With the integration of the digital world into more aspects of our lives, digital identity has become one of the angle questions. We, as consumers or internet users, have got plenty of them. Each website we visit provides you with a login and password, so you have got quite a number of those in your collection.

Digital identity causes many questions in society, the hottest being your data privacy and its security. The other concern is that we all have too many logins and passwords, which makes it inconvenient. Ideally If only one simple but secure confirmation process for all the variety of logins could be enough. Apparently, such a solution exists.

Wikipedia defines personal identity as the unique numerical identity of a person over time. 

Our personal identification documents include a driving licence, passport, social security number, and other forms of physical IDs. We use them to confirm our identities. 

With growing digitalization and many services being moved online, we are often required to create IDs online using the credentials of our official documents (IDs). Each time we share this private information, it raises the question of who has access to it and whether it can be hacked or stolen. Protection and data transfer of such information are reflected in relevant laws globally. However, this doesn’t guarantee the safety of your data as it still can be lost, passed to third parties by mistake, or stolen. 

Blockchain technology can help resolve the issues specified above. Today a few companies are developing solutions for the Digital ID based on blockchain.

How does Blockchain help with IDs?

How does Blockchain help with IDs?

Imagine you need to confirm your passport details for some online banking operation or provide your proof of address for the KYC. Each operation causes risks of security and requires time. 

A single ID based on the blockchain can help you to keep off time-wasting and avoid security risks. Personal data, which you provided earlier for the Digital ID ( in most cases, it is the same proof of address, confirmation of mobile number, passport details), is stored on a distributed ledger.  So there are no chances for copying your data without the system noticing it. Moreover, you will not need to always go through the same procedure of representing your documentation online, as you have got saved under your single Digital ID already. 

Furthermore, companies working on these solutions today are using private blockchains primarily. Private blockchains permit setting nodes only to those institutions that are official governmental bodies, health clinics, banks, and other organisations that serve us daily. These companies also go through the security procedures, and access to your data comes only after your approval. Therefore, the settings of the blockchains help minimise the risks of data being stolen. Also, you can always track the history of the data access granted. 

From the business point of view, the Digital ID system built on the blockchain reduces the organisational cost of authentication procedures, as this process becomes automated. 

Global Adoption of Digital IDs

Global Adoption of Digital IDs

One of the countries with the most positive attitude and laws towards blockchain innovation is Estonia. Estonia has implemented Digital IDs on a national level and even holds elections using this system. We wrote more about this in the article E-Estonia: How It Become a Digital Hub.

Digital IDs operational management was created by tech giant IBM for Canada and the USA. Lately, Digital IDs are getting popular in Scandinavian banks.  

These business examples have already passed a reality check and proven their effectiveness in solutions such as: 

  • reducing business operational costs
  • eliminating risks of stolen personal data
  • to be user-friendly and time-consuming 
  • help to prevent fraud
  • set more transparency on who and when accessed the data allowing the end-user to control this access.

From all the positive sides, blockchain can create a better, safer, and easier solution to the questions of storing our personal data, its transfer, and its security. Blockchain solutions for digital IDs are not available everywhere yet, but we hope this convenient innovation will become widespread and globally adopted with time.

Author: Aleksandra Leonenko