Identity is something that many of us take for granted. But if you’ve ever had your passport lost or stolen while traveling or been stopped by the police without your driver’s license on you, then you’ll know the temporary panic that sets in when you realize you can’t prove your identity. It represents a loss of freedom.
For many people in the world, that lack of ability to identify themselves is an everyday reality. In 2018, the World Bank conducted a global study into identity and found that over one billion people worldwide have no government-issued ID, meaning they miss out on access to basic services such as a bank account or registered employment. It’s such a fundamental problem that the United Nations has included a commitment to provide everyone in the world with a legal identity, including birth registration, by 2030 into its Sustainable Development Goals.
Given the increasing shift to digital as we live more of our lives online, it’s now generally accepted that digital identities have a role to play in the ID landscape of the future.
Moreover, digital IDs offer enticing potential. Research from McKinsey in seven focus countries found that extending full digital identity coverage could unlock as much as 13 percent of GDP by 2030, with over half of this value directed towards individual citizens rather than government or corporations.
Lone Fønss Schrøder, CEO of a new blockchain platform called Concordium, believes that governments and enterprises should be leveraging the power of new technologies in their efforts to introduce self-sovereign digital identity. In a recent interview, she agreed with the UN position, stating that “having an identity is a human right, and identity programs help governments and agencies to secure that right.”
The Case for Blockchain-based Identities
Blockchain technology has much to offer in the field of digital identity. Along with incomplete coverage, current systems tend to be fragmented, and physical documents represent a point of weakness, as illustrated in the opening paragraph. It’s just too easy to lose or damage a passport or driver’s license. Furthermore, removing an individual’s identity documents is a coercion technique used by people engaged in crimes such as human trafficking, child marriage, and other forms of exploitation.
In contrast, a digital identity stored as a blockchain record will exist permanently. It cannot be stolen, deleted, or otherwise tampered with. If it’s stored on a decentralized public blockchain, it’s kept secure and safe from hackers. Even an entire government of corrupt officials couldn’t interfere with it.
Individuals can be equipped with private keys that mean only they can access the digital identity, and they can decide who has access to view it for verification purposes. This idea of user control is why we refer to it as “self-sovereign” digital identity.
However, new technologies of the kind being pioneered by Concordium take the concept of digital identity privacy a step further. As Ms. Fønss Schrøder puts it, the platform is a kind of “disruptor of disruptors.” The challenge with many public blockchains is that enterprises are reluctant to adopt them to do business, partly because they allow people to transact pseudonymously. In the real world, there are many reasons why a company needs to identify the people with whom they’re doing business, most often compliance-related.
But from the consumer side, meeting these requirements involves compromising our privacy, leaving copies of sensitive information lying around all over the internet and in the hands of companies.
A New Approach to Self-Sovereign Identity
Concordium takes a different approach than most public blockchains, which Fønss Schrøder asserts will spur enterprise adoption of the platform. As part of the technology stack, it operates an identity layer that requires a user to undergo an off-chain verification to open an account using an established identity service provider. The provider then creates an on-chain secure proof that allows the user to get their identity verified, but without any other party being able to view their ID.
There is a multitude of practical use cases for this kind of self-sovereign digital identity. Merchants selling age-restricted products could verify someone is old enough to purchase without needing to see an ID. Someone could rent a car without handing over a copy of their driver’s license. In the context of the ongoing pandemic, if you wanted to take a flight or attend a large event, you could demonstrate your immunity without having to reveal health records.
However, what would happen if there were to be an outbreak of Covid-19 following a flight, and the authorities ordered that those on the plane hand over health records? Or what if you ran a red light in your rental car and the police wanted to issue a fine?
In this case, Concordium uses an independent third-party called an “anonymity revoker” who could decrypt the on-chain identity proof. The identity provider could then hand over copies of the documentation required by the authorities. It’s important to note that neither party can act in isolation, and for most everyday purposes, users could transact in privacy without interruption.
A Call to Action
It’s an intriguing way of solving a key challenge for enterprises considering blockchain adoption. However, as Fønss Schrøder points out, “leaders have to be bold with embracing new innovations.”
Solving the digital identity challenge has far-reaching implications for online privacy as well as the economic and humanitarian benefits that it can bring. As this emerging field evolves over the coming years, blockchain offers vast possibilities to change the way we think about our identity.