Blockchain can bring a new way of approaching identity proof

Fingerprint Binary Microchip
3D illustration. Fingerprint integrated in a printed circuit, releasing binary codes.

You might not notice it but chances are you’re identifying yourself several times throughout a normal day. That’s not because you’re being constantly pulled over by cops or being carded at bars but rather because of all the digital services you use. Think about it: when you log into Instagram, access your Gmail account, go live on Twitch – you’re constantly providing proof of your identity. And that’s without considering the passport you’ll need to travel abroad or the proof of address to rent a new home.

Identity is at the heart of a lot of our daily tasks. Yet, even being this essential, identity systems aren’t as sophisticated or streamlined as they could be. They are prone to be attacked by hackers, can be riddled with costly errors, or can be hard to update. What’s more – the current digitalization process that society is going through has put identities at the center of the stage. A lot of companies and algorithms already know who you are, what you did in the past, and have access to a lot of details about you.

As if that wasn’t enough, there’s also the chance that the documents that prove your identity go missing, are destroyed, or stolen. That could bring you a lot of trouble down the line. Is there a way to prevent this from happening? Isn’t there a technological alternative that can better safeguard our identities while also being easier to use and maintain? Some people believe there is. That alternative is called blockchain.

Learn more: What is Blockchain Technology


A great match of everything related to identity

The possibility of using blockchain to develop a secure digital identity isn’t precisely a new idea. There are companies already working on this, and outsourcing specific tasks to Latin America, Eastern Europe, and other places where blockchain developers are open for this sort of challenge.

The logic for it is simple: having a decentralized network whose information can’t be tampered with, can be accessed through mobile devices, and is protected with biometrics. Creating a blockchain-based system would be great, as it could be accepted everywhere and for a myriad of purposes, from opening a bank account to traveling overseas.

The benefits of using blockchain for managing identities include:

  • Validation of identity upon request
  • Easy access for everyone, including typically marginalized groups (like underprivileged people or refugees)
  • Robust data privacy
  • Better integration between systems, even on an international scale
  • Untamperable identity
  • A decentralized authority that safeguards the data in the face of corrupt or incompetent governments

All of that is possible thanks to the unique features and workings of blockchain. This peer-to-peer network adheres to a protocol that communicates and validates each node. Those nodes are devices that act as blocks that store information. All the data contained in any given block can’t be altered without modifying the rest of the blocks. This means that all changes must be approved by the whole network, increasing the security of the data and ensuring the democratic approach to its governance.


How would blockchain work when applied to identity?

Some of the companies developing blockchain-based solutions for managing identities have already proposed a model for it. One of the most interesting ones poses that there will be four layers working in such a system. Those layers include:

  • Physical Documents: the ID documents you already have, such as your passport or your driver’s license.
  • Identity Hub: the things you say about your identity (like the fact you’re of legal drinking age or that you can drive)
  • Satellite Identities: the identities you have that have been verified by authorized third parties (like a driver’s license verified by the DMV or the government validating your passport)
  • Third Parties: anyone that needs to verify your identity (such as a hotel when you book a room, a bank before granting a loan, or even the airport authorities before you get on a plane), a verification that is done automatically through smart contracts.


The basic idea is that all of these layers will come to play through a digital blockchain-powered system that uses the potential of smart contracts. In other words, the system would use a protocol that would enforce a series of rules that govern over an agreement between the part. The smart contract allows for the performance of credible transactions that are trackable, irreversible, and facilitated through an automated process.

To better understand all this, it’s best if you think of the process taking place in 3 domains. There’s the Authorization Domain, where satellite identities let you do things like getting on a plane or drinking at a bar. That’s opposed to your “real identity” – it’s not who you are, it’s what you’re allowed to do by authorities.

Then comes the Authentication Domain, which is the sphere where trusted parties (such as the government, a public institution, or even private ones like a bank) vouch for your identity. In other words, this is the domain where an authority says that you are who you say you are and what you’re allowed to do what you claim you want to do.

In the Authentication Domain, you’d find the Identity Hub, that would be protected through a personal and private key that will tie your identity claims to the evidence that proves those. Those ties are physically manifested in what’s called the Identification Domain.

How will this all work? Let’s say that you are about to rent a house. The real estate agency would require a satellite identity about you and your income. Such a satellite identity would be signed by your key and by an authorized third party, such as a bank. When the real estate agency makes its requirement, the bank will check 2 things. First, if the real estate agent has permission to request such information, and second, the requested information itself.

This is a very simple and quick transaction that would be recorded in the blockchain’s log. In other words, everything that’s asked about your identity would be stored, as well as the identity of the people asking for it. This would bring a lot of transparency and level out the field for everyone, as you could finally know who knows what about you and when did they request said data.


Where could this be used?

For such a system to work, there will be the need to develop certain elements, such as the technological support for it, the authorized parties that will verify the satellite identities, and the rules that would govern the smart contracts. Though that requires a lot of effort, it can actually be achieved – and it would be beneficial for a lot of industries.

Some of the ones that could make the most out of blockchain applied to identity proof include:

  • Banks: they could become a trusted custodian of satellite identities, given how universally trusted they already are. If they can store your money, why wouldn’t you entrust them with your identity’s private key?
  • Health organizations: blockchain identities could be used to provide consent for care and treatment, a transaction that would be recorded with enough strength to be private.
  • Politics: blockchain could bridge the communication gap between politicians and the people. Satellite identities could be used for a lot of things, from sending feedback to Congress members to actually voting with enough security and privacy.
  • Retailers: the identity can be tied to the transaction history and an economic endorsement that proves you can shop online and meet your payments.
  • Real Estate Agencies: satellite identities can be tied to income, repayment history, social profile, and other information. This could end up providing a personal credit score that could be used in a smart contract that could streamline the whole purchase or rental.
  • Food Suppliers: everyone involved in the production and distribution of food can be closely identified and monitored through satellite identities. These can be also enriched with other information about the suppliers, providing more transparency that allows anyone to verify the trajectory of any product.


The challenges ahead

Developing a blockchain-based platform for identity proof is really feasible from a technical standpoint. However, there’s also the need for the creation of a legal framework that could support such a solution. Laying down some ground rules of how it all should work and which would be the authorized parties to enforce satellite identities is a must before going forward. Without such a framework, people won’t just get on board.

A potential solution is starting with government institutions and public organizations that can introduce the concept to the citizens. Once it gains some wide recognition, the system could be implemented in trusted private companies that would be brought to the network. After that, and with the valuable feedback provided by experience, the system could contemplate the inclusion of other actors, such as other private companies, startups, and online services.

The implementation is the main challenge for everyone that’s trying to bring this model to life. Yet, given how little value our current digital identities have, it is not only possible to develop a blockchain-based system – it’s almost imperative.

Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.


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