Decentralized identity, often referred to as “self-sovereign identity,” is a concept in the field of digital identity that aims to give individuals more control over their personal information and how it is used.

In traditional centralized systems, individuals’ identity information is stored and controlled by a single entity, such as a government or a corporation. This centralization of power can lead to issues of privacy and security, as well as potential abuses of power.

Decentralized identity, on the other hand, aims to distribute control over individuals’ identity information across a network of peers. This can be achieved through the use of blockchain technology, which allows for the creation of tamper-proof and decentralized databases. In a decentralized system, individuals have the ability to store their own identity information, share it on a need-to-know basis, and even retain the ability to keep some information private.

One example of a decentralized identity system is the use of blockchain-based digital identities, such as those built on top of the Ethereum blockchain. These digital identities can be used to represent individuals, organizations, or even physical assets, and can be easily verified and authenticated through the use of smart contracts.

Another example is decentralized identifier (DID) which is decentralized identification system based on W3C standards. It uses public and private key pair to ensure the authenticity of the identity.

Decentralized identity has the potential to give individuals more control over their personal information, increase security and privacy, and reduce the potential for abuses of power. However, it is important to note that there are still many challenges that need to be overcome, such as scalability and interoperability, before decentralized identity can be widely adopted. Despite this, decentralized identity is an exciting area of development in the field of digital identity and it will be interesting to see how it evolves in the coming years.

In summary, Decentralized Identity (DI) is an approach to digital identity, where identity of an individual is maintained by the individual himself, in decentralized manner. It is built on the principle of self-sovereignty and aims at giving individuals more control over their personal information, increasing security, and reducing the potential for abuse of power. It uses blockchain or other decentralized technologies, such as decentralized identifier (DID) to provide authenticity and trustworthiness. Despite its benefits, there are still many challenges that need to be overcome before wide-spread adoption.

Reshaping digital identity with blockchain and Web3

Ever stopped to think about your digital identity? It’s something we all have, whether we realize it or not. You contribute to your digital identity whenever you post something online, create an account, or interact with someone online.

But what exactly is a digital identity, and how does it differ from your physical identity? Essentially, a digital identity is a representation that allows you to prove who you are online. It includes your name, birth date, usernames and passwords, profile picture, purchasing history, and personal information.

Your digital identity is the data or content you produce and choose to share online. It’s your data, right? But the truth is you don’t own it.

The Problems with Centralized Digital Identities

Did you know cybercriminals make millions through formjacking attacks and stealing credit cards from businesses?

As a food supplier, how can you easily trace the source of a contaminated batch of products to its origin?

Imagine finding out your doctor had a fake degree. How would you feel?

Although somewhat unrelated, these situations all tie back to the issues with centralized identity and verification systems.

Our digital identity was largely controlled by centralized entities such as social media platforms or government agencies. This meant that we had to trust these entities to store and manage our personal information, and we had little control over how it was used.

This lack of control and privacy can be problematic, as centralized entities can be hacked or abuse their power. For example, we have seen numerous instances of social media platforms selling users’ personal data to third parties without their knowledge or consent. This abuse of power can have serious consequences for individuals, including identity theft and online harassment.

Where does this leave you?

• Your digital identity doesn’t belong to you, and you have no control over how your data is used.
• Data breaches and hacks happen all the time, which means companies that store your data can’t guarantee its security.
• You can’t just move your digital identity from one platform to another. It’s non-transferable.

Blockchain and Web3 can solve these problems to level up and reshape our digital identities.

Web3 and Decentralized Identity Systems

Web3 is the next generation of the World Wide Web, built on blockchain technology. One of the key features of web3 is decentralized identity (DID) systems, which offer a new way for individuals to control and manage their digital identity.

Digital identity in Web3 is based on the notion that everyone will have a unique identifier on a blockchain. Users will own their identity, backed by on-chain data, with the ability to be linked to any software or transferred to different platforms.

How it works

When it comes to decentralized identity, the main idea is known as Self-Sovereign Identity, which is a model that gives individuals control and full ownership of their digital identities.

There are three pillars of Self-Sovereign Identity:

• Verifiable Credentials
• Blockchain
• Decentralized Identifiers (DIDs)

With DIDs, you can create a digital identity tied to your physical identity, but that is completely under your control. This means you can choose which personal information to share and with whom, and you can even create multiple digital identities for different purposes. For example, you can create a separate digital identity for your personal life and a separate one for your professional life.

This is made possible by a digital wallet, which becomes your identity — multiple wallets mean multiple identities.

Benefits of a Decentralized (Identity) Identifier

• Control  –  You are in control of your identities.
• Transparency  –  Blockchain operates on transparent algorithms and systems. Decentralized identity systems use encryption so that no external actor can tamper with the data.
• Ownership  –  You have access to your data without the interference of third parties.
• Portability – Transportable information and services about identity.
• Interoperability –  Your identities will be as widely usable as possible.

All these means that as blockchain technology evolves and grows, we’ll be able to access different services available with different wallets we control.

By using web3 technologies, we can create a more decentralized and open online environment where individuals have more agency and control over their own identity. This can lead to more innovation and competition, ultimately benefiting the end user.

Notable Web3 Decentralized Identity Use

You might be wondering which brands are already working on these unique digital identifiers. Here are some examples:

Describing below 3 of the decentralized identity solutions being offered in the market.

Polygon ID

Earlier in 2022, the team at Polygon announced that they are developing a new product called Polygon ID. It’s a decentralized identity system that uses zero-knowledge-proof technology. The product portfolio includes a wallet app, an ID platform, and a public service platform to help users access their wallets and applications more easily.

Polygon ID is powered by the Iden3 protocol and the Circom ZK toolkit. This means it’s built on top of cutting-edge technologies that help to ensure the security and privacy of users’ personal information. With Polygon ID, you can have more control over your digital identity and have confidence that your personal information is stored securely.

Rebus NFTID

NFTID will use Web3 and NFT technology to give control back to users and reshape digital identities.

NFTID (nifdy) created decentralized identification system that can be used worldwide by individuals or organizations. This system allows people to identify themselves uniquely and choose which pieces of personal information they want to share.

To test this idea, Rev=bus is planning to create Rebus Nation. While NFTID won’t replace traditional legal documents, it provides an alternative way for people to identify themselves. Even minors can set up an NFTID as long as they can navigate the DeFi (decentralized finance) protocol.

One of the benefits of NFTID is that it allows anyone to deviate from the traditional format of their legal documents. For example, you can input your name in all lowercase letters or use completely fictitious data. This gives you more flexibility and control over your digital identity.

The full potential of NFTIDs (non-fungible token-based decentralized identities) hasn’t been realized yet, but as more people become familiar with the idea, the potential is limitless. The primary goal is to build a strong community around non-fungible assets and continually expand how they can be used. As more people adopt NFTIDs and find new ways to use them, the possibilities for their utility will continue to grow.

Read more about NFTID

Dock Certs

Dock Certs is another example of how web3 is reimagining digital identity. Dock Certs is a suite of tools for organizations to issue digital credentials and certificates using Verifiable Credentials (VCs). Their newest product, Web3 ID, is a blockchain-based authentication and authorization system that allows organizations to request private user data securely.

You can give permission to reveal or confirm the information without revealing the data. This gives users more control over their personal information and ensures that it is handled securely and privately. By using Web3 ID, organizations can streamline their processes and improve their systems’ security while also allowing users to protect their privacy.

Wrapping Up

Web3 and decentralized identity systems offer a new way for individuals to control and manage their digital identity. By giving us more control and privacy, these technologies have the potential to create a more decentralized and equitable online environment

Related Reading: Blockchain Killer

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