Usernames and passwords may have done the job in the internet’s early days. But as large centralized organizations started cornering the market, they acquired huge amounts of personal data end users can’t control. Users have never been more aware of or concerned about data privacy, especially in the wake of high-profile data breaches. So, the time is ripe for change.
We think self-sovereign IDs will emerge as the solution for two reasons. Firstly, the World Wide Web Consortium (W3C) is standardizing the format of digitally signed credentials. And, secondly, public blockchains can provide decentralized registration and verification of digital signatures.
THE ROAD TO SOVEREIGN SELF-IDS:
- 1. Centralized: in which the consumer’ s identity is owned and controlled by a single entity
- 2. Federated: enables user portability by allowing the user to sign on to multiple sites with the credentials of another; think of using your Facebook credentials to sign in and create accounts on various websites
- 3. User-centric: relies on independent personal data stores (sometimes large social networks), but is still beholden to the contractual user agreements
- 4. Self-sovereign ID: independent of individual data silos, is decentralized, and entirely controlled by the individual
The blockchain could create a new global ecosystem of credential issuers, owners and verifiers. Interoperable verifiable claims could be used across multiple access points whenever KYC is needed — from finance and insurance to education, healthcare and even retail. Aside from unlocking the financial system for the 1.2 billion people who currently don’t have a legal identity, this could also create new business models in which individuals get financial incentives for sharing data.
Collective Action: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.