Applications of Blockchain in the Identity Management Perspective
It cannot be denied that the world has gone digital, which means that important data – namely sensitive customer data such as banking and health information – is vulnerable to cyber attacks. For example supply chain relationships on websites with fast deposits, withdrawals and trading strategies. Concerns about privacy are long-standing, and for good reason: the amount of personal information that major technology companies store is a tempting target for hackers. But as technology races forward, so must our ability to manage sensitive data with increased efficiency and security. Blockchain-based identity management can make a difference. This is how:
Blockchain-based digital identity system:
In a blockchain-based digital identity system, users are responsible for their personal information and can choose whether to share it with specific organizations and under what conditions. It is made possible by distributed ledger technology that records all transactions permanently in a way that allows them to be tracked but not changed.
Because data is time-stamped and cannot be altered or hacked (plus, nothing is stored in centralized locations where companies can easily access it), blockchain-based digital identity systems provide an almost foolproof way for people to control their personal information—without fear for modifications or hacking. Blockchain’s strengths
Blockchain-based identity management solutions offer several advantages over other digital identity security tools. The most important thing is that they achieve improved security and transparency while providing greater user-friendliness. However, blockchain is a unique but still nascent technology. Many use cases are still being investigated. As such, people have to overcome some hurdles before digital identity management can take off in the mainstream – weaknesses.
For example, while blockchain-based identity management seems promising and holds a lot of promise as a long-term solution to identifying security issues, people need to address some limitations if the technology is to reach true strength. These include transaction speed and other issues related to the current scalability of the technology.
The government can use blockchain to verify identity:
There are many reasons why blockchain could be a big deal for identity management: more people around the world are being brought into the system every day. In other words, people are taking on new roles that involve different levels of risk, including positions in government agencies and civil society.
Each person added to the system increases the security risk, so it is important to have a scalable, flexible solution that can grow with new users. Blockchain could be that solution, which means organizations must now work to develop distributed ledger-based identity management systems.
As such, it is not without its flaws. Blockchain-based identity management’s main challenges lie in transaction speed and scalability. That’s a problem with all distributed ledger technology, and it’s an obstacle to widespread adoption by government agencies, which are often forced to rely on outdated technology simply because they can afford to update their systems often enough to keep up with technological advances . However, that may soon change: many governments are investing heavily in blockchain technology to improve their own services while reducing costs, making distributed ledger-based identity management more attractive and cost-effective over time.
How can blockchain facilitate identity management?
- Blockchain is transparent:
Contrary to popular belief, there is absolutely no way to hack a blockchain. As a result, it has become an important aspect of blockchain technology, explaining the popularity of Bitcoin. Furthermore, the fact that all transactions are recorded in a public ledger means that the identity of wallet holders cannot be hijacked or changed – not even by governments or large banks, making digital identity management a much safer prospect than before.
- Blockchain is efficient:
Use cases for this technology are already being explored and tested, with some succeeding more than others. The Digital Citizen Fund (DIF) uses it, for example, to protect children’s privacy. Also, blockchain-based identity management has the added benefit of being infinitely scalable. As more people use digital identity management systems, networks become more secure and efficient. So while governments are slow to adopt blockchain, there’s no reason to believe it won’t grow in value over time.
Blockchain is not cheaper to execute:
To build a blockchain-based digital identity management system, individual users must create their trust officers. It is not only labor intensive, but also extremely expensive. In fact, in some cases the costs can be so burdensome that the use of the technology is completely unaffordable.
Public and private organizations and public agencies must place greater emphasis on security – especially around sensitive data such as healthcare and financial information. Blockchain-based digital identity management seems like it could be an upcoming solution. As blockchain technology becomes more widespread, we are likely to see more public and private organizations adopt distributed ledger-based digital identity management in need of a cost-effective, secure and scalable solution.
With the growth of cyberspace, we see a new type of criminal emerging: cybercriminals. Their method is the same as traditional criminals; they have always tried to take advantage of individuals or companies who do not know how to protect their data and information, and blockchain reduces any prospect related to cybercrime.
