Traditional identity systems are centralized and fragmented, while also being more insecure and restrictive. The advent of blockchain technology holds the promise of a more secure, accessible, interoperable, and ultimately self-sovereign future, in which everyone comes to possess personal information and control how it is used.
Radu Chirila – CEO selfDID
What is digital identity?
A digital identity is a record derived from the use of personal information and actions taken online. It can include pseudonymous information, such as an IP address, but also real-world data, such as name, date of birth, medical history.It is the combination of these biographical, biometric and behavioral data points that make up a digital identity.
Blockchain technology provides a decentralized solution for storing and managing this digital identity, in which data is not stored in a single database, protecting privacy and protecting against hackers and unauthorized access.
Why decentralized digital identity is so important
Currently, most of our valuable data is stored in centralized governmental or business databases. The personally identifiable information stored on these systems is very attractive to hackers, accounting for 97% of all violations, at an estimated cost of $ 654 billion in 2018. Storing and transmitting encrypted information on a tamper-resistant decentralized blockchain eliminates this risk.
The fragmented and non-standardized way in which digital identities are currently managed is weak, facilitating the creation of false identities and increasing levels of fraud. With sophisticated smartphones and advances in cryptography and blockchain technology, we now have the tools to build decentralized identity management systems that standardize the process.
What decentralization means for digital business models
In the new, digitally driven economy, the benefits of digital identity on a blockchain are clear and attitudes about who owns and should take advantage of user-generated data are likely to change.
Digital identities should make a significant contribution to economic growth over the next decade, benefiting individuals and opening up access to the global market. It is estimated that the value of digital identities will increase by 22% per year, with economic benefits of over EUR 300 billion for European organizations alone and double that of consumers. Decentralized digital identity models will allow users to unlock this value and contribute to the development of the global economy.
It is a major breakthrough, giving users full control over all their personal information. Companies will have limited access to verifiable complaints, and the systems do not rely on a central authority to operate. The impact of this will extend far beyond our current imagination, encompassing new use cases and industries, as digital identity becomes an integral part of the lives of billions.