Blockchain technology has helped a variety of sectors and industries. The advantages of transparency security, immutability, and transparency nature, bring an enormous amount of value to companies.
The modern business could be transformed through the introduction and use of identity management using blockchain technology. We have learned that the present identity management systems aren’t trustworthy. They are vulnerable to data leaks and breaches. Therefore, in this article, we’ll look at how blockchain-based identity management will provide us with a highly secure system. This will be a comprehensive guide to the management and use of blockchain-based identities.
What is Identity Management?
The administrative procedure used to create and manage user accounts for identification and authentication within an online service is known as identity management. Identity management is crucial to ensure that the rightful users have access to this online platform. Typically, the life cycle for identity management software is comprised of 4 phases.
- Enrollment
- Authentication
- Issuance
- Verification
In general, there are two types of identities:
- Central Identity The entity responsible for this serves as the main service supplier and has the power central. This identity is accountable for accepting the credentials of the user and confirming their storage. The credentials that are stored and validated are used to gain access to online services through an online platform. Another method is one that is DLT model, which is based on the DLT layer. the identity of the user is verified by storing information within the DLT layer.
- Federal Identification – The service provider is accountable to differentiate the enrollment entity from other organizations that rely on authentication to confirm the identity of the user. They are accountable for the management of the information of the users and perform the primary role for many internet-based service companies.
- Self-Sovereign Identification This is a form of identity in which the user owns the right to their information. This concept encourages transparency and trust with the people who are interested in the online service. To control the system, there are some guidelines that users are required to adhere to. These include “need-to-know” and “need-to-retain” in which the user is able to manage the data without the need for a middle-man to protect against the theft of data or misuse of sensitive information.
Basics of Blockchain
Blockchain was initially introduced as a peer-to-peer network that provides transparency regarding all transactions that are conducted through the network. Blockchain is popular due to its indestructibility and the ability which eliminates the need for an authority central to watch over all transactions. Since data is one of the best assets users have the ability to take advantage of the unique features of blockchain that provide security, anonymity, and transparency.
The necessity of encryption for the management of identity
Public key infrastructure is vital to managing public keys. PKI is necessary to properly connect the keys of people and public keys. Two different ways to authenticate using the Public Key Infrastructure(PKI) :
- Centralized method Central authority is in charge of the digital certificates and holds the authority to issue, cancel or keep them at any moment to ensure a secure authenticating.
- Decentralized method Users can choose other trusted nodes to verify and issue certificates. This model is entirely dependent on trust among users of this decentralized system. It is known as the Web of Trust(WOT). Further verification of the individual is possible using the provided certificate, which bears the signature of the individual.
The method of bi-directional verification of these records makes it safer and may totally eliminate many Sybil nodes. Blockchain-based authentication offers greater security and privacy by integrating cryptographic functions, such as encryption, attribute signatures and authentication codes.
What exactly is the blockchain-based identity management system function?
To address issues with digital identity The ten rules of self-governed identity could be achieved by using the blockchain. The consensus mechanism fulfils the requirement of having a confirmed report on attributes that are reliable. The ability to keep statements for a long time is possible because blockchain is a secure ledger that cannot be altered.
The SSI approach is user-centric which means that the user must maintain complete control over their personal data. The chain structure that gives the user a unique identity chain like trust chains, such as the Trust chain, or The Tangle, provides complete control. This kind of structure could also indicate the existence of a notion which allows users to waive the right of being erased.
Claim Blocks are used to keep personal data private, and claim authentication provides privacy and security of data. Claim Blocks can share with different systems, making possible the possibility of interoperability and transferability.
Solutions for protecting personal data as well as regulations are in development and are already in use. The exchange of data between agents of communication is unclear which makes it difficult to monitor the data that is shared and what access is granted.
The level of linkability of personal information affects the anonymity of identity [18].To tackle privacy and security issues, it is essential to ensure that you only disclose PII and to track PII. It is defined as the information that can be used to determine the identity holder within a specific set of subjects like a driver’s licence address, passport number and name, birth date, birth and many more.
“PPII is the subset of all complete identity attributes, where complete identity is the union of all attribute values such as bank name, part of the email, religion, partial name, and so on.”
Because digital identities are divided into various contexts based on personal data like PII and possible PII as well as non-PII. The activation of identity property for identification and authentication of users is determined by the specific situation and the role.
Many companies have developed their own authentication system built on the OAuth standard. Standards-based regulations for bodies are currently utilized to manage and protect personal data across the globe.
The European Union is enforcing GDPR to safeguard consumers by restoring control of their identity information to the identity holders. To recognize the necessity to allow individuals to control and manage their own personal data the GDPR-compliant digital rights are coupled together with an SSI principle of identity that is user-centric. It covers the following subjects including consent, access to limit data, data minimization, access to data, and the existence (right for being forgotten).
Benefits of blockchain identity management
There are four major advantages of using blockchain in managing your identity :
- Unique Identity Each user who joins the blockchain and registers with the Blockchain will receive a unique ID number. The unique ID of the user is unique and personal to every user. Additionally, it holds personal information about the user, which is kept in a secure format. Users only have to provide their unique user IDs in order to authenticate themselves with a 3rd person for the management of blockchain IDs.
- Decentralized The data saved on blockchain’s identity management systems is totally decentralized. Data is not accessible on only one server that could be susceptible to security breaches and Sybil attacks.
- Consent – Identity management that is based on the blockchain does not keep user information in a central manner. Therefore, it is less vulnerable to data breaches and Sybil attacks. Systems for tracking IDs on Blockchains employ smart contracts to determine whether a person has access to certain details or not. In this way, it’s impossible to alter data stored on the blockchain. It creates trust for users of the network since their data is safe and safe. There isn’t a single point of failure because the system is distributed. This means that the system will not be shut down in the event that one of the nodes within the blockchain is subject to any kind of attack.
- Blockchain ecosystem Blockchain-based ecosystems are able accessed by any person anywhere in the globe. There are no geographic boundaries or requirements for users to prove their identity.
The impact of blockchain-based identity management on business
We will look at different ways in which the blockchain-based identity management system has made a significant impact on companies:
- Optimized for users Blockchain’s identity management system can be extremely low-cost and efficient in time. Both customers and business owners benefit from cost-effective identity verification.
- Transparent transactions made in a blockchain publically are recorded on the distributed ledger. Anyone is able to connect to the network to track the details of transactions.
- Decentralized instead of storing all information on one central server, information could be stored in a decentralized manner. This decreases the risk of losing data and a single point of failure.
- Ecosystem Users are able to request the organisation to verify their identity in any country.
- Privacy – It is a way to ensure the security of all transactions made on a blockchain. The details of these transactions are kept secret and users are permitted to carry out transactions in anonymity.
Case studies of the use-cases for blockchain identity management
We will look at 3 of the well-known applications of blockchain-based identity management
- The process of lending or borrowing money(Loan) It is aware of the fact that a person is required to go through a complicated process to apply for a loan and have the loan approved. You must submit numerous identity proofs as well as legal documents. These documents require several weeks to be verified. There is always the possibility that someone could try to commit fraud through the use of false documents.
- In such instances, blockchain identity management systems can aid in storing and organizing legal documents. The documents are checked before they are saved within the blockchain. This eliminates the requirement to verify the documents.
- Travel and immigration In the previous instance one could spend many hours trying to get the document verified. If this is related to immigration and travel, the background check and ID verifications are easily accomplished by using blockchain. The user’s information is in the blockchain’s identity management system, allowing for an effortless authentication process for those travelling. This makes the process easier for both the authorities and travellers.
- Legal – If someone is going through the legal procedure, they might be required to present proof of identity like proof of age, proof of address or proof of occupation. With the help of blockchain-based identity management systems users won’t have been carrying these forms around in a legal process. Legal and government agencies could create a decentralized storage solution in which this data can be stored. The data can be accessed anytime there is a need. So, extensive check-ups on background and ID documents are not necessary.
