Blockchain is a solution to numerous digital identity problems through its decentralized nature, transparency of data usage, KYC costs reduction, availability of verified claims and ease of access.
In addition to privacy concerns, Facebook and Google account holders (among others) have had accounts disabled or closed with little explanation. Often, these closures occurred because users unknowingly violated the “terms of service” agreements these companies demand users abide by. Rightly or wrongly, most social media users are only one “inappropriate” post or comment away from being locked out of their accounts, with little recourse for recovery once an account is closed. The reality is that technology heavyweights such as Facebook, Google, LinkedIn and others control identity data – not the user. These companies are not accountable to users. They can deny access at any time, for any reason and are not required to provide explanation or recourse.
Most identity systems have large centralized databases containing millions (or billions) of identity records. Because of their sheer size, these centralized databases are high-value targets for hackers. The identity data they contain is relatively easy to steal and use. Because the reward for a successful breach increases exponentially with the number of identities held in that database, as a database grows larger, it becomes increasingly more vulnerable to attack. Furthermore, a single large database (as opposed to multiple, segmented, decentralized databases) often means a single point of failure.
There is a high cost of KYC verifications. The high cost of maintaining the KYC data in centralized databases and also increases risk of breach of data. In many cases, companies are paying a high cost of verifying individuals who were already verified hours ago by the same provider but for another company.
The KYC process done by a company for an individual is isolated and not compatible with the process of another company. An individual has to go through the same process of KYC again and again.
There are many different identity systems in the world run by governments and private entities. Most of them are incompatible with each other and are paper-based halting widespread use in the rapid digital world.
In today’s highly-digitized environment where the overlapping demands of healthcare, banking, education, commerce, entertainment, social media and regulation require consumers to manage a portfolio of identities and log-on credentials just to function in online and real-world environments. In fact, according to Dashline, in the United States, the typical email address is now connected to 130 different accounts. And this number does not even take into account the additional “identities” associated with physical IDs, access badges, fobs and drivers licenses we all carry.
The user has to prove his identity again and again with different entities, and has to wait days for verification.
In today’s digital world, there is no link between physical and digital identities of a user. Physical identities given by a government entity and the digital identity issued online have no interface to interact with each other.
The data is stored on user devices instead of centralized databases. This can reduce the need to maintain data silos by the service providers, which can greatly reduce the number of data honeypots in existence today.
Users have complete ownership and responsibility over their data.
The user has total transparency over the usage of their data. They will have the ability to grant access to their data, which is stored on their devices, to any other user or organization, and will also be able to revoke their access to the data in the future.
The shared distributed ledger will contain the verified claims from users which are certified by the trust providers.
Due to the decentralized nature of the identities, different services can authenticate users by their identity to provide ease-of-use to the user.
Due to availability of the verified claims by the user certified by the trust providers, the KYC cost can be reduced exponentially.
A user’s identity on the platform will extend to both the digital and physical world. This means users will be able to access a website or a building with their phone, all through the same identity app and interface.
By using an app with biometric capabilities, users will be able to sign into their accounts without ever needing to remember, write down or enter a password.
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