The Future of Identity: How Blockchain IDs are Changing the Game

The Future of Identity: How Blockchain IDs are Changing the Game

Did you know that identity theft affects millions of people worldwide each year? In fact, according to a report by Javelin Strategy & Research, over 14 million Americans fell victim to identity theft in 2019 alone. As more of our lives move online, the need for secure and reliable digital identification becomes increasingly important. This is where blockchain IDs come in. In this blog, we'll explore the world of blockchain IDs and how they are changing the game when it comes to digital identity. With enhanced security, convenience, and control over personal information, blockchain IDs have the potential to revolutionize the way we think about online identity. So, let's dive in!

What is a Blockchain ID?

A blockchain ID, also known as a self-sovereign identity (SSI), is a digital identity system that utilizes blockchain technology to provide a secure and decentralized way of verifying an individual's identity. Unlike traditional identification systems that rely on centralized authorities to verify identity, blockchain IDs put the control back in the hands of the individual.

With a blockchain ID, an individual's personal information is stored on a decentralized ledger, which can only be accessed through a cryptographic key that is controlled by the individual. This means that no one else, including third-party services or government agencies, can access an individual's personal information without their permission.

Blockchain IDs have the potential to revolutionize the way we think about digital identity. By putting control back in the hands of the individual, they offer enhanced security, privacy, and convenience, which can benefit everyone from individual users to businesses and government agencies.

Phases of Blockchain IDs— How Digital Identity Evolved?

The evolution of digital identity has gone through several phases over the years. Four key phases in this evolution are:

  1. Centralized Identity: In the early days of the internet, most digital identity systems were centralized, with users relying on a single organization or platform to manage their identity. This approach gave companies and governments significant control over personal data, which could be vulnerable to data breaches or misuse.

  2. Federated Identity: With the growth of the internet and the rise of multiple platforms and services, federated identity systems emerged. These systems allowed users to use a single identity to access multiple services, but still relied on centralized identity providers to authenticate and authorize users.

  3. User-Centric Identity: As concerns grew about privacy and control over personal data, user-centric identity systems were developed. These systems put users in control of their own identity data and enabled them to choose when and how to share it with others. However, user-centric identity systems still rely on centralized providers to verify identities.

  4. Self-Sovereign Identity: The most recent phase in the evolution of digital identity is self-sovereign identity, which aims to give users complete control over their own identity data, without relying on any central authority. Self-sovereign identity systems use decentralized technologies like blockchain to enable users to manage their own identity data and share it with others on their own terms, without the need for third-party verification.

How Blockchain IDs work?

Blockchain IDs work by utilizing blockchain technology to create a secure and decentralized digital identity system. The following steps explain how blockchain IDs work:-

  1. Creation of the ID: A blockchain ID is created by an individual who generates a public-private key pair. The private key is kept secret and used to sign transactions and provide proof of ownership of the ID. The public key is shared with others to verify the identity of the individual.

  2. Verification of the ID: When an individual wants to verify their identity, they present their blockchain ID to the verifier. The verifier then uses the public key to check if the ID is valid and if the information provided by the individual matches the information stored on the blockchain.

  3. Storage of the ID: The blockchain ID is stored on a decentralized ledger, which is maintained by a network of computers. This makes it virtually impossible for a single party to manipulate or control the identity data.

  4. Access and control of the ID: The individual retains complete control over their blockchain ID and can choose to share specific information with third parties when needed. This is done by creating a unique digital signature with their private key, which allows them to prove ownership of the ID and grant access to specific information.

Pillars of Blockchain Identity

Self-Sovereign Identity consists of three fundamental components:

Firstly, there is blockchain technology, which is a type of distributed database that is shared across a network of computers. It maintains a permanent record of information that cannot easily be modified, manipulated or hacked.

Secondly, there are Decentralized Identifiers (DIDs), which enable individuals to authenticate themselves online without relying on a centralized organization to validate their identity. Instead, they can use a unique code stored on a blockchain, which gives them greater control over their personal information and who can access it. This method is similar to presenting a driver's license or passport to prove one's identity in the physical world.

Thirdly, there are Verifiable Credentials (VCs), which are digital versions of paper or digital documents that can be presented to verify one's identity. These credentials are cryptographically secure, making them highly resistant to fraud and forgery.

Principles of Blockchain Identity

There are several principles that underpin self-sovereign identity (SSI). Some of the key principles are:

  1. Ownership: The individual has ultimate control over their identity data, including how it is collected, stored, and shared. This means that individuals have the ability to grant or revoke access to their personal information.

  2. Portability: Individuals should have the ability to take their identity data with them wherever they go, without being locked into a particular platform or service. This allows for greater flexibility and convenience in the management of one's personal identity.

  3. Interoperability: Self-sovereign identity systems should be designed to work seamlessly with other identity systems and technologies. This allows for greater flexibility and interoperability between different systems and services.

  4. Security: Self-sovereign identity systems should be designed with security in mind, to ensure that personal information is protected against unauthorized access, manipulation, or theft.

  5. Privacy: Self-sovereign identity systems should prioritize the privacy of individuals, ensuring that personal information is only disclosed on a need-to-know basis and with the explicit consent of the individual.

  6. Inclusivity: Self-sovereign identity systems should be designed to be accessible and usable by all individuals, regardless of their technical proficiency, social status, or economic resources. This ensures that everyone has equal access to the benefits of self-sovereign identity.

Concerns Regarding Consolidated Digital Identifiers, Certifications, and Identification Documents

There are several problems associated with centralized digital identifiers, credentials, and IDs. Here are some of the most significant issues:-

  1. Data Breaches: Centralized databases are prime targets for hackers, and a single breach can result in the loss or theft of millions of personal records. This puts individuals at risk of identity theft, financial fraud, and other forms of cybercrime.

  2. Lack of User Control: With centralized identity systems, users have limited control over their personal data. They are often required to disclose sensitive information to third parties, and they have little say over how that information is used or shared.

  3. Limited Interoperability: Centralized identity systems are often proprietary and closed, making it difficult for users to use their identities across different platforms and services. This creates unnecessary friction and hinders innovation.

  4. Single Point of Failure: Centralized identity systems rely on a single authority to authenticate and verify users. If that authority is compromised, the entire system is compromised, and millions of users could be impacted.

  5. Lack of Privacy: Centralized identity systems can expose users to unnecessary surveillance and tracking, as their personal data is collected and stored in a centralized location. This can lead to abuse of power and violations of civil liberties.

  6. Cost and Inefficiency: Centralized identity systems can be expensive and complex to manage, requiring significant resources and infrastructure to maintain. This can lead to inefficiencies and unnecessary costs that are passed on to users.

Examples of Data Consequences

Here are some examples of the consequences of data breaches and relevant statistics:-

  1. Financial Losses: Data breaches can result in financial losses for individuals and organizations. According to a 2021 study by IBM, the average cost of a data breach is $4.24 million. This includes the cost of investigating and containing the breach, legal fees, and compensation for affected individuals.

  2. Identity Theft: Data breaches can expose personal information, such as Social Security numbers, credit card numbers, and login credentials. This information can be used to steal identities and commit financial fraud. According to the Identity Theft Resource Center, there were over 1,100 data breaches in 2020 that exposed over 300 million records.

  3. Reputational Damage: Data breaches can damage the reputation of organizations, resulting in lost customers and revenue. According to a 2021 survey by KPMG, 38% of consumers would stop doing business with a company that suffered a data breach.

  4. Regulatory Fines and Legal Liability: Organizations that fail to protect personal data can face regulatory fines and legal liability. For example, the EU's General Data Protection Regulation (GDPR) allows fines of up to 4% of an organization's global revenue for data breaches. In 2021, Google was fined €50 million under the GDPR for violating data protection laws.

  5. National Security Risks: Data breaches can also pose national security risks if they expose sensitive government or military information. In 2015, the US Office of Personnel Management suffered a data breach that exposed the personal information of over 21 million individuals, including government employees and contractors. This breach was attributed to Chinese hackers and was considered a significant national security threat.


In conclusion, blockchain-based digital identities, also known as Self-Sovereign Identity (SSI), offer a transformative solution to the current issues with centralized digital identity systems. By leveraging blockchain technology, SSI management provides enhanced security, increased privacy, improved user experience, reduced costs, interoperability, decentralization, and innovation.

Blockchain IDs are a step towards a more secure, decentralized, and user-centric internet. As more organizations and individuals become aware of the benefits of SSI management, we can expect to see greater adoption of blockchain IDs across various industries, from finance to healthcare, and beyond.

While there are still some challenges to be addressed, such as legal and regulatory frameworks, blockchain IDs offer a promising future for the digital identity landscape. As the technology continues to evolve and mature, we can look forward to a more trustworthy and secure digital world, where individuals have greater control over their personal data and privacy.

Jul 3, 2023

Jul 3, 2023