Digital identity will be web3’s eureka use case

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On December 3, 1992, the world changed. Neil Papworth, a humble 22-year-old test engineer, sent the world’s first text message. It consisted of just two words: Merry Christmas, and he had to type it into a computer, but it would soon change the way the world communicated.

At that time, mobile phones were still a novelty. Of course, they were effective and interesting. But these were not necessary. After all, for anything to happen, both parties had to be ready at the same time.

If it weren’t for the text message they would have stayed that way. This new use case for mobile devices made them ubiquitous, and after a few years, text messaging became the most widely used data application in the world.

This kind of ‘eureka’ moment is about to happen for another technology. Blockchains are still viewed by many as a novelty, a fad, or a dream with no realistic use case. Web3 technology is popular but certainly not available everywhere.

We need a text message to change this. Digital identity is exactly that.

digital dilemma

If there’s one thing we’ve learned from the last election cycle in the US, it’s that online perception can be the greatest political force in the world. Podcasts are essentially long-form discussion platforms, social media turns every word into wildfire, and vice presidential candidates are livestreamed video games.

Our world lives online, and this poses a critical challenge. How do you prove it’s you? We have seen deepfakes and other AI-generated content push the limits of our ability to tell. Our financial institutions are under immense pressure from highly advanced fraud technology, and governments are realizing that traditional identification is no longer effective or reliable enough.

Digital identity services are being developed (or implemented) worldwide. But most of these are mobile apps that are verified with the real-world ID cards we’ve been using for decades.

Just like the original cell phones are portable versions of the one you have at home.

It needs to be more than that. It is more than a portable version of your ID card. It should be undeniable, unique, and inherently tied to your humanity. These so-called ‘personality credentials’ by a group of researchers earlier this summer are only possible with web3 technology and I believe is a use case that will help integrate this into everything we do.

honeypot

Why is digital identity service tied to physical identities and not the answer? Security. A central repository of information is ripe for the picking.

There’s an old saying I like to use to explain this. Show me a 10-foot wall and I’ll show you an 11-foot ladder. No matter how many guardrails you install from individual hacker groups, other nations, political forces, or even corporations, there is no way to completely protect it from outside forces.

Imagine a safe containing extensive files on each of us. Enough detail to impersonate, steal or destroy anyone’s identity. This would be the most valuable bank robbery in world history.

The only answer is decentralization! A blockchain with a built-in identity layer like the one Concordium is building is a starting point, but we need more innovation and creative new solutions if we want to preserve our humanity.

modern wallet

For as long as we can remember, ID was just a piece of paper with your name on it. Improvements and changes have been made, such as adding photos or scannable barcodes. But IDs are still just a piece of paper with your name on it.

There is a new way of doing things today. As JP Morgan explains, there are four different building blocks of digital identity. The first three are simple:

● Identifiers: Things like your name, email address, or account number.

● Identity attributes: Data points, such as where you went to school or where you work.

● Reputation: What you participate in, your social following, or the content you create.

In years past, a Twitter account with the correct username, a blue checkmark, and three million followers would have been enough to confirm that they were who you thought they were. This is no longer true. Each of these three categories can easily be decentralized. Proof of Participation Protocol is one of the technologies currently used to create reputation certificates.

The fourth building block of our modern identity will be digital assets. You will be able to prove who you are with what you have. Blockchain ledgers will keep immutable proof and records that you are who you say you are.

I don’t mean that you’ll use Bored Monkey to affirm your humanity (though I suppose you could do that). Instead we will create identity tokens that cannot be transferred, copied or decrypted. They will become the cornerstone of the modern wallet.

need for caution

However, as with older text message systems that were often scammed, there will be challenges. While the Wild West days of crypto may be over, many snake oil salesmen are still on the road.

Digital identity is too important to be delegated to those who will implement it as quickly or easily as possible. Regulation should be a joint effort between government and private blockchain leaders who want to put privacy and security first. It should also place data ownership in the hands of the individual, not a central repository.

When we do this, web3 will have its own eureka moment. Neil will find his Papworth.

Boris Bohrer-Bilowitzki

Boris Bohrer-Bilowitzki is the CEO of L1 blockchain and technology firm Concordium. He previously worked as chief commercial officer at Copper.co and senior relationship manager at Newscape Capital Group in London. St. He studied at the University of St. Gallen and holds an MBA from Imadec University.