Why is Blockchain Beneficial for Digital Identities?

1. Why is Blockchain Beneficial for Digital Identities? Staying online in the digital world is the need of the hour for every individual. People always leave digital footprints whenever they transact on the internet. All this requires your identity, either in the form of physical or digital identity. Digital identity is a new ecosystem of trust for individuals. Before the globe went digital, physical identities were widely available to humans, but physical identity jeopardizes the person’s access to the financial system. The World Bank’s report and software outsourcing stats says that 1 billion people do not have official proof of identity that leaves one-seventh of the world’s population in a vulnerable state. But now with time, the world is becoming more digital and people need to disclose their financial information that really makes the image of digital identity quite unsecure.

2. Personal and financial information from the digital identity gets stored in a digital database that is not secured from hackers and here is where Blockchain’s Hyperledger comes into play. The applicability of Hyperledger can be endless. Before we see how blockchain is beneficial for digital identities, we need to know why digital identity is important? Digital identity is a crucial aspect of online financial transactions as it ensures accuracy while expediting the customer on-boarding process and prevents money laundering and fraudulent activities. It ensures economic upliftment of the communities and brings social transformation in the society. Data authentication, data privacy, and data encryption are part of its ramparts and need digital identity protection. Leveraging the Power of Blockchain in Digital Identity Management

3. Source Various cutting-edge technologies like Machine Learning, biometrics, RPA, and multiple methods have been evaluated till now for protecting the digital identity. Though many of these technologies have been effective but they fail when applied to centralized digital identity management. The reason is that the control of the data remains with one entity, tampering with the data and loss of data is easy, and thus digital identification takes time. This is why blockchain solutions are being adored because they bring trust and transparency to the entire digital identity management. Also read: Don't fear AI! Its more positive than negative in our lives Let’s have a look at the five pillars of digital identity: Trust In blockchain-based systems, decentralization is useful when it comes to digital identity management because the metadata(data of data) is maintained in the distributed ledger. The data’s authenticity is verified through multiple nodes via a consensus mechanism. This blockchain mechanism is quite useful in digital identification when national identities are used across multiple agencies. Software development company in India Security When it comes to security in any field, blockchain is one of the revolutionary technologies that removes the vulnerability associated with password protection. It has been designed to maintain the data in an encrypted and immutable manner and is secured through cryptography. It also keeps the digital identity protected and traceable. Integrity

4. Blockchain’s identity system can maintain each identity across all the nodes in the network. The data is maintained across peer-to-peer networks and is continuously reconciled and kept to update. Additionally, the blockchain network does not own a single point of failure, which makes it difficult for the hackers to break the integrity in the data set. Simplicity The blockchain framework makes digital identity management very simple and accessible to every stakeholder involved. It automates the issuance of digital identity, which in turn reduces the time and manual interventions. It identifies the verifiers and owners separately. For the verifiers, data verification and customer onboarding for the digital identification process becomes more straightforward and cost-effective. The owners can create their own data for social media and payment transactions, giving them overall control over their identity. This is termed as a “SelfSovereign Digital Identity”. Privacy Regulatory bodies across the different countries in the world are looking for ways that their citizen’s personal and sensitive data can be kept private. Blockchain’s encryption technique is combined with digital signature through pseudonymization. It affixes the digital signature to every transaction and makes it hack-proof. Real-life examples of how blockchain technology has become a platform of choice among various countries for Digital Identity Management are: ● Estonia has been using blockchain since 2012 to maintain the national data and services both in the private and public sector. The government of Estonia maintains the multi-purpose digital ID card on the blockchain that ensures that any change in the data is detected immediately based on audit trails left by the “digital defense dust” that covers it.

5. ● In Canada, blockchain developers have built a digital identity framework that is built on the Hyperledger Fabric. It facilitates the citizen to maintain their digital identity credentials privately to keep The users can share the information as needed with service providers when they apply for. Conclusion Digital Identity is closely associated with the socio-economic wellbeing of the citizens in a country but still, there are so many people in the world who don’t even have physical identification. As a result, many of them can not enjoy the basic facilities like the right to vote, gaining access to healthcare education, and opening a bank account. With the help of blockchain-based frameworks, organizations can combat money laundering and cyber terrorism. If your organization is also looking for ways to implement blockchain in digital identity, hire blockchain developer who will enable blockchain-based data encryption to defend against identity theft.