Decentralized identity (DID) is a new form of blockchain-based verification that allows users to control how their personal data are submitted, accessed, and distributed.
Certified issuers such as government agencies, companies, and universities can send credentials to your web3 wallet. And you’ll have the option to show only the information you want to present once you need to prove your identity.
Through this method, there’s no need to disclose and expose your entire personal information just to prove your authenticity. Imagine being able to prove your legal age without revealing your actual birthday 一 that’s the level of privacy and control that DIDs can provide.
This new system has two major parts: a private and a public key. The private key is securely stored in your wallet, while verifiers can archive the public key on the blockchain.
Institutions can use the public key to confirm your identity and credentials, and since you possess the private key, you are the only one who can prove your verifiability. With this, no central entities or third parties would be involved in authenticating identities, as everything happens peer-to-peer (P2P).
But while self-sovereign identities are a promising solution, mass adoption remains one of its biggest hurdles. Moreover, there’s the question of who should adopt this method first: The entities or the masses?
On one hand, government agencies, organizations, and related bodies need to see widespread adoption among citizens in order to support DIDs. On the other hand, people may be hesitant to use DIDs until these entities show support for this novel method.
This is a challenge that the blockchain industry, institutions, and government agencies have yet to fully address.
Major Aspects of Decentralized Identity
Public Key Infrastructure (PKI)
Public Key Infrastructure (PKI) is an encryption technology that creates private and public keys for identity or credentials verification. As mentioned before, the public key is the ‘key’ for institutions to immediately verify your claims in the most secure and private way possible. Furthermore, it uses cryptographic signatures to prevent anyone from creating counterfeit identities.
PKI also runs beneath non-fungible tokens (NFTs), which makes it possible to authenticate collectors’ ownership of their assets.
Decentralized data stores, more commonly known as blockchain or distributed ledgers, will be your personal information’s only storage. It automatically eliminates centralized storage and third parties when it comes to managing your sensitive data.
This promising decentralized structure is a far cry compared to the current data management, which still relies on centrally-controlled storage prone to data compromise.
What are the Potential Applications of DIDs?
DIDs can potentially replace passwords and evolve as your universal logins for various platforms.
Instead of using separate passwords or enhancing their strength from time to time, platforms may only soon require trustless authentication from your DID account.
This could eliminate the friction experienced by users whenever they have to enter long and case-sensitive passwords every time they’re using websites or online services.
In a traditional Know-Your-Customer (KYC) process, you have no choice but to submit sensitive documentation, including your passport and driver’s license.
While this procedure aims to authenticate your validity, it diminishes your privacy through the exposure of your information.
In addition, the entity that required these documents would have to spend time and manpower just to authenticate your submitted records.
But through DIDs, entities may simply confirm your information through cryptographically verifiable data (also called Verifiable Credentials) making the entire process more private for you and cost-efficient for verifiers.
Mitigate Sybil Attacks
A Sybil attack is a cyber threat involving creating multiple accounts to influence, mislead or take over a network.
This type of attack is a serious risk, especially when used against a decentralized autonomous organization (DAO). By unleashing participants backed by fake accounts, a single person or a handful of people can influence the governance community’s token allocations.
To prevent or at least mitigate this threat, DAOs can require DID authentication from any web3 natives who intend to be voting members.
Fake accounts have always been one of the main problems of online voting, which also undermines the credibility of their published results. Online-based voting can potentially eradicate this challenge by requiring users to present their DIDs before casting votes.
As a result, DIDs can help facilitate more accurate voting results and help revamp the reputation of online voting platforms.
With blockchain-authenticated accounts as a precautionary measure, it is theoretically impossible for fake accounts or even bots to infiltrate any virtually-held voting.
Projects Utilizing DIDs
While DIDs remains largely a concept today, an increasing number of web3 projects are now exploring this new verification process to test and develop its immense potential. Here are some of the biggest DID initiatives you need to know.
Ethereum Name Service
Ethereum Name Service (ENS) is a trustless naming service that allows you to only use a single, personalized, and secure address for web3 wallets, websites, and other services.
It eliminates the cumbersome task of repeatedly copy-pasting multiple, long, and confusing addresses on different platforms, saving you time accessing various web portals.
You can also create a censorship-proof website, upload it to IFPS, a blockchain-based file network, and use your ENS address to access it. Web2 platform owners may also import their website to the ENS system as the service supports domain names including ‘.com,’ ‘.org,’ ‘.io,’ and more.
Proof of Humanity
Proof of Humanity is a social identity system built for the Ethereum network and aims to create a Sybil-proof data bank of human identities. And to verify its members’ identities, it uses a combination of dispute resolution and the Turing test, a method to distinguish humans from computers.
Moreover, members can help verify account applicants by vouching for those they trust or challenging the authenticity of suspcisous candidates. The platform also incentivizes verified participants with its native currency, the universal basic income (UBI) token, offering them economic rewards for providing genuine identities.
Decentralized Society (DeSoc)
Decentralized Society is a concept created by Ethereum co-founder Vitalik Buterin, along with Puja Ohlhaver and E. Glen Weyl, to develop secure, immutable, and verifiable identities for everyone.
At the center of this vision is the Soulbound Token (SBT), which will serve as web3 citizens’ IDs or certificates to prove their identities, social network, past records, and other critical transactions. These IDs will be non-transferable to prevent holders from selling them along with their credentials.
DeSoc and SBTs might soon open opportunities for web3 citizens to access leases, loans, and other financial instruments as they can finally present a trusted and tamper-proof identity of themselves.
Note that DIDs are also included in the Web5 initiative founded by former Twitter CEO Jack Dorsey
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