Blockchain Applications in Identity

Blockchain Technology for Digital Identity

Blockchain Identity

Blockchain technologies make tracking and managing digital identities both secure and efficient, resulting in seamless sign-on and reduced fraud.

Banking, healthcare, national security, citizenship documentation, online retailing or walking into a bar, all require identity authentication and authorization. I.D. Verification is a process intricately woven into commerce and culture worldwide. Due to the lack of common comprehension and often-unchecked cyberspace of personal information, Identity in the context of technology is facing significant hurdles. Events such as hacked databases and breached accounts are shedding light on the growing problems of a technologically advanced society, without entirely outpaced identity-based security innovations.

Alongside biometrics, blockchain technology offers a solution to many digital identity issues, where identity can be uniquely authenticated in an irrefutable, immutable, and secure manner. Current methods use problematic password-based systems of shared secrets exchanged and stored on insecure systems. Blockchain-based authentication systems are founded on irrefutable identity verification using digital signatures based on public key cryptography. In blockchain identity authentication systems, the only check performed is: was the transaction signed by the correct private key? The cryptography allows us to infer that whoever has access to the private key is the owner and the exact identity of the owner is deemed irrelevant within the parameters of this authentication protocol.

Our current centralized systems are identity-centric and profoundly broken. We only get one social security number, birthdate, and name. Using this information set as the keys to hundreds of different online accounts and portals, many necessary to essential day-to-day functions like banking, purchasing, and emailing, only protected by a single password is insecure for not only the funds and information held in those accounts.

This universal low-security standard opens individuals up to a world of probable possibilities like identity theft, fund theft, fraud, companies profiting from selling our personal data, and more. In many cases, it is mandatory for users to subject themselves to these security vulnerabilities if they want to online bank or order goods. With each online transaction and registration, we barter our personal information to gain access to services. One unwilling to share their personal information will automatically have lowered access to resources. As the brick and mortar world hangs on by a string of novelty, we will be nearly forced more than we already are to disclose more and more personal information to authenticate our actions.

Blockchain presents itself as an excellent solution to personal security woes and haphazard identity verification processes in the post-modern world. In this guide to blockchain applications in Identity we will further discuss the problems associated with centralized Identity authentication, the solutions decentralization offers, and specific use cases for Identity-related blockchain applications.

The Problem with Centralized Identity Management

We reviewed a lot of the overarching problems with current digital identity management and authentication protocols. Systems rely on collecting personal information from their user base, but once they own that information in exchange for access, the problems unfold in multiple ways. Here are the three most significant problems the current centralized identity industry creates:

  • Companies Sell Personal Identity Information

When databases act as a centralized repository for heaps of personal identity information (PII) all linked to real people, the storage center instantly becomes a product with value beyond our comprehension. The personal data industry is a million dollar one. Whether that company sells that product to the highest bidder themselves or a criminal element becomes involved, your information is a commodity. Even the most “reputable” companies partake in buying and selling user data, and you may have even agreed to it when you registered. Businesses use your data to profit using your stats and demographic info to improve their marketing strategies. This marketing use is the least damaging and nefarious company use of PII. However, many companies are not adequately protecting (nor are they motivated to) user data or are selling it off in droves to unideal parties. The centralized identity management systems businesses employ 1) hoard data in vulnerable databases 2) often use it for personal gain 3) sells it as a “product” to third-parties with or without user permission.

  • Identity Theft

Identity theft happens when a fraudster gains access to your personally identifiable information (PII) through one of many strategies. Millions have their identity stolen annually in the U.S. and become victims of fraud. Online thieves can access your PII by creating a fake site and requesting personal info to allow access, the tried and true email scams, planting malware on your computer, hacking a weak password with no two-factor authentication, finding your old mobile phone or laptop in the trash, and targeting your children online. Fraudsters can use spyware to harvest your PII as you check your checking account or PayPal. These nefarious actors might not even initially use your information themselves, but instead, sell it to other parties. Your personal information is incredibly valuable to a lot of different online players for a variety of reasons. Just one of the ways it is valuable is to identity thieves who can then file and collect your tax return for example.

  • Excessive Cloud Reliance

Cloud adoption is rampant and has presented itself as a cost-saving means for flexible data storage. Cloud migration is the latest wave of data security strategies. This completely “hot” storage method might benefit corporations, but it ushers in an entirely new set of security issues and vulnerabilities. It moves information that used to be on a vulnerable centralized server and migrates it to a centralized cloud with an entirely new set of security challenges. Many companies do not fully understand the risks and impact cloud adoption has on their user data. The burden of responsibility weighs heavily on companies to pick a cloud service provider that can meet their security standards and needs. It is a trust-heavy relationship that requires faith and good judgment. Unauthorized cloud use is also a common practice because providers want to allow their clients on-demand self-service which lowers overhead for both parties. Cloud storage also makes it harder for users to ensure data deletion. Since data is distributed over several different storage devices within the cloud storage network, deletion might never fully occur and would be difficult to verify.

Blockchain Identity News

Defining Decentralizing Identity Management

The identity management industry and really any service that requires users to provide personal data could improve their current models by introducing blockchain infrastructure. Cryptography can be used to separate data from identity. Through this separation, companies can obtain the data they need while still preserving user privacy. This creates a win-win situation for both user and provider.

Here are three main concepts that define decentralized identity management:

  • Public/ Private Key-Pair

This is the foundation for how blockchain cryptography functions. Public/Private key-pairs are also known as “asymmetric cryptography.” The system uses key pairs to eliminate the need for third-party verification. Private keys are known only by the owner, while public keys can be distributed to anyone. The public key is used to verify that a holder of a specific public key is the one sending the message. The private key can decrypt the message that was originally encrypted with the public key. This method eliminates the need for personal data to be used as a means to provide verified and authenticated access.

  • Blockchain Identity

A universal blockchain identity that could be accepted at all major venues where personal information is now required. A widely used blockchain I.D. concept has yet to be adopted but is potentially viable. Having a single blockchain identity could reduce the need to share any personal information at all. Your identity can be authenticated once on the blockchain, and you could use a symbol of this authentication to provide you with access to other online or on-chain portals and platforms. This could put an end to identity theft while streamlining currently tedious “registration” processes where we put all our private info up for grabs. Blockchain provides technology to make self-sovereign identities possible empowering individuals to own their identity information fully.

  • Immutability

The blockchain ledger is immutable by nature. It creates an unalterable record that can lock in variables that authenticate identity making it consistently accurate even with the passage of time. Immutability reduces the need for repetition and constant verification and authentication across various platforms. Unaltered information on the blockchain is what makes the concept of a universal blockchain I.D. incredibly sound. This reduces the need for sprawling data stores and protects against identity theft. There is no need to repeatedly enter in personal information when we can securely authenticate identity once. We only receive one driver’s license, and now we can drive. That information is effectively immutable, and we can drive any car we’d like on any road. Why is the internet not designed this way?

Different Sectors that Could Benefit from Blockchain Applications in Identity

  • Government Agencies
  • Insurance
  • Real Estate
  • Financial Services
  • Health Care

Any industry or venue (decentralized or centralized) that requires identity verification could benefit from blockchain-based authentication to absolve them of having to securely store personal data for users and to protect user privacy. It will also encourage more users to register and use services. It could also work to reduce legal costs and other expenses incurred due to identity theft and fraud.

Blockchain Identity Use Cases

One of the top use cases for blockchain is digital identity. The public/private key system that we’ve described up above. So while digital identity is a use case for blockchain, what are some more specific use cases for blockchain applications in identity?

Distributed ledger technology can be applied to identity applications in the following areas:

  • Anonymous Data Collection & Analysis

Having accurate and comprehensive data stores is useful for many reasons ranging from saving lives in a medical emergency to improving marketing strategies. Real-time data stored on the blockchain can be analyzed and then used to improve various industry practices. Traditionally databases are not secure, and information related to consumers or patients is directly linked to their identity. This link makes people less likely to tell the truth when being surveyed; it additionally puts them at risk for a privacy breach. If patients or consumers could be assured that their data is secure and not associated with their identity, they would be more willing to provide accurate information about their demographic.

  • E-Residency

Government IDs verified on the blockchain could help residents vote, file taxes, and perform other related citizenship processes in a more secure and streamlined fashion. Virtual residency authentication could help to immutable provide citizenship. All government transactions could be moved onto the blockchain using virtual e-residency identities to streamline all interactions between the government and citizens. For countries with universal healthcare, patient portals could be integrated, and everything from banking to medical prescriptions could be performed in one e-resident portal.

  • Immigration & Biometric Identity

A card could be linked to a digital identity on the blockchain and act like a temporary bank account and I.D. card when entering a new country. This would allow those who do not have access to other I.D. documentation the ability to transact without cash and for immigration services to monitor transactions. Travelers could also link their credit or debit cards and monitor account activity while only the account holders could access the funds and personal information.

Nearly one-sixth of the world’s population does not have documented proof of their existence. Blockchain could help establish identity for this one-sixth giving them access to education, banking, mobile communication, and more. Biometric data, when used in conjunction with blockchain tech, works to create immutable identity records on the distributed ledger. Blockchain identity could be life-saving in refugee camps and allow for more families to reunite amidst diaspora.

  • Self-Sovereign Identities

The blockchain has a secure, distributed ledger that could allow users to control their identities rather than a centralized third-party, eliminating identity sprawl and identity theft. It would also improve user trust if virtual identities were self-sovereign. Several use cases fall under the self-sovereign identity umbrella in the different ways we could use the “self-sovereign identity” to secure verification without a centralized repository:

  • Passports
  • Wedding Certificates
  • Death Certificates
  • Drivers Licenses
  • Taxes
  • Censuses
  • Identity for IoT

 Identity management is not just for humans, IoT devices have their own identities. They each require verification and identity management. Improving identity management for IoT would open up a wealth of workflow possibilities. IoT-to-User transactions could allow for a car’s autonomous identity to authenticate a user who has their own blockchain identity. The two blockchain-based identities could authenticate and create a trustless interaction without a third-party. Similarly, IoT-to-IoT transactions between two autonomous assets could transact on the ledger via smart contracts using their blockchain-verified asset identity.


Blockchain will dictate future identity management solutions for individuals, governments, and businesses. Identity management has been identified as one of the most significant use cases for blockchain technology since its original conception. It can work to prevent more pertinent and apparent issues like identity theft and fraud, but it can also provide an entirely new framework for how we think about personal data and identity in virtual spaces.

It can be overwhelming and horrifying to think about the possibly hundreds of times we’ve registered for websites and given away our valuable and private information in exchange for goods or services. Blockchain and asymmetrical cryptography are extremely viable solutions to this larger cybersecurity issue. It will soon become an industry standard that websites use DApps and public/private key pairs to eliminate the need for identity verification. There may be a standardized Blockchain I.D. industry giant that will create a universal authentication on the blockchain that will be immutable and used as pre-supposed identity verification across all websites and blockchains.

The possibilities for identity management blockchain applications are endless. Making these processes more efficient and secure is crucial for a functioning trustless future to exist. Banking, healthcare, national security, citizenship documentation, online retailing or walking into a bar, all require identity authentication and authorization.

Verifying who we are online is a necessary part of transacting virtually. The current wild west password and two-factor authentication predicated models, and excessive reliance on cloud storage is already outdated in their capacity to meet user needs. Blockchain has the sound infrastructure to effectively disrupt identity management as it exists across industries and sectors. Identity applications in blockchain can provide us with improved data stores and fully trustless transactions. It could be the foundation for privacy as an inherent right, not a privilege.