We all leave comprehensive digital footprints whenever we transact on the internet. Internet platforms that process financial transactions include Paypal, credit card processors, direct banking, Google Wallet, Apple Pay, Amazon Pay, Square, Stripe, Venmo, and cryptocurrencies. A user must disclose personal and financial data to use these services. Some of these individual data changes over time (for example, residential addresses) and is therefore not the same across databases. The result is that multiple ‘digital clones’ of an individual exist across different databases. Users enter their data and register on several online platforms and websites, and have to create and remember numerous passwords. Additionally,> as the Equifax hack showed, bad actors need to break into just one major database to gain every user’s information.
Blockchains can ensure that a user’s single digital identity is stored in a secure and incorruptible manner.
In short, current data identity practices are unsustainable.
The governments of Estonia and India >have experimented with centralised digital IDs. An individual’s ID can be used to vote, file taxes, withdraw funds from banks, register property and comply with other government reporting requirements. Since digital IDs are issued by governments, the information collected is stored in a centralised database. Centralised storage of data creates a single point of failure.
Blockchain technology stores data in a decentralised, trusted and immutable manner. Blockchains can ensure that a user’s single digital identity is stored in a secure and incorruptible manner. This single digital identity can always be up-to-date with the latest user information. Early movers in this space include Bitnation, Civic, Cambridge Blockchain LLC, BlockAuth, and Existence ID. Civic, which focuses on fraud reduction and protection from identity theft, had an extremely successful ICO last July.
Cambridge Blockchain LLC is working with financial institutions on an intuitive and user-friendly digital identity solution that is fully compliant with privacy regulations. The Hyperledger Fabric is a permissioned blockchain (which means that its network participants can restrict who can participate in the blockchain’s consensus mechanism). The permissioned blockchain will allow users to assign permissions for who can access their digital identity data.
Without buy-in from consumers, no digital identity blockchain solution will be useful for connected enterprises and institutions. Many of the industries looking to adopt blockchain-based identity management solutions are highly regulated, such as banks, credit card companies, and healthcare providers.