Envision a society in which your identity is not dependent on any one central authority. Rather, it is rooted in the synergy of Bitcoin. It sounds like something from science fiction, right? You underestimate its proximity. Read more now on Bitcoin synergy
So what’s the deal with Bitcoin and decentralized identity systems? Imagine this instead: traditional identity systems are clumsy, heavy, and susceptible to hacking, much like vintage filing cabinets. Imagine now that the dusty cabinets have been replaced by a sleek, impregnable vault that is driven by the blockchain technology found in Bitcoin. This is where the magic lies.
For starters, let us define decentralized identity. Said another way, it’s about being in charge of your data and not having to depend on companies or governments. You are the only one with access to and control over your digital passport.
The original cryptocurrency, Bitcoin, is now introduced. Its blockchain serves as an unchangeable ledger for safe and transparent data recording in addition to transactions. For decentralized identity management, this makes it ideal.
You may be wondering how this all actually functions in real life. Consider every block in the Bitcoin blockchain as a single page of an unbreakable book. Before being included in the book, every page has records that have been independently verified. Through this procedure, it is made impossible for anything to be changed or removed without the knowledge of all parties involved.
This is where it gets exciting: we can establish digital identities that are secret and safe by utilizing this bulletproof ledger system. You can stop worrying that a hacker might access a central database and grab millions of credit card numbers or social security numbers.
I’ll use an example to help you visualize: Assume Jane Doe wishes to verify her age in order to make an online wine purchase, but she does not want to give the vendor her entire ID number or address. She would only have to divulge the minimal amount of information necessary to prove her age through a decentralized identity system built on the blockchain of Bitcoin.
The advantages go beyond that. Decentralized identities also make it possible for those without official identification to fully engage in society, such as refugees or residents of distant places. Without having to go through red tape, they may use services like banking and healthcare.
However, let’s not delude ourselves; difficulties do exist. There is some work involved in integrating these technologies into current frameworks. Entities that profit from data control are resisting (big tech, look at you). Furthermore, teaching individuals how to operate this new technology is no easy task.
Okay, so we now know that the blockchain behind Bitcoin may serve as a stronghold for online personas. How do we, however, translate theory into reality? Let’s discuss some practical uses for this.
Take into consideration the idea of self-sovereign identity (SSI). It’s similar like owning a set of keys to the vault where all of your data is kept. You determine when and who can see what. Imagine not having to repeatedly fill out forms with the same information over and over again. Rather, you allow access to validated portions of your identity when required.
I’ll tell you a little story now: John Smith misplaces his passport while on a foreign trip. He has panic till he finds his SSI on the Bitcoin blockchain. He grabs his smartphone, goes to the closest embassy, and safely gives officials his verified identity information. Without much effort, the crisis was avoided!
But for now, let’s avoid putting all of our eggs in one basket. Decentralized identities won’t become commonplace until certain obstacles are removed. First, interoperability—or making disparate systems communicate with one another seamlessly—is a problem. Consider the task of attempting to squeeze a square peg into a round hole; while not insurmountable, it will take a lot of force.
In addition, a redesign of the user experience is required. For the typical person right now, interacting with blockchain technology can be likened to understanding hieroglyphics. Adoption will be accelerated by streamlining and improving interfaces.
Furthermore, in decentralized systems, governance—or rather, a lack of it—is an issue. By whom are the rules established? How do we resolve conflicts? Establishing trust in these new structures requires addressing these questions, which are not easily answered.
Allow me to present you with an additional scenario: Mary is looking to rent an apartment, but she doesn’t want her prospective landlord to look into every detail of her credit history. She could provide only what’s required—like evidence of income or rental history—with a decentralized ID system built on the blockchain of Bitcoin without subjecting herself to needless scrutiny.
And that gets us nicely to privacy problems, or rather, how traditional systems handle privacy. Data breaches happen frequently these days, just like muck. We are talking about decreasing single points of failure and mass data theft risk by decentralizing identities through the use of Bitcoin’s blockchain.
However, hold on! There is more! Smooth cross-border interactions and transactions are also made possible by decentralized identities. Moving between nations or using foreign services doesn’t have to involve laborious paperwork or waiting weeks for verifications.