Over the past few years, there has been wide talk about the decentralized internet and Web 3.0. Wherever you look, there is a podcast, article, group discussion or social media post discussing the rise of blockchain technology, data, artificial intelligence, or the metaverse. As the world embraces the ‘future of the internet’, personal data and digital identity information remain a key talking point on how they will be controlled and owned in Web 3.0 ecosystems.
Before talking about the rise of ‘decentralized digital identities (DIDs)’ platforms or why they matter in the adoption race for Web 3.0 platforms, we need to understand what these technologies are. Web 3.0 is dubbed the ‘vision of the future internet’, majorly built on blockchain technology. Blockchain technology refers to a digital ledger that stores data on a transparent, immutable, decentralized platform. While most know the technology as a foundation of cryptocurrencies, the technology has expanded to virtually all industries around the world, offering great value to businesses and individuals as well, from finance to security.
On the other hand, decentralized identities are digital identities stored on a blockchain platform. In more technical terms, decentralized identities (DIDs) are based on a trust framework for identity management. It allows users to generate and control their own digital identity without depending on a specific service provider.
Today’s internet, known as Web 2.0, has been riddled with extensive digital identity and personal data problems including cybercrime, identity thefts, data selling without consent, leaking and hacking. According to a data research report, “The 2021 Cost of a Data Breach Report”, a global study sponsored by IBM Security, the total identity theft losses alone cost $502.5 billion in 2019 and increased to $712.4 billion in 2020.
With Web 2.0 being the technology influencing about 80% of our waking life daily, digital identity data is becoming more and more important to protect and safeguard. In this respect, developers have turned to blockchain technology as the prime solution to Web 2.0’s digital identity problems and power the mass adoption of Web 3.0 technologies. The aim is to create digital identities that easily mesh with Web 3.0 and the future digital world and create a frictionless experience for users.
The role of decentralized identities (DIDs) in Web 3.0
To understand exactly how blockchains could expand the world of digital identities in Web 3.0 applications and platforms, we will focus on some of the leading projects in the space. According to Fraser Edwards, co-founder and CEO at cheqd, a digital identity platform for Web 3.0, the future of the internet lies in self-sovereign identity (SSI). Edwards believes “ the utility and relevance of SSI and decentralized identity are becoming increasingly apparent” as Web 2.0 applications face daily data hacks and unauthorized monetization of personal data.
cheqd employs the SSI channel, a method that centres the control and ownership of information around the user. SSI removes the need to store personal information entirely on a central database and gives individuals greater control over what information they share safeguarding their privacy. It’s a fully user-centric and user-controlled approach to exchanging authentic and digitally signed information in a much more secure way.
Another project leading the drive to decentralized identities is the ShareRing network, a user-focussed ecosystem for the issuance, storage, verification and sharing of personal information and key documents. The platform allows users to get a ShareRing ID and Vault, the two main features of the app, which verify the credibility of the uploaded personal information and then leaves the management of data to the user. Although this information is hashed onto the blockchain, none of the uploaded assets is ever stored on a centralized database. This in return results in the user owning the responsibility of managing their IDs and documents, as ShareRing does not store or manage this on their behalf at all.
The platform also includes the eKYC feature that enables faster and more efficient KYC processes for financial institutions, and NFT Events, a feature that lets users easily ticket events, removing the risks of counterfeiting via NFTs. The eKYC feature also benefits financial institutions and corporations by reducing the hustle of collecting user information every time a customer signs up.
Final words
All in all, the exponential rise in cases of data breaches and hacks on Web 2.0 applications, calls for a new system that protects users data and privacy on the internet. Additionally, the rapid growth of the decentralized internet means that digital identities are becoming more important than ever as users turn to virtual worlds and metaverses in future.
Lastly, decentralized identities will allow no one to “regulate” or share a user’s personal data without their permission. Web 3.0 allows us all to take control of our own digital data and lives while opening a simple and fast channel for corporations to collect KYC information from their customers.
