Forms of applying blockchain technology in digital identification systems

In essence, when a file is recorded on a blockchain system, the reliability of that information is guaranteed by the many nodes responsible for maintaining that network. Or, in other words, “a series of confirmations,” from multiple users attesting to the validity of all recorded data.

In this case, the network nodes may be controlled by authorities or government organizations, which are responsible for checking and validating digital records. Essentially, each node can “cast a vote” on the reliability of the data so that the files can be used like an official document but with a higher level of security.

The role of cryptography

In a digital identity system based on blockchain technology, there is no need to share sensitive information directly and in detail. Instead, digital data can be shared and authenticated using cryptographic techniques such as hash functions, digital signatures, and zero-knowledge proof protocols. proof).

Using a hash algorithm, any text can be converted into a hash code consisting of a string of alphanumeric characters. This hash represents all the information used to create that hash, and acts as a digital fingerprint. Additionally, government organizations or other trusted organizations can provide digital signatures to officially certify a document as valid.

For example, a person can provide an authority with their text to create a unique hash code (digital fingerprint). The authority can then create a digital signature to confirm the validity of that hash, meaning that hash can be used as an official document.

Additionally, a zero-knowledge proof protocol allows users' credentials and identities to be shared and authenticated without the user revealing information about themselves. This means that even if data is encrypted, its validity can still be checked. In other words, you can use the proof-without-disclosure protocol to prove that you are old enough to drive or enter a club without revealing your date of birth.

Sovereign identity system

Sovereign identity is a model where each individual user has complete control over their data stored on personal wallets (similar to cryptocurrency wallets). Using this system, users can decide when and how their information is shared. For example, a person can store his or her credit card information in a personal wallet and use his or her private key to sign a transaction, which sends the information. This will allow them to prove they are the owner of that credit card.

While blockchain technology is primarily used to save and transact cryptocurrencies, it can also be used to share and authenticate documents and personal signatures. For example, a user can request that a state agency approve their status as an accredited investor, then transmit that confirmation to a broker via a proof-of-concept protocol without requiring details. information disclosure. Thanks to this, the broker can ensure that the investor is officially certified, even if they do not know the details of the investor's net worth or income.

Potential advantages

The application of cryptography and blockchain technology in digital identity systems has at least two major benefits. First, users have greater control over how and when their personal information is used. That will reduce the risks from storing sensitive information on centralized databases. Additionally, blockchain networks offer greater privacy through the use of cryptographic systems. As mentioned, the proof-without-disclosure protocol allows users to prove the validity of their documents and without sharing details about them.

The second advantage is that blockchain-based digital identity systems can be more trustworthy than traditional ones. For example, using digital signatures can make it easier to check where a user's claim comes from. In addition, blockchain systems make it more difficult to falsify information, and can effectively protect all data against fraud risks.

Potential downsides

Just like other functions of blockchain, using this technology for digital identity systems can also have some challenges. The most difficult problem is that these systems are vulnerable to a malicious practice known as synthetic identity theft.

A composite identity combines multiple valid pieces of information from many different people to form an entirely new identity. Because synthetic identities are made up of accurate information, identity systems can be fooled into not recognizing fake identities. This type of attack is widely used by criminals in credit card fraud.

However, this problem can be solved by using digital signatures to ensure that the blockchain will not accept a collection of documents as a record. For example, a government agency can issue individual digital signatures for each document and a common digital signature for all documents registered by the same user.

Another thing to watch out for is the risk of 51 percent attacks, which are likely to occur on small blockchain networks. A 51% attack has the potential to reorganize the blockchain, essentially changing its records. This problem is especially worrisome in public blockchain networks, where anyone can participate in the process of checking and validating blocks. Fortunately, private blockchain networks can reduce the risk of these attacks because in them, only trusted entities can participate in the authentication process. However, this will also cause these networks to become more centralized and less democratic models.

Conclude

Despite its drawbacks and limitations, blockchain technology has huge potential to change the way digital data is authenticated, stored and shared. Although many companies and startups are already testing these potentials, there is still a lot of work to be done. However, we will certainly continue to see the birth of many digital identity management services in the coming years. And it is very likely that blockchain technology will play a central role in those services.