Data privacy and portability are critically important, and blockchain has an integral role to play in the development of new ways to manage and share personal information.
Credentials and other identifying information play a role in virtually every interaction that individuals have with each other and various institutions. Drivers licenses, professional certifications, tax and property records, health information, and innumerable other representations of digital identity form the backbone of the modern economy. This information is, in turn, verified, monitored, and secured by trusted third party intermediaries that may either be governmental in nature, or associated with the private sector.
This arrangement, familiar and embedded into business and society at large, has been showing signs of strain. Whether it has taken the form of hacks of private sector organizations, data breaches of government records and organizations, the trend is the same; the traditional centralized or hub model of data provider and verification is not sustainable in the 21st century. Amplifying these hacks and breaches is the power dynamic that exists between the providers, or holders, of these credentials and the individuals seeking to use them. A move to self-sovereign identity seems like a blockchain application that intersects with the needs of both individual and institutional markets.
Self-sovereign identity might sound like an abstract concept, but in essence all it means is that an individual controls their own identity. On the surface this might seem like a redundant or rather obvious statement, but circling back to the importance of credentials – and digitally verifiable credentials – reveals a slightly different story. Individuals may be the constituent group that is dependent on using said credentials, but they do not control, authorize, or have much say over the privacy and dissemination of this information.
To function as advertised, a self-sovereign identity system requires a digital infrastructure that is scalable, distributed, decentralized, and provides adequate levels of security to protect this valuable information. Blockchain, in its various forms, provides a potential answer to this problem that has – to date – prevented the idea of a truly self-sovereign identity system from becoming reality.
Particularly as more robust permissioned blockchain models have come to market, the possibility of individuals being able to more securely manage and actually control their identity continues to increase. Additionally, blockchain based wallet applications can serve as convenient storage locations for this sensitive information, in addition to storing various cryptocurrencies and other cryptoassets.
Blockchain, by all appearances, seems ready to emerge as the key piece of – and until now missing – technology, that can help enable this possibility and new way of managing ones virtual identity, but what are the benefits of doing so?
Increased privacy. Perhaps the most obvious benefit associated with a move to self-sovereign identity is that the individual themselves, rather than the organizations that issue or store certain credentials, are authorized to share certain pieces of digital information. In other words, instead of having critical pieces of identifying information (license numbers, social security information, etc.) stored at dozens, if not hundreds, of different locations, that information remains with the individual. The individual, in this case, is the only entity with the authorization to disclose or allow access to sensitive information, and also controls the level and duration of external access.
With fears of deep fakes, artificial intelligence potentially being used for unethical or malicious tasks, and a general suspicion of increased monitoring across the board, the appeal of higher levels of privacy is difficult to ignore. It increasingly appears, from Congressional hearings in the United States to the passage of more consumer oriented data privacy laws – headlined by the General Data Protection Regulation (GDPR) – that privacy has moved to the forefront of the digital economy.
Reduced possibility of data breaches. Building on the first point, the fact that the individual in question is the only entity that can authorize access to certain information, and that this data is not scattered around the digital landscape, also reduces the underlying reason for most data breaches. Users, regulators, and criminals alike are aware that all kinds of organizations have, permanently stored in their servers, a proverbial treasure trove of information. The pace and scope of recent data hacks and breaches illustrates this point all too clearly.
If, however, credit card and other important digital information were held by the individuals and not in a centralized location, the motivation for many hacking attempts would disappear. Of course, this does not mean that the risk of hacks would vanish; it would simply to reoriented toward the individuals themselves. This is where a blockchain based system, with data encryption and security as the core of the value proposition, can truly shine in helping to prevent breaches in the first place.
Wealth creation. As the saying goes, if the product or service that a company provides cannot be easily discerned, the customer of the company is the product. This has routinely manifested itself – for years – in the form of organizations providing services for “free” in exchange for the ability to access, store, repurpose, and otherwise monetize the information of customers. There is nothing inherently wrong with this model, and has helped create some of the most valuable technology organizations in the world today.
That said, if individuals have the ability to safeguard and restrict access to their personal data, this shifts the power dynamic related to information back in the direction of the individual. Put another way, the rise of self-sovereign identity might actually help the creators and (now) true owners of this valuable information be fairly compensated for the usage of said information.
Self-sovereign identity, or the ability of an individual to control and manage their own digital identity, is not a new concept or idea. That said, blockchain technology increasingly looks like the critical missing link to turn this from idea to reality. As outlined above the benefits of moving in this direction are clear, quantifiable, and numerous; privacy, fewer instances of cyber crime, and the potential for individuals to participate in the wealth created by their own identities.
Blockchain continues to develop and accelerate on a daily basis, and applications like self-sovereign identity are proof that the potential of this technology is growing equally as fast.