Decentralized Identity

Table of Contents

This module should be leveraged by the blockchain network’s designers, owners, and operators to focus digital identity as one of the key components of the blockchain capability. It contains general considerations around the design of a digital identity system, including who the actors are, technology decisions, business models, securing identity data, process and governance. It also includes a specific focus area intended to inform the design of a decentralised identity system.

  • But as we traverse this new territory, we will be forced to consider the implications of permanence.
  • What is considered private and confidential to one actor is not always for another.
  • How will this selection impact the ability of the blockchain to scale and maintain trust?
  • Common data standards and technical standards are critically important for decentralised identity to be adopted in supply chain.

With decentralized identities that track contributions across the internet, we will be better able to gauge how early someone was to a topic or trend and how much value someone is contributing to a subject matter. If the playing field for building on-chain identity isn’t leveled, this new source of reputation will accrue primarily to the already privileged, exacerbating existing social and socioeconomic divides. Work with legal and compliance teams to map out any regulations that an identity system must comply with across jurisdictions – including privacy regulations. For example, different actors will have different privacy and compliance considerations. Fill in the table to help outline those actors and define how their considerations and interactions differ from one another.

Then, they transfer that to a crypto wallet and connect it to an AMM to have access to a wider selection of cryptocurrencies. If decentralized identity is the future of the web, then the contributions that you accumulate in your crypto wallet — the articles you write, the content you curate, or the things you buy — will become very important. They’ll become the carrier signals of who you are online and the basis for your reputation. Define standards on digital identity data and processes across the ecosystem from the very beginning. This tool is not intended to be fully comprehensive but rather to provide a starting point for the types of processes and governance questions to understand and solve. Working through this checklist will provide a strong foundation for such considerations in developing a digital identity system.

Also, the module Legal and Regulatory Compliance explains how laws and regulations may affect decisions – for instance, how personally identifiable information is regulated. The module Financial Reporting and Controls considers the auditing process of legal entity-related identity date and its use. A blockchain solution is only as valuable as the data the stakeholders choose to share on it – and how much other stakeholders can be trusted. To reach its fullest potential, a blockchain’s architecture should ensure confidentiality and privacy protection of identity data – or risk losing trust in the other actors in the digital world and, therefore, any information they provide or transactions they perform. Figure 5.2 – Propagation of distrust in an interconnected worldA supply chain blockchain solution is often the work of multiple contributing groups, so digital identity will need to be designed collaboratively.

A digital identity is an online presence that represents and acts on behalf of an external actor in an ecosystem. An identity could belong to a legal entity, a financial intermediary, or a physical object, for example. Ideally, a digital identity is verified by a trust anchor, or something confirming the legitimacy of an actor, so that those interacting with that actor’s digital identity have confidence the actor is who and what it claims to be. Online interactions in supply-chain use cases are growing in volume and complexity. Such growth introduces more potential for value creation, and contrarily, more potential for inefficiencies and risk. When blockchain technology is leveraged for a supply-chain use case, a trusted digital identity can facilitate complex online interactions, mitigate risk, and enable the full potential of the system.

Legal Entities

Decentralised identity, operated by a consortium model typically built on top of distributed ledger, has specific considerations to tease out. Consider up front which blockchain should be used, and what model will be supported (e.g. public or private, permissioned, etc.), and how identity data should be stored – for instance, if sidechains or other archetypes are necessary to support privacy considerations. Given the evolving nature of blockchain as a relatively new archetype, consider if or how a hybrid model could be supported and how current architectures and technologies used for digital identity might be integrated to support a smoother and quicker transition.

Thus, we need some way to take parts of their decentralized identity and showcase them in different digital spaces to distinct audiences. Imagine a design in which the wallet’s overall content was kept private, but accessing a specific facet of a person’s reputation required a specific access key. Web3 is based on the premise that each internet user will have a unique internet identifier, like an email address, that can be natively linked to any piece of software Blockchain Identity Management and stored on a blockchain. As part of someone’s “decentralized identity,” a portion of a person’s online activity would then be “on chain,” meaning that it would be public and easily searchable via their individual crypto wallet. The initial building and implementation of a blockchain solution should be done with the future state in mind. While a digital identity system is enabled to support the blockchain solution, it must be sustainable in and of itself.

While some standards, such as the federation standards SAML2.0 and OIDC/ OAuth2.0, provide a means for a basic level of interoperability, each organisation must still establish relationships with each other organisation (in a one-to-one model). There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. Until now, blockchains have been single-threaded computers, guaranteeing no two transactions conflict if executed in parallel. Solana unlocks concurrent GPU-parallelization for the first time, using Proof of History , a clock before consensus, delivering high speed, low latency, and inexpensive transactions, all at layer 1 without sharding. Imagine a version of Behance in which a designer’s portfolio is populated based on automatically tracked and verified projects, thus enabling direct, blockchain-mediated recruitment.

The point of KYC is to confirm that a customer is who they claim to be and to prevent illegal activities, such as money laundering, funding terrorism, and tax evasion. If a crypto exchange doesn’t perform KYC, then it could be liable for those kinds of illegal activities. “Identity verification is a key component of the web2 stack, and I am thrilled to see companies like Civic building to support a decentralized web3 world.” said Anatoly Yakovenko, President of the Solana Foundation. Moreover, on-chain systems are easily portable across borders and applications, unlike current credit scoring systems. Here especially, however, there needs to be strong consideration of how users might be able to add context and curate their permanent public histories to avoid undue prejudice. It would be important to circumvent the digital equivalent of getting evicted, hindering your ability to obtain future housing.

A Novel Framework For Reputation

The collaboration will allow for improved privacy, regulatory compliance and ease-of-use as digital identity takes center stage as the cornerstone of the new wave of consumer-first blockchain infrastructure. At the moment, blockchain technologies are often opaque to the average consumer, largely configured for financial transactions. To make decentralized identity useful and widespread, it is important to introduce on-ramps for people to record their experiences and affinities on the blockchain, such as their educational accomplishments, professional achievements, or fanships. This means that an NFT of a diploma in your crypto wallet, for instance, would turn into a permanent academic certification. Likewise, each piece of content you post online would be permanently linked to you . Moreover, with public histories it would be possible to prove that you were early to a trend or active in a project before it took off — like, say, being into Taylor Swift before she was popular or reading this article while web3 is still in its genesis.

blockchain identity verification

To ensure the most secure and best overall experience on our website, we recommend the latest versions of Chrome, Edge, Firefox, or Safari. Jad Esber is cofounder of the web3 company Koodos and is an affiliate at the Berkman Klein Center for Internet & Society at Harvard. This is the second installment of a two-part series on reputation systems in web3. If not already required, establish procedures for regular audits and compliance checks. Define procedures and liability terms with levels of assurance that are universally accepted. Usually owned and managed by a single organisation for users to access services provided by that organisation.

The Infrastructure Decentralized Identity Requires

All organisations considering blockchain in their supply-chain environment must consider the unintended consequences of sharing data. For example, business intelligence can derive meaning from patterns in available data and use analytics to advance their future transactions. Most organisations today do not have information security policies that define what data should be shared and how to share these in a blockchain environment. In most cases, organisations’ policies are unlikely to allow for data to be shared with parties that are not “trusted” or have no established relationships with.

Custodianship is an official role whereby an individual may be granted specific rights over a digital identity. For instance, a person may have custody of a car’s digital twin once they have bought, and own, the physical car. This topic can be complex in and of itself, but it is important to consider how people may be custodians of identity information on behalf of legal entities, things, or even other people. Now, imagine an “Internet of things” tracking device is attached to the bags during production.

This can take anywhere from minutes to several business days depending on the exchange and how busy it is. You may be able to create an exchange account without going through the KYC process, but your account will have restrictions until you verify your identity. The most likely restriction is the exchange simply not letting you deposit money or buy crypto. Furthermore, if every piece of content on the internet were truly composable or remixable, it could be possible to gauge which content inspires further creation, or is the most meme-able.

The distributed and shared nature of blockchain means there are several different technical considerations for digital identity in supply chain. In setting technical requirements, it is also crucial to take into account the great variety of actors, needs, and use cases that may be covered in a blockchain solution. With that in mind, digital identity and access control must be scalable to support a growing and varied ecosystem. They may also be a source of trust for other actors – such as those actors’ employees or autonomous software agents they run. Ultimately, the legal entity will decide what trust to place on a digital identity – legitimising other actors in the ecosystem. A buyer might never meet a seller in person; instead the buyer must trust that the seller is real, and the goods are authentic.

The blockchain and IoT tracking device unites and informs all supply-chain participants, giving each visibility into a larger portion of the supply chain. The supply chain becomes a web of interconnected businesses, rather than a linked chain. Identity is crucial to this example, as trust in each of the actors will affect the trust in the handbag and its authenticity. One needs to know that each actor, from devices, to legal entities, to employees and things, is trustworthy and really who they claim to be. When a user signs up with Civic Wallet, they are authenticated as a real person by securely verifying their identifiable information and incorporating groundbreaking blockchain-based technology. Once they have a Civic Wallet, users are able to selectively share parts of their verified identity with third parties, for example, purchasing age-restricted products anonymously.

Integrity in a digital identity depends on the security of the technology that supports it. If the digital identity system is not secure, there is less assurance that the actors are really who they claim to be. On an organisational level, it is critical that acceptance of the digital identity is established across the ecosystem well before any standards discussions take place. Acceptance of a digital identity is a matter of governance before it is a technical discussion. Many organisations are not yet poised to accept a decentralised identity model for production use cases, though that is changing. KYC, which is short for “know your customer” as well as “know your client,” is the process of verifying a customer’s identity.

Similarly, people might make active attestations of other people’s skills, character traits, or accomplishments by sending them tokens; these testaments can be verified through peer review or an assessment of activities on-chain. Data held in the nodes of directed graphs can be linked to a single source of truth. This means that if a piece of identity data, for example the expiration date on a license, is updated in the “off-graph” storage, it is updated in each instance throughout the graph. This is unlike blockchain, where a transaction published to the chain is permanent without the option of updates.

Standards, Integration And Interoperability

Before crypto can serve as a mainstream repository for identity and reputation, it will need to provide the sorts of security protections we are used to from other services. From there, we can start to explore the many use cases enabled by factoring on-chain reputation into offline activities based on the openly queryable nature of decentralized identities. The below table may be useful in starting to define the actors involved in an ecosystem. The columns depict different considerations and interactions within the ecosystem.

blockchain identity verification

Directed graph solutions for decentralized identity are still new on the market, and more research and the test of time will reveal how this technology plays out. What happens to a digital identity after an actor has been successfully onboarded? If, for instance, an ASA’s software package has been updated, should that be recorded? How much will it cost – versus the benefit received – to update and verify identity data? Is it sufficient to rely on annual audits, or should more regular verifications take place?

Civic Announces Integration With Solana Blockchain

The most common ways to buy crypto without verifying your identity are decentralized exchanges and Bitcoin ATMs. Additionally, there’s a whole class of applications based around the use of reputation to incentivize new forms of creation or contribution. Currently, it is difficult to decipher who is a subject-matter expert and to recognize and reward them.

You Are Unable To Access Ccn Com

To hold each party accountable in a transaction, there needs to be a method to identify who/what was responsible for any specific part of the transaction. A trusted identity enables these transactions in the digital world and can even facilitate binding legal agreements digitally – a piece of enabling supply chains’ entrance into the digital world. Further, this trusted identity becomes more critical in a digital environment with no face-to-face interaction. As leaders in the decentralized identity space, Civic is focused on a few real-world applications of its blockchain-powered technology.

What Can I Do To Prevent This In The Future?

Thus, the importance of trust and trust in data underpins companies’ ability to conduct trade, from authenticity of products to financing letters of credit to facilitating exports. When you set up an account with a crypto exchange, you’ll typically be asked to go through the know-your-customer process. This is a standard identity verification that major exchanges require for anyone who wants to trade crypto.

Software will increasingly be used to make decisions or take actions autonomously on behalf of an actor. An ASA will need the appropriate proof to show its association with that actor, and the authority under which it can transact. Especially as an ASA may make decisions, it is important to clearly outline accountability of a given transaction and ensure the ASA itself remains secure. Sign up today for Stock Advisor and get access to our exclusive report where you can get the full scoop on this company and its upside as a long-term investment.

As adoption of a decentralised model for identity is emerging, technology and standards are evolving. While ideal case is a single solution to work for all global supply chains, the reality is that most supply chains are incredibly different from one another, so different solutions may emerge on a case by case basis. A milk supply chain may operate entirely within one country versus a standard coffee supply chain will operate in a few – so the regulations that each may adhere to with regards to identity information will be different. And, of course, the types of data and information that both may need to handle will be extremely different. Where a single solution could add value is within a narrow and very homogenous industry, for example, the airline industry.

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