Blockchain has exhibited the capacity to disrupt the status quo for digital identities

In today’s information age, data has become a vital asset for companies of all shapes and sizes around the world. Organisations use data for various purposes ranging from research and development to tailoring effective marketing strategies.

An important aspect of such data are the ones generated from clients’ personal information – particularly online identities.

In a digital-first era, virtually all transactions are now carried out online. As such, internet users are required to create online identities in order to make use of the various platforms.

By creating these online identities, certain levels of personal information are then provided to the platforms for easier verification. For instance, to make use of social network platforms like Facebook, one is required to provide some personal information details like full name, phone number, address, date of birth and some others.

This personal data is in turn stored in databases controlled by the corporation — which raises eyebrows on security and data privacy.

Data privacy and security: the need for a guarantee

As more people create online identities across digital platforms, effectively managing these identities and ensuring that they are secure becomes a growing concern.

History shows that data created by users/clients, and subsequently stored by service providers, are susceptible to breaches and unauthorised usage. These major breaches highlight the importance and need for a platform that will guarantee a secure identity framework.

What’s concerning is that such illicit use of data can sometimes be sanctioned activities by online services and platforms.

For instance, in 2018, the Facebook Analytica scandal provoked the involvement of the US Congress, as the erring political consultancy firm gained access to information on 50 million Facebook users without their consent. The underlying aim was to understand how American voters could be influenced to cast votes, but the study ended up being manipulated to aid certain political figures.

The ironic problem today is that digital identities are mostly controlled by big corporations, and not by the individuals who are the rightful owners of their identity.

The more we hear cases of data breaches — which are impacting millions of individuals — the stronger the need for a more secure platform that gives control of data back to the user grows.

Blockchain tech can help revolutionise KYC and data privacy

Blockchain allows users to have more control over their own identity data particularly by decentralising the control over data. In essence, a blockchain is a distributed network of nodes that work together to verify transactions and secure data.

The ideal tech infrastructure is designed such that the user can control what piece of information is shared with specific services or companies. It should provide the ability for people to create, manage, and secure their own identity without entirely relying on the company to keep or manage all of their data.

The main point behind the know-your-customer (KYC) process is, of course, to identify and authenticate a user, thus ensuring they are who they claim to be. The added benefit of a decentralised system is that there is no single entity controlling access to KYC.

Digital identities using blockchain technology can help streamline many processes that require verification. For example, organisations (especially in the finance sector) are required to comply with KYC regulations, which usually entails verification of user identities. With blockchain, the process can be made easier and simpler.

See, instead of users requesting third-party agencies to give permission to release all of their sensitive data, users have the option to choose what information should be shared with the company. It also makes it clear how the user’s data is being shared — with whom, when, and how.

Thus, users have more control over the information they release.

On the other hand, for the organisations, blockchain can help reduce cost and time for each KYC verification process. It eliminates the need for third-party agencies who contribute largely to the additional costs associated with KYC services.

Blockchain in this model serves to connect and build a trusted platform that restores more control back to the digital identity owner (and a clear framework for how data is shared with the owner’s permission).

Ontology stands as a key example of an organisation already leveraging blockchain in ensuring adequate user verification, whilst protecting privacy. The public blockchain is a trust collaboration platform for empowering digital identities. The solution aims to offer infrastructure and tools for businesses, enterprises, institutions, and even individuals to manage their digital identities and how this is used.

Establishing trust in a trustless environment

The key is integrating both existing technologies and blockchain, coupled with the trust network.

A profound use-case is how the project partners with ‘Trust Anchors’ or trusted entities like biometric tech companies, universities, banks, government agencies who provide user authentication services. In turn, they can provide multi-dimensional authentication for a user’s digital identity.

Through Trust Anchors, the Ontology platform is able to provide standardised and credible authentication requirements while using the blockchain to secure the hashed authentication records.

Currently, the network covers 218 countries and regions in collaboration with Trust Anchors to make this trust network accessible across the globe. “Everyone has various kinds of identities across multiple platforms. However, they need an easy way to link and manage these identities”, shares Li Jun, Founder, Ontology.

One reason the project stands out from others is its focus on a platform that encourages the integration of various parties for a new trust network. Li Jun highlights that the platform is built “for both organisations and individuals to create a trust collaboration platform.”

He also further describes the platform as a new way to “balance privacy and [consumer] data usage,” a problem that has lingered for a long time now.

Furthermore, today it’s becoming a necessity to provide valid proof of certification for personal endorsement as in the case of academic certificates. Beyond KYC and authentication, the trust network enables a Distributed Reputation System by using a comprehensive multi-source or multi-factor authentication systems, which allows for the management of user authentications with supporting evidence from multiple sources.

Li believes blockchain adoption will become a reality as people come to realise the true value of the technology.

Integrating blockchain tech with digital identities opens a door for the establishment of a much stronger platform for effective management of user IDs in a hyper-digital world. Whilst the tech revolutionises digital identities for individuals, its tentacles also spread across assets like cars, arts and jewelry.

Blockchain has exhibited the capacity to disrupt the status quo for digital identities and insightful pioneers with digital identity solutions like Li from Ontology are already taking advantage of that.

—

Photo by Finan Akbar on Unsplash

e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

The post Finding trust in a trustless digital environment, with blockchain appeared first on e27.