Several industries can use the blockchain development services to make their businesses more transparent, safe, and valuable in other ways. So, it looks like it will also change the way identity management works, but in a very safe way.
The current system for managing identities is neither safe nor reliable. At every step, you have to show multiple government-issued IDs, like a voter ID, passport, Pan Card, etc., to prove who you are.
When people share multiple IDs, it makes privacy concerns and data leaks more likely. So, the blockchain can help people get self-sovereign identities through decentralised networks, which assures:
- where identity papers are kept safe
- where identification papers are checked
- where people with permission sign identity documents
What is the need of Blockchain for Identity ?
Blockchain-based systems for managing identities could be used to get rid of problems like
- Insecurity with data
- Fraudulent identities
About 1.1 billion people in the world have no way to prove who they are, and 45% of those people are in the poorest 20% of the world. Traditional identification systems keep more than a billion people from using them because they are hard to use, expensive, hard to get to, or because they don’t know much about their own identities. You can’t go to school, apply for jobs, get a passport, or use many government services if you don’t have a physical identity. To use the current financial system, you must have a name and address. On the other hand, 60% of the 2.7 billion people who don’t have bank accounts already have mobile phones. This opens the door for blockchain-based mobile identity solutions that better meet the needs of vulnerable citizens.
Insecurity with Data
At the moment, our most important identification information is kept in centralised government databases that are run by old software with many single points of failure. Hackers are very interested in large, centralised systems with the personally identifiable information (PII) of millions of user accounts. A recent study shows that personally identifiable information is the data that breaches are most interested in. In 2018, 97% of all breaches involved personally identifiable information. In 2018, 2.8 billion consumer data records were exposed at an estimated cost of more than $654 billion, despite laws and business efforts to improve cybersecurity.
Also, the user’s experience of the digital identity landscape is very fragmented. Users use their usernames to switch between different identities on different websites. There is no standard way to use data from one platform on another platform. Also, because there isn’t a strong link between online and offline identities, it’s pretty easy to make fake identities. Fake identities make it easy for a phenomenon called “counterfeit interaction” to happen, which can help people commit fraud and cause numbers to be inflated and money to be lost. In society, this makes it easier for bad things like “fake news” to be made and spread, which could be a threat to democracy.
We have the tools to build new identity management systems, digital identity frameworks based on the idea of decentralised identifiers (DIDs), which could include a new type of decentralised identity called a self-sovereign identity. This is because smartphones are getting smarter, cryptography is getting better, and blockchain technology is here (SSI).
How can the User benefit from the Blockchain Identity Management System?
From the user’s point of view, using blockchain identity management has four benefits:
When a user signs up for the blockchain identity management system, they will get a number that is unique to them. The user’s unique ID number is made up of all the information that can be used to identify them. This information is encrypted and stored on the user’s device, which is backed by IPFS. Through blockchain identity management, users can share their unique IDs with anyone else to directly prove who they are.
Also Read Here: How Will Blockchain Identity Management Deliver Standout Performance In The Upcoming Future?
No user’s information will be saved by a blockchain identity management system. Smart contracts are also used in the system to allow controlled data disclosure. Since this is the case, data cannot be changed on the blockchain. A system for managing identities that uses blockchain is very safe for the people who have identities. No transaction can happen with a user’s information without the user’s clear permission. It gives the user control over the information that can be used to identify them.
No user’s personal identification information will be kept on a central server. All the documents that identify users are stored on their devices and backed up by IPFS. This keeps them safe from mass data breaches. Using Blockchain identity management backed by IPFS makes it impossible for hackers to steal information that could be used to find someone. Since the system won’t be in one place, there won’t be a single place where it could go wrong (SPOF). This part of the system is called a single point of failure because if it fails, the whole system will stop working. So, the lack of SPOF makes sure that the system can never be broken.
A Universal Ecosystem
Blockchain identity management has no limits on where it can be used. So, users can use the platform to prove who they are across borders.
How can the Businesses benefit from the Blockchain Identity Management System?
The blockchain ecosystem is very good at saving money and saving time. Also, both businesses and users can save money on the cost of verifying identities.
Anyone who is connected to the network can look up the transactions on the blockchain. Every transaction can be checked to make sure it is real.
It keeps the transactions between people who are connected to the blockchain private.
Instead of keeping all the data on a single, centralised server, decentralization lets information be stored on every node in the network. This makes it less likely that a single point of failure will happen.
Users can also ask the organization to prove who it is across borders.
How can the Blockchain Identity System be used in different ways?
Here, we’ve talked about five ways that blockchain identity management can be used:
Getting a Loan
Imagine that you need to get a loan or start a new bank account. In the past, you had to hand in a lot of documents to prove your identity, and the whole manual verification process took weeks. But an identity based on blockchain could speed up the process by making it easy to share important information. Since a user might not have to keep track of different IDs, costs and work could go down as well.
Also Read Here: How Blockchain Is Revolutionizing The Insurance Industry
A traveler needs to bring more than just a passport to the airport. They also need to bring a certain set of documents for clearance and security checks. From buying a plane ticket to going through security checks, boarding a flight, and moving to a new country, a person can use a blockchain-based identity that works everywhere. A person with a decentralised identity would not have to go through security checks and other procedures that are hard to understand. So, identity management on the blockchain can make the process easier for both travelers and authorities.
During any legal process, a user may need to show different proofs of identity, such as:
- evidence of age
- proof of living there
- proof of address, etc.
People might not have to carry multiple documents with them everywhere they go if they use blockchain to manage their identities. Legal entities and government agencies can use a single blockchain-based identity to check if a person is who they say they are. So, it’s no longer necessary to do a full background check.
Checkout for E-commerce
When people order something online, they are asked to fill in their name, email address, phone number, address, etc. Every time they sign up for an e-commerce site, they have to go through this process again. This makes the whole process take a long time and be hard to do. Users can save time and effort by signing up for more than one e-commerce site with the same unique ID number.
Verification of Employment
At the moment, there isn’t a set way to do a background check on an employee. In the global job market, it is important to check the information on resumes, previous letters, and reference letters. With a user’s permission, the blockchain ecosystem can be used to directly check the information on a job candidate’s resume.
When Blockchain identity management is done right, it can make security and privacy better. The immutable and decentralised ledger lets third parties check the user’s data without wasting time and money.
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