Blockchain’s decentralized nature ensures that your digital identity is secure, and it has the potential to exponentially reduce the risk of identity theft.
Think about your personal digital identity for a second. What is it, really? If you’re opening a bank account, applying for a mortgage or loan, signing up for a new mobile phone agreement, or crossing a border, proof of your identity is imperative – and not always easy.
Today, in most cases, you need paper – sometimes a lot of it. Phone bills, gas bills, a national ID card or passport, or some combination of paper and plastic will get you what you need…maybe. But, what does all this paper say about you? In most cases it says more than it needs to, and it’s cumbersome and dangerous to tote around.
Add to that the fact that millions of identities are stolen every day via phishing scams, hacking, and corporate data breaches. Often, your personal data is stolen from places you didn’t even know had it in the first place. But there is a way forward.
Risk Reduction & Improved Security
Blockchain data protection has the potential to exponentially reduce the risk of identity theft, and bring people who are currently priced out of participating in a more-connected and networked society out of the shadows.
BanQu founder and CEO Ashish Gadnis puts it perfectly:
“The real value of blockchain is its unmatched ability to create and secure an economic identity for the world’s billions living in extreme poverty today. The fully traceable, transparent transactions empower the unbanked to formally participate in the global economy while owning and monetising their own information.”
With blockchain data security, your digital identity – accurate, verified, and comprehensive – is at your fingertips and no one else’s. Verified components of your identity are hashed and stored in a decentralized ledger that is protected with a private key to maximize safety and integrity. The ability to prove your identity – that you are the exact person you say you are – may not seem like a revelation, but it is.
Here’s a nice diagram of the current landscape for personal digital identity from Altoros that captures the many problems succinctly:
Isolated, complex, vulnerable, time-consuming, and frustrating – these words sum it up perfectly.
But there is a way forward, and blockchain is at the heart of it.
Decentralized, Verified, and Immutable
Blockchain’s decentralized nature ensures that your digital identity is verified, distributed, and secure. The implications for digital privacy – for once, in favor of the end user – are significant. Imagine having a signature that cannot be forged – not even by the very parties trusted to verify your data.
A great example is in your digital password portfolio. The average business user has nearly 200 unique credentials for different systems. Add your personal accounts to this, and the number likely approaches double that or more. Online banking, shopping, social media, e-payments – all of these services, things you use several times a day, have sometimes very-detailed personal information – credit card numbers, home address, and more.
Terry Lin, Product Lead at SelfKey, a company working on blockchain-based identity solutions for consumers and businesses, provides more detail in this interview:
You probably have different accounts and usernames at Facebook, Google, LinkedIn, Reddit, Quora, AirBnB, and more. But you don’t truly own your data because it is stored on their servers, and they can sell your information to advertisers. This is how you get targeted with specific campaigns during your usage of their products. However every month or so, we hear of large data breaches at big companies that have poor safeguards to protect their information and servers.
Blockchain-based digital identity systems promise to change this landscape, and may be the key to ending the need for individual passwords altogether – and it will likely be more secure than the current patchwork system of individual credentials for every online system you use.
The system is actually relatively simple. The end user puts hashed bits of personal data into a distributed ledger with a verified network of certifying participants. These bits of hashed data become immutable as they are verified on the ledger, and, using a private key, you can prove your identity to any party – a bank, a hospital, anyone – in seconds.
Here’s an easy-to-understand visual from Lynked.World, an organization making inroads in the blockchain space for digital identity:
Interactions with government and immigration officials could be made infinitely more efficient simply by being able to verify identity beyond the shadow of a doubt. As personal data becomes more vast and dispersed than ever before, Blockchain data security offers a solution. It offers control over your digital identity that will give you a new level of confidence in your analog life.
PwC’s Blockchain and Cryptocurrency lead, Grainne McNamara gets to the strengths of such a model in this Fast Company piece. She says,
“Organizations no longer need to collect and store every identity data attribute and thus, no single party has power over your identity. You get to decide what identity data attributes you share with each organization.”
Cities and countries all over the world are already using blockchain technology to help homeless populations, people without bank accounts (the so-called “unbanked”), refugees, and even in the election process.
Toward a More Inclusive Society
In Austin, Texas, the city piloted the “MyPass Austin” program to provide members of the homeless population with SMS-enabled phones and access to a blockchain-based identification system that they could use to verify their identity. Without proof of ID, they have no access to emergency services, can’t open bank accounts, and more. There are plans to expand the pilot to other major cities in the United States, and it may only expand from there.
In fact, in the 2018 midterm elections in the United States, the state of West Virginia trialed a blockchain-based mobile app to allow West Virginians overseas to cast their ballots. The early analysis pointed to the pilot program’s being a success, and it may provide a blueprint for future elections as well.
Also on the civic front, Sierra Leone, where the country’s 2018 elections saw 70% of the total votes cast recorded on blockchain networks.
It may not be a revolution…yet…but the pieces are in place for blockchain to play a significant role in securing elections around the world.
The United Nations and World Food Program are using a blockchain-based program called “Building Blocks” to make their cash transfer system more secure – a system that moves nearly one billion U.S. dollars around the world annually to people in desperate need of money. In the Azraq Refugee Camp in Jordan, some 10,500 people received disbursements totalling one million U.S. dollars via 100,000 transactions executed on a blockchain network.