What is Decentralized Identity (DID)?
Decentralized Identity is a system of managing digital identities that allows individuals to control their own personal information without relying on a central authority. In this system, there are three key roles: the issuer (who creates and provides credentials), the holder (who owns and manages these credentials), and the verifier (who checks the authenticity of the credentials).
Unlike centralized identity systems, where a single organization stores and controls user data, decentralized identity enables users to own and control their data through digital wallets on smart devices. This allows for secure, private, and verifiable identities without the need for passwords. Users can selectively share only the necessary information with service providers, enhancing privacy and security.
- Benefits for Organizations: Decentralized identity allows for instant verification of credentials, reduces the risk of data breaches, and improves data security by minimizing the storage of sensitive user information.
- Benefits for Individuals: It empowers people to fully own their digital identities, control who can access their data, and protect their information from being misused or tracked.
- Benefits for Developers: It enables the creation of user-centric applications with secure, password-free authentication and privacy-preserving data handling.
How does Decentralized Identity (DID) Work?
Decentralized identity operates through a few core components that enable secure and private management of digital identities:
- Blockchain: This is the backbone of decentralized identity. It acts as a distributed ledger that records information in a secure, immutable way. The blockchain ensures that the data cannot be easily altered, hacked, or manipulated, providing a trustworthy foundation for identity management.
- Decentralized Identity Wallet: This is an application that allows users to create and manage their decentralized identifiers (DIDs) and Verifiable Credentials (VCs). The wallet stores these credentials and enables users to share them securely with others when needed.
- Decentralized Identifier (DID): A DID is a unique identifier linked to the blockchain. It is a string of letters and numbers that includes details like the public key and other verification information. DIDs are self-owned and controlled by the user, rather than being issued by a centralized authority.
- Verifiable Credential (VC): VCs are digital versions of traditional credentials (like IDs or certificates) that are cryptographically secured. These credentials can be presented to organizations or entities that require verification. VCs ensure that the credentials are authentic and have not been tampered with.
The decentralized identity system involves three main parties:
- Holder: The individual or entity that owns the DID and manages their Verifiable Credentials using a decentralized identity wallet.
- Issuer: The organization or authority that creates and issues Verifiable Credentials to the holder. The issuer signs the credential with their private key, ensuring its authenticity.
- Verifier: The entity that needs to verify the holder's credentials. The verifier checks the credential by referencing the issuer's public DID on the blockchain to confirm that the credential was indeed issued by the trusted issuer.
The Decentralized Identity (DID) Landscape
The Decentralized Identity Ecosystem consists of various projects and technologies that aim to give individuals control over their digital identities, enabling secure and private identity verification across multiple industries.
Infrastructure and Protocols
These projects provide the foundational technology for decentralized identity management, including the creation, management, and verification of decentralized identifiers (DIDs) and verifiable credentials (VCs).
- Sovrin: A global public utility for self-sovereign identity (SSI), providing a blockchain-based infrastructure for managing decentralized identities.
- Hyperledger Indy: A blockchain project designed specifically for decentralized identity, offering tools, libraries, and reusable components for creating and using independent digital identities rooted on blockchains.
- Ethereum Name Service (ENS): A decentralized domain name service that maps human-readable names to machine-readable identifiers, like wallet addresses or DIDs.
Identity Wallets
These applications allow users to manage their decentralized identifiers and verifiable credentials, acting as secure storage for their digital identity data.
- uPort: A self-sovereign identity wallet that allows users to create a digital identity, manage credentials, and interact with decentralized applications (dApps).
- Dock Wallet: A digital wallet that enables users to manage verifiable credentials and share them securely with verifiers.
- Evernym: Provides digital wallets and identity management tools for users to store and control their decentralized identifiers and credentials.
Credential Issuers
These are organizations or platforms that issue verifiable credentials to users, which can be used across different sectors such as education, healthcare, and finance.
- Learning Machine: A platform for issuing verifiable academic credentials, allowing educational institutions to issue digital diplomas and certificates.
- TrustID: A project that focuses on issuing verifiable credentials for identity verification in various sectors, including finance and government.
Verification Services
These services enable organizations to verify the authenticity of decentralized identifiers and verifiable credentials without needing to contact the issuer directly.
- Civic: A decentralized identity verification solution that allows users to verify their identity securely and privately.
- ID2020: An alliance that promotes digital identities for everyone by 2030, focusing on verifying identities in a decentralized manner, especially in underserved communities.
Industry-Specific Applications
These projects apply decentralized identity solutions to specific industries, solving unique challenges related to identity management.
- Finance:
- Kiva Protocol: A decentralized identity system aimed at providing financial identities to the unbanked population in developing countries.
- Bloom: A decentralized credit scoring and identity verification platform for the finance industry.
- Healthcare:
- MedCreds: A platform for issuing and verifying medical credentials in a decentralized manner, ensuring healthcare providers’ qualifications are valid.
- Blockcerts: A project that provides verifiable, blockchain-based credentials, commonly used in healthcare for verifying certifications and licenses.
- Supply Chain:
- Verified.Me: A decentralized identity network that facilitates identity verification in supply chains, reducing fraud and enhancing transparency.
- Provenance: Uses decentralized identity to ensure the authenticity of products and verify the credentials of suppliers in the supply chain.