Every online interaction includes some kind of digital identity. We need to prove who we are, every step of the way, and in doing so we have to reveal a lot of information about ourselves. We are leaving our digital footprint behind, which is vulnerable to manipulation.

With the use of blockchain technology, however, we might be able to find a secure repository for our personal data. The technology also shows promise for changing the way relationships between people and institutions are created and maintained.

Existing Problems in Identity Management

The information that we provide each time we make an online purchase or when we login into our social media accounts gets stored on multiple internet databases. We are essentially creating digital clones of ourselves across various platforms, and this information is vulnerable to security breaches. This information can also be passed on to third-parties, without our consent. Laws like GDPR have sprung up in recent times to tackle issues like these.

In a totally different spectrum of society, there is a huge humanitarian crisis going on. Millions of people have abandoned their homes and belongings to seek shelter on foreign shores. About 70% of Syrian refugees today are facing an identity crisis, with no identity proofs and no property ownership documents. They can’t have bank accounts and once-hopeful students can’t apply to universities.

On the other hand, digital identity is a vital aspect of our lives today. So the questions we need to ask are: How do we protect digital access and management systems? And: How do we ensure security and civil liberties for helpless refugees?

Blockchain Technology – Promise for the Future

With blockchain technology, people can gain complete control of their identities. Combining the applications of a decentralised ledger with a comprehensive system for identity verification, it will be possible to create unique digital IDs.

These digital IDs will be used for all online transactions. Users will be able to determine the data that they wish to share across different mediums and also protect it from theft. Organisations will no longer have to collect and store every bit of identity data, which only adds to their datacenter loads.

Blockchain technology is supremely resistant to tampering, so issues of identity fraud can be tackled. Insurance providers, banks and credit companies are already looking into ways this technology could be used to safeguard client data and speed up transactions.

Blockchain technology can empower host governments and various support organisations to start issuing digital identification for refugees. They will be able to access essential public services and address basic human needs. Bitnation is a startup working for this cause, helping refugees to obtain digital IDs. The United Nations World Food Programme (WFP) is using the Ethereum blockchain to provide displaced people with cryptocurrency vouchers that they can redeem for essential supplies in participating markets.

The Challenges We Face

While we are seeing plenty of success stories associated with blockchain, there are still some people who are skeptical about its role in identity management. Some experts believe that distributed ledger technology, in its purest form, is a public and permission-less system. While it can solve various issues, it was not designed to keep identities safe.

It will pose challenges when it comes to recording sensitive information, since every node in the network has access to every record. This will pose issues in privacy considerations.

The presence of third parties to vouch for identities cannot yet be done away with. For now, it is the government of a country that acts as the third party, vouching for identities. And, we are far from a time when every country in the world adopts blockchain systems readily.

Nevertheless, we cannot discard the concept yet. There are obstacles that can be removed. Even if the technology doesn’t function entirely to solve every identity management issues, it can address major challenges. For starters, keeping accurate records on the distributed ledger will help the identity management ecosystem. The promise is indeed great, and it will depend on how organisations implement it.