The world has swiftly embraced digitalization, empowering individuals to accomplish over 90% of their daily tasks through mobile apps or web interfaces. Activities like bill payments, flight bookings, health consultations, and even exploring one's DNA lineage have become more accessible, thanks to digital platforms.
Despite this progress, the average person manages about 35 accounts with traditional string-based passwords serving as the primary means to protect personal information. In December 2023, biotech company 23andMe experienced a security breach affecting nearly 7 million users, highlighting the vulnerability of string-based passwords, with a Google report revealing that 56% of individuals reuse passwords across various platforms.
To address these challenges, the industry is transitioning towards a decentralized model, envisioning a future where users transact using portable verifiable digital credentials (VCs), eliminating the need for traditional passwords. This shift aims to enhance security, reduce user fatigue from multi-factor authentication (MFA), and simplify the authentication and authorization process.
Governments are exploring the unification of citizens' digital credentials, enabling access to public services with government-issued verified credentials. Similarly, educational institutions are considering VCs to streamline onboarding processes and provide secure access to digital learning content.
This modern approach ensures users have control over their personal details stored in a digital wallet on various devices, secured by biometric gestures such as fingerprint, voice, or face recognition. Users can release or retrieve their VCs, and authentication becomes decentralized, free from traditional passwords.
The adoption of decentralized identity and verifiable credentials extends across sectors, including HR employee management, education, healthcare, government, and fintech. Recognized bodies like W3C are advocating standards for decentralized identity, providing an opportunity for businesses and institutions to create interoperable designs aligned with this new model.
In this architecture, trusted identity providers, potentially serving as decentralized issuers (DID), play a crucial role in certifying digital credentials. While witness ledgers, employing technology akin to blockchain networks, ensure traceability and trust in VC transactions, new vendors and institutions may emerge to compete in this evolving space.
Embracing this approach enhances security and efficiency for organizations, mitigating risks associated with email phishing, brute force attacks, and password breaches. It also streamlines operations, reducing operational costs tied to managing outdated password information and account recovery. This modernized vision of a portable account and passwordless future is essential for businesses to adopt promptly, safeguarding against sophisticated password breach incidents in 2024.