Technology makes it much easier to identify people and conduct transactions, removing many bureaucratic barriers that make manual paperwork so taxing. But these advances come with substantial drawbacks.
Cybercrime has compromised the private information of hundreds of millions of individuals. At least one in 15 people in the United States have been victims of identity theft, according to Javelin Strategy & Research, with 37% of South Africans having fallen for COVID-related identity scams (Global Consumer Pulse Study).
“Digital identities are prime targets for criminal hackers,” explains Jason Shedden, chief operating officer at identity management provider Contactable. “Criminals use that personal information to access our bank accounts and credit facilities or to commit fraud elsewhere. There is also a big jump in employee-related fraud because it’s much easier to access and manipulate information on servers.”
For all the benefits, digital systems still retain the silos of traditional paperwork – every institution has a separate copy of someone’s identity. Digital identities will not break out of this problem unless they can decentralise, but achieving that has proven elusive. Yet a breakthrough can create digital identities that remain secure and in control of the people they represent.
Decentralisation with blockchain
This breakthrough can be found in blockchain, the technology that powers decentralised systems such as cryptocurrencies. Blockchain relies on a group of independent parties to verify the authenticity of information. Shedden compares it to sharing copies of the same document.
“Imagine someone has an important document, such as an invoice. They make photocopies and hand these to three other people for safekeeping. If someone alters the invoice, and then insists it is still the same, you can compare that invoice to the three independent copies. If all three copies are the same and the reference invoice isn’t, then it was clearly altered.”
This is the essence of the blockchain: a chain of different entities that maintain identical ledger copies. If you verify or alter the ledger, it must reflect across all the copies. Any anomalies suggest fraud and are rejected.
Blockchain provides a highly effective way to verify information independently. So, why don’t we use blockchain systems to solve identity issues? In theory, we can, and in practice, this recently became a reality.
Identity that stays with you
Blockchains have a significant drawback: keeping large quantities of data in them isn’t efficient. “It’s a small matter to store, for example, your ID number in a blockchain,” says Shedden. “But when we add your photo or more complex documentation such as medical records, things get complicated. Then we fall back to storing information on servers, and hence recreate the issues of centralisation.”
Even if we outsource identity data to third parties that act on our behalf – a Federated Identity model – they are still centralised entities. To achieve true decentralisation, the identity world has been working on Self-Sovereign Identity, making the identity’s owner its custodian. Yet because decentralising blockchains handle large volumes of information poorly, this issue has kept self-sovereign identity back – until recently.
“New methods combine blockchain with digital wallets, which are encrypted digital stores that individual’s control. Your digital wallet stores your identity information. The blockchain confirms that you and your wallet are legitimate. If you need to verify your identity – perhaps to RICA your new SIM card – all you do is scan a QR code. The blockchain then confirms your credentials, and the digital wallet provides whatever you need to conclude the process. You control and manage your identity and third-parties access only what they need to transact with you.”
An opportunity that needs partners
The arrival of self-sovereign identity can finally deliver on the promises of digital identities which include faster transactions, greater convenience, and improved access for more people. Imagine a patient at a rural clinic waiting for their medical record to arrive or people queuing early at Home Affairs to renew their IDs – with self-sovereign identity, these can all become problems of the past.
But realising this future requires another crucial step. Blockchains are only as honest as those who control them. Recently, local criminals fleeced people out of billions in cryptocurrencies because they controlled the entire blockchain that supported those assets. Self-sovereign identity will require authorities that oversee identity blockchains and partners who can be trusted to enrol legitimate identities onto the system.
“This is an opportunity for governments and identity providers to work together,” says Shedden. “If government institutions establish identity blockchains, they can ensure control doesn’t go to a third-party with compromising self-interests and they can build a network of trusted partners to support the chain’s verification and add legitimate identities.”
Self-sovereign identity will reduce paperwork, improve access to services, and could even stop most of the identity theft. They provide a leapfrog opportunity for a new age of identity that puts people in charge. Africa loves leapfrog opportunities, and this begs the question, will self-sovereign identity become the continent’s next big step forward?
For more information, contact Contactable,
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