to their ID.
Verifiable credentials: Authentication of the decentralised ID is critical. Here's where verifiable credentials come in. Consider it your driver's licence or passport, which you can use to verify your identity.
Verifiable credentials enable users to prove their identities without disclosing too much personal information.
A decentralised identity system allows users to own and control their verifiable credentials. One of the most promising verified credential developments in blockchain is known as zero-knowledge proof (ZK proof).
Zero Knowledge Proofs: ZK proofs are arguably the most significant blockchain technology that provides decentralised digital identification solutions - at the time of publication.
What is ZK proof? It is a cryptographic mechanism for proving a statement's validity without disclosing any information about it. ZK-proof decentralised identities enable personal verification and attestation without disclosing any personal information to third parties.
For example, if you wish to open an account on a social media platform. Simply provide your ZK-proof decentralised ID to authenticate your identity. You will not be asked to provide personal information such as your email address, age, name, location, or date of birth, which is currently requested when "signing up" or "creating an account" on a website.
All you need to do is complete a series of actions that require the underlying identity information but do not include any of the information itself. To determine whether the information is valid, the verifier can apply those operations to a certain cryptographic function.
Is decentralised identity the future?
Decentralised identification could be the future, and it is likely to be in the best interests of internet users. Unfortunately, personal data is so valuable to businesses that it will be a difficult battle for technology.
If decentralised identities are successful, they will not only allow us to avoid the data privacy issues that plague the web2 environment, but will also set a higher bar for data protection, privacy, and user empowerment. Decentralised identification solutions, such as ZK-proof technology, have the potential to have a worldwide influence and disrupt industries spanning finance to retail.