Blockchain technology provides several benefits to individuals, organizations, and IT systems. This is because it is a decentralized, interoperable, and immutable information infrastructure that isn’t easy to hack into.
To provide some context for all business leaders, organizations have previously managed digital identities in large, centralized databases. This makes them vulnerable to fraud, theft, and misuse. However, the decentralized nature of blockchain means that digital identities can now be managed independently. This is known as self-sovereign identity (SSI).
In this article, we’ll investigate how blockchain can secure your identity by examining its scope and the latest key stats. We'll also touch on the industries using blockchain, how it helps secure digital assets, five ways to use blockchain in practice, and its use cases.
The current scope of blockchain
Blockchain has most famously been used to validate various forms of cryptocurrency. But, as many of us already know, the potential scope of the application of blockchain is much broader than that.
When it comes to securing digital identities, commerce and finance industries have a particularly strong use case for blockchain. This is because the decentralized and sovereign nature of blockchain addresses issues like data inaccessibility, data insecurity, and identity fraud.
To put things into perspective, blockchain is a way of storing information in a decentralized ledger across nodes in a network. Within these nodes, each block of information is immutable and validated through cryptographic relationships between each of these “blocks” of information.
In this way, the stored information is more accessible and can be updated uniformly across the board. Also, these blocks of data are less vulnerable to hacking. This is because only certain information is visible and accessible thanks to encryption.
Blockchain: The latest key stats
With concerns about increasing data privacy and a desire to move towards self-sovereign identity management, here are some interesting statistics related to the use of blockchain.
According to Statista, global spending on blockchain technologies is set to increase to an estimated 15.9 billion dollars by 2023. The financial sector also accounts for 60 percent of the market value of blockchain. This speaks of the need to secure all kinds of data, both personal and corporate, and bring all attempts to secure it in line with the EU’s General Data Protection Regulation (GDPR) standards.
Industries using blockchain for digital identity
In essence, blockchain is a way of storing information in a decentralized manner. Therefore, it can be used across a range of industries. For example, blockchain can be helpful when authenticating users across a range of online services and platforms.
This means that users no longer have to remember multiple passwords and login details, which guarantees a more streamlined user experience.
While individual users will increasingly use blockchain to manage their own digital identities, large organizations can also streamline their work processes through a more efficient blockchain single sign-on (SSO) system. This allows for the use of multiple applications without any friction. And, it is applicable across most industries.
How blockchain helps in securing digital assets
The decentralized nature of blockchain helps to secure digital assets. This is because it gives the user more power to create their own SSI (which isn't stored on a centralized database).
With this level of sovereignty, users can manage multiple identities. Although, this depends on what online activities they want to carry out. Both public and private blockchains allow for different kinds of information sharing, so users can carry out a variety of transactions with public and private entities. This means more autonomy for the user and a more secure way to manage all digital assets.
Five ways industry leaders can use blockchain to secure digital identities
For all business leaders interested in blockchain's various applications, here are five ways that you can use it to secure digital identity.
1. Secure Identity
Blockchain can help to secure digital identity within an organization. This is because the “block” of information that stores someone’s identity information is immutable and cannot be tampered with.
2. Prove Credentials
Proving your identity is easy with blockchain and the use of cryptography. The way in which the blockchain is designed means that information gets validated through the trust associated with the issuing party.
3. Creative Licensing
Blockchain technology can support “smart contracts”. These help artists to manage their digital rights and distribute revenue to all creative parties involved. This technology can also help verify both creators and consumers of creative work through a reputation system that links specific “addresses”. Therefore, it can assist with protecting an artist’s work and promote collaboration and better behavior.
4. Land Rights
Technologies, like blockchain, can help develop constructive legislation and regulation around land rights. Blockchain technology is traceable and transparent. Thus, it can be used to support a ledger of land transactions across the agricultural industry, for example, and contribute to the efficiency of land registries.
5. Voter Authentication
Blockchain can assist with voter authentication, as its decentralized system is less vulnerable to hacking and being tampered with.
Use cases of blockchain in identity management
We’ve touched on the use case of self-sovereign identity (SSI) above. But, blockchain also provides use cases for data monetization and data portability.
Through the use of blockchain, both personal and company data can be stored and managed more efficiently. Data has inherent value, so it makes sense that its value can increase as deeper insights are derived from it.
Blockchain therefore offers the opportunity for data monetization. This involves individuals and organizations storing their data on blockchain networks and negotiating the value of their data. This ultimately allows for this data to bring in revenue from charging a fee to share it with other parties.
Since blockchain is decentralized, it also means that information is more easily transferable across various services and platforms. This can provide a better user experience. Data portability eliminates the need to constantly verify identity and credentials across multiple platforms and devices. Thus, blockchain has many uses that make identity management easier.
We’ve covered a broad range of blockchain applications, specifically with regards to how it can be used to secure digital identities.
Many of these applications are still evolving. There is no doubt that blockchain can assist in addressing many of the issues presented by centralized data storage and data vulnerability through the creation of self-sovereign identities. This allows for greater autonomy and better usability across various platforms and services.
Deepak Gupta, CTO and co-founder, LoginRadius