We are witnessing an immense technological revolution and the digital space is changing at a rapid pace, so every industry is going through a process of adaptation. With blockchain technology as one of the biggest advancements in the last decade it is impressive to see how the world changes towards a more secure online environment.
One of the areas where blockchain has its impact is on revolutionizing the traditional identity systems. For that reason here are the effects of blockchain technology on enterprises, individuals and IoT management systems.
Exploring the Dynamics of Identity in the Modern World
In the modern era we live in identity functions in a different way across different sectors. In the corporate sphere, businesses hold on to sensitive personal information about their users and follow a basic data storing routine and this practice occasionally leads to significant risks, especially with the arrival of user privacy regulations such as GDPR. Potential frauds might occur even in basic transactions such as online shopping, paying your bills or using your credit card for buying cryptocurrencies, and if you want to execute a safe purchase of crypto online click here to find the best options about it.
Initially it isn’t arguable that businesses do follow security protocols because of the regulations that are imposed on them, but that doesn’t enhance their services or their knowledge on consumer behavior.
On an individual level, it’s really simple to understand what creates our identity. It’s composed of the most fundamental data that we inherit on the day we are born such as our first and last name, date of birth, place of birth representing the pillar of every society. However, even though they all are basic rights, here is the deal: 1.1 billion people lack proper identification and are cut off from the system, experiencing shortage of social and economical benefits.
The Promise of Blockchain Technology
But how does blockchain technology contribute to identity management solutions? The answer can be found in the basic concept of blockchain technology which is based on decentralized identity management systems. Here are the common challenges that can be overcome thanks to blockchain technology:
- Inaccessibility: By decentralizing the process, blockchain technology can provide more access to basic proof of identity, via mobile technology
- Data Insecurity: Current centralized data storage solutions are much desirable for professional hackers and are prone to attacks. The fundamentals of blockchain are creating a safer decentralized alternative, more focused on protecting personal data and less vulnerable by cyber attacks.
- Fraud: Nowadays it is really easy to create a fake online identity, thanks to the fragmentation in digital identity systems. A unified, blockchain-based identity system could significantly reduce this risk.
Understanding Digital Identity Formation
As previously mentioned birth dates, online purchases, behavioral patterns, biographical details are the components of digital identities which are created by spending your time in online activities everyday. Your online identity is created of these components that consist of very sensitive and personal information which highlights the importance of understanding how identities are formed. Its creation varies, as every individual may register for a self-sovereign identity on a designated platform, where they initiate the creation of a Decentralized Identifier (DID).
In this process a pair of keys are created, one public and one private. The public key can be stored on a blockchain to safeguard against potential compromises or to facilitate key rotation. Moreover, supplementary data tied to a DID, like verifications, can be anchored to the blockchain, though the entirety of the data is kept off-chain to enhance flexibility and ensure privacy compliance.
What Defines a Decentralized Identifier?
A Decentralized Identifier (DID) serves as a semi-anonymous tag for individuals, businesses, or objects, secured through a private key that only the owner can access. This security feature confirms the owner’s exclusive control over their identity. A person may hold multiple DIDs to minimize traceability across various life activities. For example, separate DIDs might be used for gaming and credit reporting services.
DIDs typically link to a collection of credentials – verified by other DIDs – that confirm specific traits of the holder, like their age, location, or education. These verifiable credentials are secured by cryptographic signatures from their issuers, enabling owners to manage these credentials independently rather than depending on a single identity provider like Google or Facebook. Additionally, owners or designated controllers can link unverified data, such as browsing histories or social media activities, to their DIDs based on the intended use and context.
Application and Benefits
Decentralized identity systems can have wide-ranging applications, including self-sovereign identity, data monetization, and data portability. These systems allow individuals to:
- Own and control their personal data.
- Monetize their data by choosing who can access it and under what terms.
- Easily transfer their data across different platforms without redundant verification processes.
Couple Last Words
Blockchain technology is and will remain the force that drives development of every aspect in the digital world. Its implementation is limitless making transactions more safer than ever and less expensive. With decentralization the identity management is more secure and accessible for every individual and legal entity, providing opportunities for those who are being excluded from using more traditional financial systems. But hey, this evolution hasn’t reached its peak, so it will be exciting to see the progress granted by blockchain technology.
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