In most western societies today, the centralization of identity management is the norm. The problem that most people have is that while their identity is "centralized" it's still all over the place and easily accessible to anyone who wants to access it. Having your social security number on file at the post office, your birth certificate in some filing cabinet at your high school, and your driver's license in your wallet all contain different sets of information.
While it would be simple enough to have all this information in one place, doing so would require a lot of effort on the part of the government or organization that would hold onto this information. These days, with the rise of cyber-attacks and identity theft, this is not the best idea from a security perspective. Losing all your personal information due to a hack or leak would be pretty devastating.
Centralized identity management solutions have come a long way in the past few decades, however, they still have some major limitations that prevent them from being able to keep pace with the rapidly changing needs of modern society. The reality is that these systems were not designed with the online world in mind and as such, they are missing some of the most basic infrastructure requirements that would make them secure and usable online.
The issues with current identity management solutions can be broken down into two areas:
Security: Centralized systems are inherently less secure than decentralized ones. This is because they are susceptible to single points of failure and data breaches. A breach at the central database could cause identity records to be incomplete or invalid.
Usability: Online services that require users to provide personal information such as banking or shopping websites or applications are unusable with current centralized identity management systems.
This is because users are forced to log in using passwords that are vulnerable to hacks.
Identity management is a key area that could be improved with the implementation of blockchain technology and that's because identity isn't just an issue of personal privacy, it's an issue of social inclusion. Currently, citizens of many countries do not have access to online banking, government services, or participate in online commerce without having a significant 'backlog' of paper identification documents such as passports, birth certificates, driver licenses, and more.
These papers take time to produce, obtain, and travel back and forth between home and work causing delays in the system and serious inconvenience for citizens. Moreover, the use of multiple types of identification across different systems makes it difficult for individuals to prove their identity.
This problem is made worse when countries like the U.S. and the U.K. update their identification standards, requiring individuals to have newer identification documents. These issues could be solved with a single interoperable identification system that could be accessed by citizens from anywhere in the world. This system would contain all forms of identification, all information about the individual, and all their relationships.
Using this system, an individual could prove their identity at a government office anywhere in the world. This system would be secure and convenient thanks to the use of blockchain technology. Identity management would be necessary to run such a system since it would have to hold all of the individual's information.
It would also need an incentive structure in place to ensure that the data is protected and that no one person has too much power to destroy the system.
Using the ERC-721 non-fungible token standards (NFT's) defined in the ERC-20 token standard, it is possible to create unique non-fungible tokens that can represent anything.
In this case, we are using non-fungible tokens to represent individuals. For example, you could have a non-fungible token that represented you and your home.
In this case, if you lost your home, you would still retain your non-fungible token and be able to prove that you still existed and were the rightful owner of that property. This would work in a similar way to how the company shares work in a company. If you owned one share in a company, that single share represented all of your ownership in the company.
You create an ERC-721 non-fungible token that represents a person, for example. You then register this non-fungible token with the blockchain so that anyone can verify the token's existence. This allows you to prove who you are without having to share any personal information such as your name, home address, birth date, or government identification number. You can still interact with the outside world, participate in online auctions, and purchase goods and services while maintaining your privacy.
You can also create an alias for yourself to use on the internet. For example, you could create an "online persona" using a non-fungible token and then use that online persona to post comments, rate content, and more. In this way, you can maintain your anonymity since no one can tell the difference between your real-world identity and your online persona. You could also use this system to create a username that represents a non-fungible token.
Since no single person or organization holds all of your identity information, you retain full control over it and can decide who has access to it. This means that: You remain in complete control over who knows your personal information. Your information is not sold or transferred to 3rd parties. You are in full control of who can see your personal information.
This is especially helpful if you are homeless or otherwise do not have physical access to your documents. This is also useful for people who do not want others to know their home addresses such as policemen and military personnel. You are in full control of when and where you share your information.
While this system may not be suitable for everyone, it is still an effective tool for those who want to maintain their anonymity. It is especially useful for people who are homeless, persecuted, or otherwise do not have good access to documents such as identity cards, passports, or even utility bills.
It is also useful for people who do not trust the government or are otherwise wary of Big Brother organizations tracking their activity. Finally, it is also useful for circumventing online advertising and online tracking.
