What is Decentralized Identity in Blockchain?

What is Decentralized Identity in Blockchain?

Decentralized Identity in blockchain refers to a system where individuals have control over their personal identity information, which is stored and managed on a decentralized network of computers, typically using blockchain technology.

In the world of blockchain and digital currencies, the discussion of identity and user security holds great importance. In line with this topic, various services have been developed. One of these systems, which has recently been developed and is at the beginning of its journey, is called Decentralized Identity.

It has become an important subject and has gained many supporters. Decentralized Identity is a new and integrated system that aims to enhance the security of user information on the blockchain. This relatively new system is positioned in web3, differs from traditional identity verification systems, and yields highly practical results. Older identity systems lack sufficient security and, in some cases, lack the necessary accuracy.

Decentralized Identity has emerged with the goal of facilitating economic and social relationships across various platforms and serves as an excellent tool for identity management. The initial concept of this idea coincided with the emergence of blockchain technology and the widespread impact of the coronavirus on offline identity verification, leading to an increased demand for this type of advanced technology.

It is interesting to note that Decentralized Identity stores different and more extensive information than traditional data, such as credit cards, age, occupation, address, gender, etc. Online data, including usernames, passwords, and histories, are collected within this system.

The reason Decentralized Identity has gained many supporters nowadays is that information management through this system is straightforward and it supports a new technology. Additionally, this system is entirely digital and can be used not only in the blockchain but also in real life. In other words, blockchain provides a way to advance and expand this technology and simplify the identity verification system as much as possible. Decentralized Identity, while maintaining high security, is capable of sharing on the blockchain network.

However, the system itself is not stored on the blockchain network, and only through identity verification methods, such as DID, can your identity be confirmed, allowing you to carry out your activities with peace of mind and a sense of security.

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Reasons for the importance of Decentralized Identity:

As we progress in time, having Decentralized Identity becomes more significant for citizens. Currently, according to data provided by the World Bank, one billion people worldwide still lack conventional identification documents. However, it is predicted that in the near future, a considerable number of people will gradually adopt identity technology and possess Decentralized Identity.

Due to the widespread adoption of the blockchain world, this system will soon become popular among individuals and transform into an essential tool. It is true that Decentralized Identity is still in its early stages of development, but it is evident that there is ample room for progress in this technology. In the near future, web3 will expand, presenting us with a newer perspective. With emerging trends towards metaverses and technologies, Decentralized Identity will also grow.

How does Decentralized Identity work?

In general, the management of Decentralized Identity is possible through the use of blockchain-based decentralized wallets. Users of this technology can store their personal Personally Identifiable Information (PII) and manage their key information. Currently, people’s identity information is controlled by intermediaries on various websites, which is certainly not an ideal system. Identity verification using Decentralized Identity is conducted with transparency and high accuracy, as all information originates from a single source.

Decentralized Identity supports the registration of data and the use of it to generate Decentralized Identifiers (DIDs). These data can be verified and confirmed using the public key methods of digital currencies. Unlike centralized identifiers that we currently use, such as email, social media accounts, and credit cards, users have control over Decentralized Identity. In other words, the information of this type of identity is not stored on centralized servers and is not intended to be lost.

What is Self-Sovereign Identity (SSI)?

The concept of Self-Sovereign Identity (SSI) is at the core of decentralized identity. Self-Sovereign Identity utilizes distributed databases to manage Personally Identifiable Information (PII). With the help of this technology, users no longer need to have a collection of identities across different platforms. In fact, user identity is established and accredited through digital wallets and is accessible through trusted applications.

It’s worth noting that Microsoft is currently developing a decentralized identity system and intends to accomplish this through blockchain and Bitcoin. Microsoft is advancing this project in collaboration with ION to create decentralized identifiers. This type of identity is expected to significantly enhance individuals’ ownership rights and protection of their information while safeguarding against security breaches, data leaks, and government surveillance.

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These identity information is not intended to be lost and possesses high-level security. The Principal Program Manager of the Decentralized Identity project at Microsoft recently stated that the ION network does not respond to anyone except its customers and network participants. This resolute approach undoubtedly benefits individuals, and it seems that in the future, even policymakers and influential individuals will not have access to the decentralized identity system of individuals.

Advantages of Decentralized Identity

One of the key advantages of decentralized identity is undoubtedly its high level of security. This system has been developed from the start with this goal in mind. Having such a system can prevent many thefts and various forms of information misuse, while enabling secure information exchange. On the other hand, the user interface of this type of personal identification is very user-friendly and accessible, requiring only an internet connection to use.

As technology experts claim, decentralized identity can play a significant role in reducing theft, fraud, data incompleteness, and low accuracy. In the near future, besides its meta-versatility, this system is likely to have a considerable impact on human activities and bring significant progress for the human race. Decentralized identity will prove useful in areas such as education, healthcare, employment, social activities, law, and more. According to one of the founders of the digital currency Aleph Zero, this system is expected to transform our understanding of identity management in the coming years.

Recent events, such as the collapse of the FTX exchange, demonstrate that decentralized identity has other security applications and can prevent many disasters. The reason for this is the high security of this system, as mentioned above. On the other hand, Verified Credentials (VCs), which include certificates, educational documents, and passports, will be integrated into the blockchain in a cohesive manner. Stability and easy accessibility are reasons why future generations will prefer decentralized identity over manual credentials and centralized information. It should be noted that using decentralized identity is straightforward and not complicated. It only requires internet access, and due to the suitable user interface of this technology, anyone can use it.

Final Words

Decentralized Identity in blockchain is a system that empowers individuals with control over their personal identity information. By leveraging blockchain technology, it allows individuals to store and manage their digital identities in a decentralized and secure manner. With Decentralized Identity, individuals have the ability to selectively share their identity data without relying on centralized authorities, thus addressing concerns of privacy, security, and data breaches. This innovative approach has the potential to transform various industries by providing increased security, privacy, and user control over personal data. As we move forward, Decentralized Identity is expected to play a significant role in shaping our understanding of identity management and fostering a more user-centric and secure digital ecosystem.

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