Blog

09/21/2017

Digital Identity, Self-Sovereign Identity, And Blockchain


The concept of identity has become a hot topic recently. Some of the increased awareness comes from recent developments such as:

  • Government in countries like India, Estonia, and Pakistan are working on ways to give valid and trusted identification to citizens.
  • The Equifax breach that exposed the social security numbers (a ubiquitous personal identifier) of roughly 143 million Americans – by some estimates, that’s essentially the entire adult population of the country.
  • New technologies like smart phones and other connected devices that need to be associated with users, giving rise to digital identities-- how systems we interact with recognize that we are who we say we are.

As we spend time thinking about identity and digitizing identities, we start to see many of the flaws in traditional approaches. Today’s ways of verifying identities are sometimes simple and easily faked. Other times, verification methods are thorough but take a long time and cost a significant amount of money. On the simple-and-easily-faked end of the spectrum, it’s not difficult to guess or steal the information people used when creating accounts online, thereby allowing thieves or hackers to take over those accounts by using the real owner’s stolen credentials. On the long-and-costly end of the spectrum, think about how much time and cost are involved in verifying your identity and personal information when applying for a mortgage – it can take weeks.

Digital Identity Will Become Self-Sovereign
Of course, in addition to the expense and questionable security of today’s digital identities, there’s a more fundamental issue – our identities and related information about us aren’t in our control. Looking at the Equifax example, what frustrated so many people is that they aren’t even customers of that firm. The credit rating company gets data from other sources, so customers had data stolen that they hadn’t even given to Equifax.

And in a less disruptive example, think about the annoyance factor of needing to call your doctor to request that your medical records be sent somewhere else of your choosing. And in some cases, the doctor’s office might charge you a fee for the time spent copying and sending those files.

Or consider wanting to insure your home – you need to validate your identity both as an individual and as the owner of the property. This involves personal validation and title searches to make sure your records of ownership match public records. Most of this validation process happens without you. Yes, you provide the initial data, but then a process of asking third parties to validate your data happens.

Now ask yourself how things would be different if you were able to directly share the identity information above – cutting out the middle man and the cost/time associated with intermediaries? You’d get transactions done more quickly, you’d save fees on identity validation, and you’d be the one to control access to your information. There wouldn’t be huge data stores of your information controlled by third parties.

This is possible with blockchain technology. By using distributed ledgers, smart contracts, and cryptography, new platforms can be built that allow for self-sovereign identity.

Blockchain-based identity uses privacy-by-design architecture to ensure protection of data while also providing immutability of that data. At MatchUpBox we also believe that blockchain-based identity solutions require obfuscated data exchanges, proof of work as part of consensus, and permissioned blockchain networks.

With a blockchain-based identity platform, everyone benefits. End consumers benefit from control over their information that isn’t possible today. But other parties like governments and businesses benefit, also.

For example, blockchain will allow banks to prove they’ve validated identity, without needing to store the identity data itself. This is a huge weight off the system as there will be less cost and worry in protecting large data sets of sensitive customer information. They’ll also be able to process loans and account openings more quickly, improving customer experiences. The graphic below illustrates how this would work.


An example of how blockchain-based identity changes the Know-Your-Customer process between a bank and a customer. Instead of third parties needing each other to validate your identity, they can use the common shared identity data you’ve created.

We believe blockchain-based self-sovereign identity is needed, given the risks and costs of today’s poorly designed digital identity approaches. Using blockchain’s features to create immutable but secured digital identities will allow people to be more protected while improving the efficiencies of current business processes and public sector operations.

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