What is up everyone?
Welcome back to Blockchain Central!
My name is Blu and in today's episode we'll investigate
how digital identity can be handled by the blockchain.
Before we start, as always, please note that this content does neither represent financial,
legal, or tax advice, nor is it supposed to be understood or interpreted as solicitation
to buy or sell any securities, coins or tokens.
An interesting byproduct with the rise of cryptocurrencies, or cryptoassets, how they
are often referred to now, is the fact, that people start thinking about what money actually is.
Why money has value?
Often it's said that bitcoin doesn't have any inherent value, but paper money does.
Well, if so, what is it that gives paper money inherent value?
Curiously enough, similar questions can be raised when it comes to digital identity.
Digital identity?
Let me explain...
It's a digital object that maps to a physical entity.
Wait what?!
Ok, let's break that down!
A physical entity can be a person for example.
Linked to that person can be a bank account number, or an ID number, or any other information,
which then represents what we call the digital object.
The physical entity can also be an institution or even a device.
So when we think about the Internet of things for a second, where all devices will act in
an autonomous way, it becomes extremely important that every device has a digital identity.
How are digital identities managed today?
Often we use so-called 'federated identities'.
A third party 'identity provider' like Facebook or Google handles the 'mapping'
from digital object to physical entity.
What's mapping?
The connection from physical entity to digital object.
Let's say, a new account is set up on Facebook, for example.
Facebook then checks the email address, maybe the ID card and therefore makes a connection
from the person to the digital account.
With that identity it's then possible to log in to many other applications, bypassing
the process of repeating registration.
If this system works, why is there a need for anything else?
Well, let's think about a couple of its shortcomings:
First of all, identity ownership.
At the moment, digital identities are owned by pretty much anyone, except for the user,
as is the case with with Google, Facebook and the government, for instance.
As these identities are stored on central servers, they are always prone to hacking.
I think everyone either had their account hacked on a social media platform or at least
knows someone whose account got compromised.
Billions of dollars are spent each year to set up and maintain high security standards.
What we're more conscious of is the fact that at this point in time, the user is hardly
in possession and not even in control of his or her own data.
The recent Facebook scandal where data of up to 87 million users was sold to a researcher
working at Cambrigde Analytica, showed this in a painful way.
Another problem with digital identities at the moment is, that we have lots of them.
As some require a password with capital letters, numbers and so on, many people have their
super secure master password (great!), which they use for a multitude of accounts
(not so great!).
Updating information on this multitude of accounts, for example after having moved,
is a tedious, time consuming task!
Essentially, the question arises of what's a suitable solution for these shortcomings.
Some say, it can be a self-sovereign identity.
Imagine, there was the possibility of an identity, owned by the user himself.
The data and the reputation linked to that identity would also be held by the user.
All in one place.
The user could decide whom to give access to the data and would profit himself by selling
data to third parties.
Lots of talking!
But how could this self-sovereign identity thing work?
There are several projects in the making,
aiming to develop an infrastructure and setting up such an identity program.
uPort, Civic and Sovrin are some projects worth looking into!
Let's assume, that such a Decentralized App is developed.
The user then creates their identity on the mobile phone using the DApp.
It's like setting up an account.
The difference is, that the user is not granted access to this identity by a third party provider,
but he actually holds the private keys to this identity.
That means, the user is in total control of the identity.
For more information on public and private keys, watch the video 'Wallets – make
the right decision'.
The user then adds attributes to their identity, like the birth date for example.
These attributes get attested by some authority.
For example, a state institution will add a birth certificate as attestation to the user's account.
A bank can, after the user underwent an ordinary registration, add the attestation that the
user is allowed to open a bank account.
Opening a second bank account with another bank could be carried out easily then: The
user doesn't have to register again.
All they need to do is send the encrypted attestation of them being allowed to open
a bank account to the second bank.
No extra registration, no giving away of data, easy and quick access.
With these attestations, like shown in the bank account example,
the user can disclose data selectively.
Imagine someone buying a bottle of wine.
The shop owner actually doesn't need to know the address and the full name of the
buyer (which is the case when the user shows his ID card in the shop at the moment)
if he wants to know if the user is a legitimate buyer.
He only needs to get the confirmation of him/her being legally allowed to buy the bottle.
With this identity, the user can also sign and verify transactions easily and therefore
transfer ownership of all kinds of digital assets.
Money is only one application.
Digital assets can also be land titles, energy, or even a vote in the future.
The possibilities are endless.
Those of you who are familiar with private keys might wonder, what happens if the user
loses his/her phone and therefore the private key?
Identity gone?!
Forever?
No.
The identity can be restored through chosen nodes in the network of the user.
These can be relatives, friends or institutions, for instance.
The user notifies his network about his lost phone and therefore the identity and the network
nodes will confirm this loss, triggering the restoration of it.
Lots of new terms, lots of new concepts.
We hope you enjoyed this little excursion into digital identities!
Check out the other videos, hit that like button, share it with others and don't forget
to subscribe to Blockchain Central to never miss a beat!
Happy investing!
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