There is no denying that the world has gone digital, which means crucial data—namely sensitive customer data such as banking and healthcare information—are vulnerable to cyber-attacks. For example, the website supply chain relationships with fast deposits, withdrawals, and trading strategies. Privacy concerns are longstanding and with good reason: the bounty of personal information that significant tech companies store presents a tempting target for hackers. However, as technology races forward, so must our ability to manage sensitive data with increased efficiency and security. Blockchain-based identity management could make a difference. Here’s how:
Blockchain-based digital identity system:
In a blockchain-based digital identity system, users are in charge of their personal information and can choose whether to share it with specific organizations and on what terms. It is made possible by distributed ledger technology that records all transactions permanently in a way that allows them to be tracked but not altered.
Because data are stamped with a timestamp and cannot be altered or hacked (furthermore, nothing is stored in centralized locations where companies can easily access it), blockchain-based digital identity systems provide an almost fail-safe way for people to control their personal information – without fear of alteration or hacking. Blockchain’s Strengths
Blockchain-based identity management solutions present several advantages over other digital identity security tools. Most importantly, they achieve improved security and transparency while providing greater ease of use. However, blockchain is a unique but still nascent technology. Many use cases are still being explored. As such, people must overcome some hurdles before digital identity management can take off in the mainstream—weaknesses.
For example, while blockchain-based identity management seems promising and offers a lot of promise as a long-term solution to identify security issues, people must 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.
Government can use blockchain to verify identity:
There are numerous reasons blockchain could be a big deal for identity management: more people around the globe are being brought into the system every day. In other words, people are taking on new roles involving different risk levels, including positions in government agencies and civil society.
Each person added to the system adds to its security risks, so it’s essential to have a scalable, flexible solution that can grow with new users. Blockchain could be that solution, meaning that organizations need to work now on developing distributed ledger-based identity management systems.
As such, it is not without its flaws. Blockchain-based identity management’s most significant challenges lie in transaction speed and scalability. It is an issue with all distributed ledger technologies, and it’s an obstacle to widespread adoption by government agencies, which are often forced to rely on outdated technology simply because they need to afford to update systems frequently enough to keep pace with technological advances. That may change soon, though: many governments are investing heavily in blockchain technology to improve their own services while also reducing costs, making distributed ledger-based identity management more attractive and cost-effective over time.
How can blockchain ease 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 essential 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 altered—not even by governments or large banks, makes 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. For instance, Digital Citizen Fund (DIF) uses it to protect children’s data privacy. Moreover, blockchain-based identity management has the added benefit of being infinitely scalable. As more people use digital identity management systems, the networks become more secure and efficient. So even if governments are slow to adopt blockchain, there is no reason to believe it will fail to grow in value over time.
Blockchain is Not Cheaper to Execute:
To build a blockchain-based digital identity management system, individual users need to create their trust officers. It is not just laborious but also extremely costly. In fact, in some cases, the costs can be so onerous that the use of the technology is entirely prohibitive.
Public and private sector organizations and government agencies need to give greater importance to security – particularly around sensitive data such as healthcare and financial information. Blockchain-based digital identity management seems like it could be an up-and-coming solution. As blockchain technology becomes more prevalent, we’re likely to see more government and private sector organizations adopting distributed ledger-based digital identity management that needs a cost-effective, secure and scalable solution.
With the growth in cyberspace, we are seeing a new type of criminal emerge: cybercriminal. Their method is the same as traditional criminals; they have always sought to take advantage of individuals or companies that do not know how to protect their data and information, and blockchain mitigates any prospect related to cybercrime.