Blockchain technology is redefining how data is shared between systems. The potential of interoperability of its architecture is made clearer with the trend of cross-chain bridges and Layer 2 launch launches.
One key facilitator in the journey to true interoperability is Decentralized Identifiers (DIDs)
What are they?
DIDs are referred to as self-sovereign IDs, and can prevent fraud by verifying an identity without needing to access the underlying data. In simpler terms: DIDs expand interoperability without sacrificing security.
They enable verifiable digital identities of individuals, organizations, devices, or any other entity. All in a permission-less fashion.
Decentralized identifiers (DIDs) are globally unique identifiers made up of a string of letters and numbers that can be stored on the blockchain and independent of any organization.
Some Key Features of DIDs:
- Are created and managed completely by the user (individual or organization) without depending on any third party
- Allow the owner to securely prove control over them
- Don’t contain any personal data or wallet information
Just as we have different online profiles to show various aspects of our lives such as having a Facebook account to share updates mainly to our friends and family and LinkedIn to show your work and educational experience to our professional network as well as employers. DIDs can be used in the same way where people can create as many DIDs as they want for different purposes.
For example, you can have a DID for different interactions:
- DID 1: Online gaming sites
- DID 2: For educational and training credentials such as a university degree, Project Management Certificate, and health and safety training certificate
- DID 3: To hold different types of IDs like state ID and driver’s license
- DID 4: Online shopping websites
- DID 5: Crypto investment platforms and services
How decentralized identity benefits organizations
- Allows organizations to verify information instantly without having to contact the issuing party, like a driver’s licensing organization or university for example, to ensure that IDs, certificates, or documents are valid. Traditional, manual verification processes take weeks to months which slow down recruitment and processing times while using a lot of financial and human resources. Imagine being able to instantly verify someone’s credentials in seconds by scanning a QR code or running it through a user-friendly credential verifier tool.
- Enables issuing organizations to conveniently provide Verifiable Credentials to people and prevent fraud in a way that greatly reduces costs and increases efficiency.
How decentralized identity benefits individuals
- Because the user has full control and ownership of their identity and credentials, they are able to prove their claims without depending on any party.
- People can decide which information they want to reveal to specific parties, such as a government or employer.
- No party can take away people’s ID once they are stored on their mobile digital identity wallets.
- People can easily create and manage their decentralized identity with user-friendly platforms.
A decentralized digital wallet can be used on a phone to securely store your digital identity and credentials with encryption. This approach conceals data which greatly reduces the risk of credential tracking, hacks, and gaining unauthorized access to steal or monetize people’s data. With a decentralized identity, someone has to give authorization to share information when it is requested.
Innovation keeps the blockchain ecosystem relevant. As much as the current structure can be faulted, there is a need to ensure data security in a growing information-reliant world. We mainly use centralized identifiers like emails, usernames, and passwords to access websites and apps. But these identifiers have many problems for individuals, organizations, and developers including data being collected and shared to other parties without people’s knowledge, data tracking, and lack of control of data. Fortunately, decentralized identifiers (DIDs) can solve all of these problems.