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On the Internet, you and I have learned to live with identity. We have accounts, logins, and passwords, and we’ve learned to live with and manage them. There are ways to streamline the process, most notably in corporations using protocols and the SSO approach.
We must agree to the use of our personal data every time we use a website or application. But there is no choice: if you don’t click that button, you won’t be able to utilize the application. The good news is that things are improving.
Decentralization is currently displacing central data storage and collecting. Decentralized identities(DIDs) will allow consumers to choose whether or not to disclose their data, which is even more significant.
In this post, we will look over Decentralized Identifiers, how they function, their applications, and much more.
So, What is a Decentralized Identifier?
Decentralized IDs are a new-age trust structure of cryptographically verifiable globally unique identifiers (UUIDs) that do not require a centralized registration authority. They are capable of identifying individuals, abstract entities, companies, data models, and Internet of Things (IoT) objects.
DID’s premise is to return ownership of identification to internet users and allow them to produce unique IDs utilizing trusted methods.
Individuals and businesses can benefit from seamless, safe, and private data sharing using blockchain’s distributed ledger technology by enabling authentication of these IDs using cryptographic proofs such as digital signatures (DLT).
We need to supply crucial information to access applications, websites, services, and gadgets in today’s digital environment.
The present technology of universally unique identifiers (UUID) and uniform resource names (URN) requires a centralized registration authority and is not capable of cryptographically verifying identifier ownership.
As a result, we are frequently susceptible to invasions of privacy, data theft, and other associated issues.
However, using the DID framework, users can securely and privately store a variety of acceptable identifiers, such as government-issued certificates, educational and tax credentials, and other personally identifiable information (PII).
A blockchain-based distributed ledger serves as the source of all identifiers saved in the wallet, rather than depending on a central authority to handle the user’s identification. The identity information is kept in a user-managed wallet rather than on the ledger.
It lets users share various aspects of their identity with different services as they deem suitable. Unlike the centralized architecture, users can only offer the information that is necessary to any organization (website, app, etc.).
These entities can validate the proofs using a blockchain-based ledger.
Decentralized Identifier Framework
The core DID version, which was first released by the W3C, explains that a Decentralized Identifier is just a text string. It is divided into three sections:
- On-chain storage of the DID URI scheme identification.
- The identification for the DID method.
- The method-specific identification for DID.
DIDs are a component of a global key-value database, and the DID Documents are hosted on Ethereum and other suitable blockchains (e.g., public keys, service endpoints, and authentication protocols).
To provide precise data models to bootstrap cryptographically verified interactions with the identified entity in the decentralized ecosystem, DIDs operate as keys and DID Documents as values.
Most significantly, a DID Document has an authentication public key. Using the private key linked to a DID Document, its owner may prove ownership.
What makes decentralized identifiers possible?
Public Key Infrastructure
PKI is an information security method that creates a public key and a private key for an entity. In blockchain networks, public-key cryptography is used to verify user identities and confirm ownership of digital assets.
Public and private keys are used in some decentralized identities, such as an Ethereum account. The public key identifies the controller of the account, whereas the private keys can sign and decode communications for this account.
PKI offers the evidence required to authenticate entities and prevent impersonation and the use of false identities by employing cryptographic signatures to validate all claims.
Decentralized data stores
A blockchain is a verified data registry: an open, trustless, and decentralized store of information. The availability of public blockchains reduces the need to keep IDs in centralized registries.
Anyone who wants to check the legitimacy of a decentralized identifier can seek the accompanying public key on the blockchain. This is distinct from conventional IDs, which need third-party authentication.
Working of Decentralized Identifiers
A decentralized identifier is a string that includes a URI scheme, DID method, and DID method-specific identifier.
A DID sample is as follows: did:method:1234567890abcdefjhi Each DID is transformed into a DID document that contains the cryptographic content as well as additional metadata for DID management.
To understand how DIDs function, we must first get acquainted with three fundamental definitions: DID subject, DID technique, and DID document. We discussed them previously, and now it’s time to learn more about them.
The stuff behind digital identity is a DID topic. This might be a real person, a product, a device, a place, or a business.
A DID document is a collection of data that includes information on a DID subject as well as methods that allow the identifier to function, such as public keys and pseudonymous biometrics.
In reality, this is what the subject will use to verify themselves and demonstrate ownership of their identity. Finally, a DID method is the mechanism that allows DIDs and DID documents to work fully.
It enables you to generate, read, update, and deactivate an identity and document on the blockchain or any other DLT.
This is how decentralized IDs appear on the inside, as well as how developers generate and manage them. The final user may not even be aware of the entire procedure.
If the program allows users to generate a DID, they will sign up for a digital wallet, construct a digital identity, and save it in the wallet. They will produce a QR code each time they need to use the identification to validate it and access services.
Benefits of Decentralized Identifiers
Improved data control and privacy
Let us give you an example. You’ve created a digital passport and saved it in your digital wallet. Tonight you’ve chosen to go clubbing, but bringing a real passport is risky: you might have too much fun and lose it.
So you’re standing at the club’s door, and the security guy is questioning your age and asking for your passport to validate it.
On the one hand, you didn’t carry your real passport, but you also don’t want to reveal to them your complete name, the exact date of birth, or ID number.
Simply generate a QR code from your wallet and provide it to the security officers to scan. That individual and you will establish a safe link by exchanging decentralized IDs, and the information will be confirmed without disclosing any of your personal information.
In this way, you have complete control over your data and have the option of sharing it or not.
DIDs enable certificate-issuing companies to give fraud-resistant credentials. Organizations that acquire IDs can then promptly check the legitimacy of the credentials and ensure that the data was not fabricated.
Cryptography is used to create, register, and protect digital decentralised IDs. Cryptography allows you to create two sorts of keys: public and private. Private keys are solely known to the key owner and are never shared with the general public.
Public keys, on the other hand, are widely circulated. This sort of pairing can accomplish two key functions: authentication and encryption.
The public key can certify that the message was transmitted by the receiver, but only the person who has the private key can decode it.
No metadata gathering
A decentralized identifier does not collect metadata and does not, as a result, send it to third parties. As a result, users of sites that allow them to establish DIDs will forget what it’s like to be targeted with advertising.
Decentralized Identifiers Use case
Decentralized identification can enable decentralized authentication to replace password-based logins. This allows users to access platforms and websites without having to remember long passwords, which enhances their online experience.
Many online services need people to give attestations and credentials, such as a driver’s license or a national passport, in order to use them.
However, this technique is problematic since private user information might be hacked and service providers cannot check the attestation’s veracity.
Companies can avoid traditional Know-Your-Customer (KYC) processes by using Verifiable Credentials to validate user identities. This lowers the expense of identity management while also preventing the use of fake documents.
Voting and online forums
Two interesting uses for decentralized identification are online voting and social networking. Online voting methods are vulnerable to manipulation, particularly when bad actors create false identities in order to vote.
Requesting on-chain attestations from individuals can improve the integrity of online voting systems. Decentralized identification can aid in the creation of online communities free of fraudulent accounts.
Future of Decentralized Identifiers
Despite the fact that decentralized identifiers are still in their infancy, with organizations and governments merely piloting and testing the technology, DIDs have the potential to become a popular and solid technology, since there is a lot of interest in its development from businesses and audiences.
We are also on the verge of a new decentralized age known as Web3. This may come as a surprise, but there are already Web5 proposals floating about in which decentralized identifiers will be crucial components and an intrinsic part of our digital future.
That future is not far away, and if businesses and organizations want to remain competitive and grow, they must study blockchain, DLT, and decentralized identities now in order to be prepared for new developments.
Decentralized identifiers have the potential to alter our perceptions of personal information and user data in the twenty-first century.
Instead of relying on Big Tech corporations to protect critical information, people can retake control of their identities using DIDs. Businesses can profit from decentralized identifiers as well. They can reduce the need for time-consuming identity verification and give consumers smooth and safe online experiences.
Organizations can also develop trust and improve customer relationships by committing to preserving user information.