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blockchain for digital IDs
Blockchain technology enhances Digital IDs

Guest blog by Priyal Walpita, CTO at ZorroSign, Inc.

Digital Identity (digital ID) is a representation of information and data unique to a particular person, organization, or group. The role of blockchain in digital ID is to make it more secure, flexible, and interesting.

For individuals, at its most basic level, it consists of a collection of information about a person such as first and last names, date of birth, nationality, passport number, etc. All of these data points are issued and stored by centralized entities. For companies or organizations, digital identity consists of information about their users. The downside of this is the business risk that comes with the rise of user privacy-centric regulations, such as the EU’s General Data Protection Regulation (GDPR). In any case, when they are being relegated to tight-lipped data vaults, the use of this data becomes less which will in return reduce the improvements of the products and the true customer understanding.

What is Digital Identity and Why is it Important?

Digital Identity comprises everything and anything you have on the web which includes but is not limited to images, preferences, usage behavior on websites, bank account information, etc. With the present advancements in digital platforms, digital identity varies across banking systems, social media platforms, and telecommunication.

The importance of blockchain in digital identity is mostly based on securing individuals’ data in a distributed ecosystem. Blockchain plays a major role in ensuring accuracy when speeding up the process of customer onboarding as well as preventing any money laundering and fraudulent activity. Digital identity could help in standardizing and streamlining citizen services in different nations while having a significant part in the facilitation of social transformation projects while ensuring economic improvements.

Being precise on the identity issue eradication, using blockchain identity management, inaccessibility, fraudulent identities, and data insecurity are broadly being discussed. All the traditional methods used for identification have led a significant amount of the population to stay out of the process. Although it has been crucial for an individual to have an identity to gain access to education, the job market, traveling, governmental services, and financial systems. On another hand, the stored data and valuable identification information have been appealing to hackers. Despite all the regulations, legislation and efforts in increasing more and more cyber security, there was an exposure of a considerable amount of consumer data at a large cost. In addition to the above-mentioned issues, users tend to juggle various identities combined with usernames across websites. Data generated by one platform on another platform has no standardization and the links which are weak between the digital and offline IDs give a higher probability of the creation of fake identities.

Effectiveness of Blockchain

Improving the digital IDs with blockchain technology as the base brings several advantages, including improved:

  • Security
  • Privacy
  • Integrity
  • Trust
  • Simplicity

Security-wise, blockchain gives the element of maintaining data in an immutable and encrypted manner, ensuring that the digital identity is secure and easily traceable. In terms of privacy, efficient blockchain encryption, with the facility of digital signatures, ensures effective design and privacy while the maintenance of records of all the identities throughout the nodes across the network creates integrity. In improving trust, the maintenance of communication metadata in a distributed ledger and consensus mechanisms that helps to verify data authenticity across several nodes, plays a major role. Blockchain brings simplicity through the clear roles that are set for the identity issuers, owners, and verifiers in the processes associated with each stakeholder.

In the management of blockchain digital identity, the advantages are crucial for its sustainability. These include:

  • Relief from cumbersome paper-based identity management
  • Self-sovereign identity and easier ID verification
  • Non-custodial login solutions
  • IoT system user identify management
  • Decentralized web identity solutions
  • Improved safeguards for critical infrastructure

Moreover, using blockchains in digital IDs have the following benefits as well:

  • Manageability and control
  • Decentralized storage
  • Decentralized Public Key Infrastructure (DPKI)

Decentralized Public Key Infrastructure (DPKI) is at the heart of Decentralized Identity. Blockchain’s role here is to create a tamper-proof and trusted medium in distributing the asymmetric verification and encryption keys of the holders of the identities. DPKIs give users the ability to anchor or create cryptographic keys on the blockchain in a way that is chronologically ordered. These keys are used in the verification of other users’ information. Identities that are created on the blockchain are inherently safer to use than those that are stored on centralized servers. Cryptographically secure Ethereum blockchain, along with distributed data storage systems like InterPlanetary File System (IPFS) or OrbitDB, enables disintermediate of existing centralized data storage systems maintaining trust and data integrity. When compared, the responsibility of the data security of the identity in centralized identity systems falls under the entity providing the identity. In contrast, the responsibility of the decentralized identity framework falls completely on the user. The user has the sole right to implement his or her security measures or even outsource the tasks to any other service. The main advantage here is that the decentralized identity solutions that are blockchain-powered forcefully make the hackers attack the individual data stores which  becomes highly costly and unprofitable.

Digital identity has increasingly become a part of the social as well as the economic well-being of people all over the world. It has enabled an individual’s right to vote, and access education, and financial systems. Blockchain has become a crucial part in securing these identities by helping to create a decentralized identifier in parallel with the facility for associating digital identity with verifiable credentials. This enables an ultimate digital identity across different platforms under the individual’s control and ownership.

Blockchain for IDaaS

What is IDaaS?

Identity-as-a-service (IDaaS) is any cloud-based identity management solution that enables organizations to securely authenticate and manage the identities of their users. IDaaS solutions can be used to manage a wide range of identities, including employees, customers, partners, and devices.

At a basic level, all IDaaS platforms are created to enhance online user experiences, secure access to critical enterprise applications, and reduce IT resource-related expenses with efficient identity and access management (IAM) and privileged access management (PAM).

“Sound identity management is essential,” writes Mark Diodati at Gartner. “Without good IAM, you are at real risk for data breaches and denial of service attacks. And IAM is hard to get right.”

The overarching goal of IDaaS solutions is to ensure users are who they claim to be—and to give users access to applications, data, systems, or other digital resources as authorized by their organizations.

“Some of the pros associated with IDaaS offerings include the ability to consume rather than host IAM and offloading some of the management overhead associated with IAM to an external provider,” writes Chris Hughes for CSO. “Other benefits include feature-rich offerings that make your IAM implementations more robust and secure in many cases. Most IDaaS providers offer native and integrated capabilities such as single sign-on (SSO) and multi-factor authentication (MFA).”

With this introduction, let’s look at how blockchain technology can help to improve and support IDaaS.

Blockchain and Decentralized Identifiers (DID)

One of the most well-known applications of blockchain technology in IDaaS is in the realm of decentralized identity (DID). A DID is a digital identity that is owned and controlled by the individual, rather than a central authority.

“Decentralized identifiers are stored on distributed ledgers (blockchains) or peer-to-peer networks,” explains Ethereum.org. ”This makes DIDs globally unique, resolvable with high availability, and cryptographically verifiable. A decentralized identifier can be associated with different entities, including people, organizations, or government institutions.”

Since DIDs are stored on the blockchain, they are more secure, transparent, and auditable. They also have the potential to enable individuals to have more control over their personal information and to reduce the risk of identity theft, ensuring peace of mind when it comes to the security of their personal data.

Blockchain and Identity Verification

Another area where blockchain technology supports IDaaS is in the realm of identity verification. Identity verification ensures that the individual claiming a particular identity is actually who they say they are. It is a very important, if not the most important, aspect of digital identities, especially as identity theft “frequency has sky-rockets in the past few years,” according to the National Council on Identity Theft Protection. “Nearly half of all U.S. citizens became a victim of some form of identity theft in 2020.”

Blockchain technology, however, can help to improve the accuracy and efficiency of identity verification by providing a tamper-proof record of activities and transactions. It can also help in developing new identity management systems with digital identity frameworks featuring decentralized identifiers.

Accenture, a global consultancy, has defined five immediate areas where blockchain-based digital identity management brings strong benefits:

  • Secure and seamless travel, even across international borders
  • Healthcare records that can be easily shared and managed by individual patients
  • Background checks and training records for educational and professional credentials
  • Streamline know-your-customer (KYC) processes across organizations
  • Validate proof of ownership or insurance of physical or digital assets

Blockchain Security Elevates IDaaS Data Security

Blockchain has the power to improve IDaaS’s solution’s data security by bringing the decentralized, cryptographically secured blockchain data architecture to identity management. An estimated 81% of hacking-related breaches leveraging either stolen and/or weak passwords, putting even IDaaS solutions at risk—however, blockchain technologies can help IDaaS solutions to eliminate one of the most glaring gaps in cybersecurity, as distributed ledger technologies (DLTs such as blockchain) provide two means of preventing and/or ameliorating the threat of ransomware attacks: First, by decentralizing the data set itself; and second, by giving endpoints a quick path to recovery, even if they are themselves breached and access ransomed.

For example, unlike centralized databases—which can be breached at unsecure endpoints (users and devices) or even at MSPs hosting them, giving attackers complete control once they gain central access—blockchain technology distributes data across geographically separate nodes. By decentralizing data storage, blockchain effectively prevents any one endpoint (even if compromised) from gaining control of the full data set. This distributed nature so defeats any attack seeking to breach a system and holistically encrypt the data files stored therein: A single endpoint node might be breached and its files held for ransom, but the larger data set cannot be controlled by any one endpoint (or central authority) and so attackers cannot capture the full data set for encryption, ransom, and shutting down the network.

Further, each endpoint node (or user) has a unique encryption key to access and write to the distributed ledger. If any one of those endpoints is successfully attacked (presumedly compromising their access key), the blockchain can simply remove distributed ledger access for that compromised key, issue the endpoint a new key, and allow that endpoint to quickly regain distributed ledger access (effectively as a new endpoint).

This unique recovery process maroons any ransomware on the endpoint it attacked—ending its access and threat—while allowing the endpoint to re-engage the larger data set: With a new key and without needing to pay any ransom to the attackers for restored access.

The Perfect Pair United on ZorroSign’s Platform

Blockchain technology has the potential to support IDaaS in many ways: It can provide a secure, decentralized database, and enable faster, more efficient, and heightened secure identity management. It can also help to reduce the risk of fraud and errors and provide a more transparent and auditable record of all identity-related activities across IDaaS solutions.

ZorroSign unites both blockchain architecture with IDaaS capabilities to help your organization better manage identity access and elevate data security!

Contact us to learn more about our data security platform built on blockchain and put us to the test:  Start your free trial of ZorroSign’s data security platform today.