Saturday, March 10, 2018

Digital ID, the Next World Changing Development
Joe El rady

Identity verification comprises one of the biggest problems of modern technology (and life). The transition to a digital economy requires radically different identity systems. Distributed Ledger technologies, such as Blockchain, may hold the key to solving this vexing and lingering problem.

As financial and other transaction disintermediation accelerates with the advent of new financial technologies and infrastructures, portable, scalable, extensible, verified digital identity will become essential. Consumers will need user centric, verified, hard to forge/counterfeit digital identity verification (what Dick Hardt calls Identity 2.0). Most importantly, every person’s digital identity should be consolidated to one record of truth—all the information should live in one place.

Usernames and passwords (existing frameworks such as OpenID, OAuth and SSO) have not and cannot solve this problem. Passwords do not and cannot identify a person, they can only authenticate a person—they can’t prove that you are you, they can only prove that you are a directory entry.

Furthermore, a significant portion of the world’s population lacks the necessary digital credentials to fully participate in the digital economy. Access to health, banking, and education remains difficult for more than 1 billion people, including refugees and displaced populations, without ID. This issue is currently being investigated by the United Nations, Microsoft, the Linux Foundation, MasterCard, Visa and many others. This problem seems analogous to the land-line telephony situation in the Developing World (given the difficulty of constructing landline telephony networks in underdeveloped places such as rural Latin America and Sub-Saharan Africa, the idea was abandoned in favor of cellular telephony—this is called skipping a generation—indeed, a landline network may never be built in these places). In the same way, given the difficulty of providing paper ID to 1.1 billion people, governments may choose to skip a generation of technology and just give them all digital forms of ID.

Where does Blockchain fit here? According to Peggy Johnson, Executive Vice-President of Business Development, Microsoft: “technologies like blockchain can play a powerful role in creating a secure, portable, personal solution”. Almost everything we do today leaves a digital signature. Yet this signature is scattered among different services that use it primarily for their, rather than our, benefit (creating wide dispersion and narrow segmentation, all of which creates economic value for the services that own pieces of our information—Google knows what we look for, FaceBook knows what we talk about, Apple knows where we go). One main promise of blockchain is to rebalance that dynamic so we can reclaim and consolidate our digital identities.

In reclaiming and consolidating our digital identities, we decide who gets to see what and how much. (A great analogy would be showing a Driver's License to a bartender in order to prove legal drinking age—all the bartender needs to see is the picture and and the birthday, but, in the process, he also sees your address. Blockchain would allow us to share only enough information to verify identity and drinking age, without sharing address and other information.)

In fact, one of the breakthrough features of blockchain is its usage of zero knowledge proofs to manage data. This allows users to disclose their ownership of certain certifications and grant access without revealing the information contained within. The dream of this type of encryption is that end-services can verify identity while the data is hashed. For example, imagine a bank running a credit check on you, while only handling your credit history data in encrypted form, so that even if that data were stolen it would be useless. These zero knowledge proofs provide an opportunity for private companies to participate in digital identification, overcoming government inertia. Companies can, for example, create relay services that take identification verification requests from end users, relay those requests to government server repositories, and then relay the only the positive or negative verification with no further information shared. Finally, beyond identifying and verifying people, Digital ID will need to expand to devices and legal entities with the adoption of the internet of things expected to connect 200 billion+ devices to the internet by 2020.

A consortium of companies, including uPort and Microsoft, recently announced the creation of the Decentralized Identity Foundation. One aim of the DIF is to create universal protocols for identity verification— similar to global standards for financial transactions, or DNS protocols, which transcend borders. The time is ripe now for private industry to step in.