The management of personal identity has emerged as a significant problem in the last couple of years, and this applies to the real and virtual worlds. These anxieties have led to questioning the validity of traditional centralized identification systems.
Decentralized Identity (DID) is a revolutionary way of identity handling that allows a user to keep complete ownership of their identity without depending on any other party. To create systems that are reliable, privacy-protected, and easy to use, the developers must comprehend and implement the DID technologies.
What is Decentralized Identity?
Decentralized Identity (DID) is an identification method that enables individuals to have and control their digital identities on their own without the need for a centrally authorized body to check or keep their credentials. The basis of DIDs is distributed ledger technology (DLT) or blockchain, which is separated from traditional identity providers like banks, social media companies, and government agencies.
A decentralized identity system allows users to take full control over their identity data, thus eliminating the need for a third party to hold and manage it. Encryption methods are employed for the verification and trust of identities that assure the security and privacy of the same.
Components of Decentralized Identity
- DID Document: The DID document is like a JSON-LD (Linked Data) object that stores the keys and additional information needed for a DID. This effectively is a confirmed snapshot of the features of the DID, such as service endpoints and methods for authentication.
- Verifiable Credentials (VC): These are claims signed digitally by a government body, a university, or an organization that a person has issued. VCs are records that describe certain things, such as citizenship, age, or qualifications.
- Decentralized Identifiers (DIDs): DIDs are identifiers that have one or more associated cryptographic keys and are unique. They refer to the heart of the decentralized identity as they allow users to verify and set up their identity independently, without the need for a trusted authority.
How Does Decentralized Identity Work?
- Creating a DID: Decentralized networks like Ethereum, Sovrin, or Hyperledger Indy require users to create a DID. This DID is associated with a public-private key pair, the public key of which is used to update the DID document, and the secret key is retained at the user’s end.
- Verifiable Credentials: Verifiable credentials (VCs), which are cryptographically signed papers that validate a user’s characteristics, are given to users by organizations (issuers). For instance, a university may provide a VC attesting to a user’s degree completion. A person can have total control over their identity by storing the credentials on their device or digital wallet.
- Verification: The user can present the pertinent VCs to a verifier when they need to confirm their identity or certain characteristics like age, degree, or residence. Without having to get in touch with the issuer directly, the verifier can use the public keys kept in the DID document to verify the VCs’ legitimacy.
- Interaction with Services: After the validation of the DID and credentials, the user can also use different services that are compatible with the DID standard without any hassle. Such services may include a bank, a public agency, or an online platform.
Key Protocols and Standards Behind DIDs
- W3C DID Specification: The DID Specification was created by the World Wide Web Consortium (W3C) to specify the composition and functionality of decentralized IDs. A framework for the creation, resolution, and administration of DIDs across various DLTs and networks is provided by this specification.
- Verifiable Credentials (VC) Data Model: This additional W3C standard specifies the representation, exchange, and validation of verified credentials. VCs serve a variety of use cases, including licenses, certificates, and even access control, and may express claims about any organization.
- Sovrin: Sovrin is a decentralized, open-source identification network based on the Hyperledger Indy blockchain. Numerous businesses and agencies have embraced it as one of the top methods for putting DIDs and VCs into practice for actual identification use cases.
- DIDComm: A communication protocol called DIDComm was created to facilitate safe communications between entities in decentralized identification systems. It is crucial for safe peer-to-peer communication as it enables users to exchange DIDs and VCs in a secure manner.
Advantages of Decentralized Identity
- Enhanced Security: DIDs possess high security against forgery and hacking as they are connected to encryption keys and stored on distributed ledgers. Besides, users are the identity holders, and there is no power that can change the data itself without these people’s consent.
- User Control and Privacy: Decentralized identity systems enable users to control their data and decide which information is shared. There is no need for the usual third-party intermediaries who typically collect, keep, and make a profit from user data. Additionally, privacy is enhanced as users may provide only the necessary details without revealing their complete identities.
- Reduced Risk of Identity Theft: Since sensitive data is kept in centralized databases, traditional centralized identification systems carry a significant risk of data breaches. Large-scale breaches are more difficult to carry out in decentralized systems since data is kept in a dispersed manner.
- Interoperability: DIDs and VCs provide smooth integration across digital ecosystems and may be utilized on a variety of platforms and applications. This creates opportunities for cross-border, cross-industry, cross-sector identity verification.
Digital Identity Solutions Market
The digital identity solutions market is growing at a rapid pace, primarily driven by the demand for smooth user experiences, the rise of digital transformation, and fears surrounding cybersecurity. The application of such technologies as the blockchain, artificial intelligence, and biometrics, among others, for the secure identification and verification of entities is increasing in the digital sphere.
Businesses are using digital identity solutions to protect against fraud and illegal access as online purchases, remote work, and cloud services grow. Over 165 digital or partially digital identification schemes were introduced worldwide by August 2020, according to a 2021 World Economic Forum guide, demonstrating the broad use of digital identity systems.
According to Pristine Market Insights, Decentralized Identity (DID) is a radical change in how we handle and confirm identities in the digital realm. The use of DIDs is capable of changing the whole scenario across several sectors, such as government services, healthcare, and finance, by giving users the power to control their data and allowing them to have safe and confidential exchanges with services.
By using DIDs, developers can lead the way in building a more user-centric, secure, and privacy-respecting web. Following the most current standards, protocols, and use cases will be essential for creating futuristic solutions that meet the needs of today’s digital identity management landscape as the decentralized identity ecosystem expands.
