How Blockchain Empowers Control Over Digital Identity and Personal Data

In today's digital age, our data is scattered across various platforms, making it vulnerable to data breaches, identity theft, and unauthorized use. However, blockchain technology offers a revolutionary solution by empowering individuals with control over their digital identity and personal data. This blog will explore how blockchain empowers individuals, the technology behind it, and how it reshapes the future of digital identity management.

The Problem With Traditional Identity Management:

Centralised and Federated Identity Management Systems are convenient in many ways but do have severe risks regarding privacy and security. In a Centralised Identity System, user data resides in a single authority, such as a company or institution, making it an easy target for hackers. 

Federated Identity Management allows users to access multiple applications using one set of credentials (such as logging into apps with a Google or Facebook account) and shares some of the aforementioned vulnerabilities.

                                                                 Fig, Causes of Data Breaches

In a Centralized Identity Management System, all personal information is collected and stored in one place, typically a database controlled by the service provider. While this offers convenience for the provider and the user, it introduces several issues:

• Single Point of Failure: If the central system is compromised or malfunctions, users may lose access to their accounts or worse, their data can be stolen.
• Security Breaches: Centralised storage of Personally Identifiable Information (PII) makes it a high-value target for hackers. In recent years, data breaches have exposed large volumes of PII, including sensitive information like social security numbers, addresses, and financial data. PII breaches represent 97% of all data breaches.

In Federated Identity Management Systems, users have the advantage of Single Sign-On (SSO), meaning they can use one set of credentials to access multiple applications across different platforms. This can simplify the user experience, but it introduces security risks. 

If a hacker gains access to a user’s credentials (such as their Google or Facebook login), they can potentially access all accounts linked to that identity. This creates a cascading effect, amplifying the damage of identity theft. Essentially, one compromised password could expose a user’s data across multiple sites.

Both centralised and federated systems carry a major risk: once a hacker breaks into the system, they can access a vast amount of user data. This is why there's growing interest in Decentralized Identifiers (DIDs).

Decentralized Identifiers

Decentralized Identifiers offer a solution to these issues by providing a more secure and user-controlled method of logging in and accessing websites, apps, and services. Unlike traditional identifiers, DIDs are stored in a decentralized manner, usually within a digital wallet that is fully controlled by the individual.

                                                                Fig. Referring to the DID document

                                                                     Source: https://bit.ly/40FAI0b 

A decentralized identifier (DID) is a globally unique string of letters and numbers that represents an individual, company, or object. The key difference is that DIDs are self-sovereign, meaning that users fully own and manage them without relying on third parties like email providers or centralized platforms.

                        Fig. A decentralized identity system, there is an issuer, holder, and verifier

Blockchain technology has paved the way for Self-Sovereign Identity (SSI), a revolutionary approach to managing personal data and online identities. Self-sovereign identity enables individuals to own, control, and manage their identity information through a decentralized system. This concept is made possible by the immutable and secure nature of blockchain technology. 

                                                         Fig. self-sovereign identity working

                                                                Source: https://bit.ly/4hE0lEy  

Blockchain plays a crucial role in facilitating SSI because of its inherent properties—decentralisation, immutability and security:

• Decentralisation: 

In a self-sovereign identity model, there’s no central authority managing the data. Instead, blockchain operates as a decentralised ledger, where identity records are verified and maintained by a distributed network. This means that users are not reliant on any single entity for authentication or identity management, giving them autonomy over their digital identities.

• Immutability: 

Once data is recorded on a blockchain, it is nearly impossible to alter or delete. This makes identity data stored on the blockchain tamper-proof, providing a higher level of security. Traditional identity systems are vulnerable to hacks and unauthorised changes, but with blockchain, identity credentials become unalterable.

• Security: 

Blockchain uses advanced cryptographic techniques to secure data. In SSI systems, credentials are often cryptographically signed by trusted issuers (e.g., governments, universities, or employers). These digital signatures ensure that the information is authentic and hasn’t been tampered with, providing strong verifiable credentials. Additionally, since users control their private keys, they are the only ones who can access or share their identity data.

Selective Disclosure and Zero-Knowledge Proofs

One of the most powerful features of blockchain for digital identity is selective disclosure, which allows individuals to share only the necessary information, instead of their entire personal profile.

For example, if an online platform needs to verify that a user is over 18, the individual can use a blockchain-based identity to prove their age without disclosing their birthdate or full name. This can be further enhanced by zero-knowledge proofs (ZKPs), a cryptographic technique that allos one party to prove a statement (such as “I am over 18”) without revealing any additional information.

Upskilling with Blockchain Technology

UniAthena's free Blockchain online courses like Basics of Blockchain Technology, Diploma In Blockchain Fundamentals, Mastering Blockchain Technology, and Essentials of Blockchain Technology will equip you with fundamentals of the technology. 

To dive deeper to find your perfect role in the Blockchain industry, check our professional certification courses like Master of Business Administration - Blockchain Management, Postgraduate Certificate in Blockchain Technology, and Postgraduate Diploma in Blockchain Technology. Delivered by recognized institutions, these programs will significantly boost your credentials and increase your demand in the industry.

Conclusion

Blockchain Technology is expected to pass back control to individuals over their personal information. Decentralised storage, increased transparency, and secure means by cryptography and selective disclosure would be provided by Blockchain, hence addressing some of the inadequacies of most traditional identity systems. There is enormous potential in Blockchain for revolutionising how people can protect their privacy.