Three barriers to digital IDs on the blockchain
There has been a lot of hype around blockchain technology and the benefits it could potentially bring to a wide variety of verticals, including identity verification.
While the benefits are exciting, there are a handful of very important steps that must happen for blockchain-based identity technology to become widely adopted and its full benefits realized. Without reaching the milestones listed below, blockchain may remain a niche technology with no mass user base to move it forward.
International support for blockchain and identities
Government entities need to collaborate and agree on how to issue and hold identities. This varies widely today, with multiple agencies responsible for issuing identity information per country. Most importantly, and probably the biggest hurdle – blockchain needs to secure additional governance from respected third-parties, so there’s a system of checks and balances in place that do not favor one government or technology over another.
It is unlikely that governments would accept a technology or approach where there are clearly vested interests. A more neutral party, such as a consortium, with built-in checks and balances might be considered for this role.
Who is in charge for onboarding people to a blockchain distributed ledger? Another role a third-party organization could play is to establish how to verify identities. What information is required to verify a user when adding them – photo, birth date, government ID number, address, etc.? When and how will they gain access to the blockchain system?
Governments will most likely want some sort of control over what onboarding documentation/data is required. However, it should be noted that government IDs aren’t utilized globally. An estimated 1.1 billion people worldwide (Africa, Asia, etc.) cannot officially prove their identity, according to the 2017 update of the World Bank’s Identification for Development (ID4D) Global Dataset.
In order for the ledger to be universal, there would need to be a way to validate those people without traditional identity documentation. Once documentation/data criteria are established, the market will need third-party technology such as identity verification to ensure the onboarding process is valid from the outset.
Consumers must be served with trust, transparency and consent for an identity-based blockchain to grow. On one hand, businesses, governments, insurance companies and the like must be ready and equipped to use blockchain identity information, but they are unlikely to be pushed to do this unless consumers speak out in favor of holding their identity information in a digital format.
The good news is that, from a pure technology perspective, users can sleep soundly knowing blockchain data is stored in a safe way – it’s immutable. The other piece that will catalyze consumer adoption is ensuring consent. Mainstream consumer adoption will only occur if the consumer has full control of the fate of their data. Giving consumers the sole power to say “yes” or “no” to data exchanges and the option to drop-out and delete their data from the ledger will be crucial in garnering consumer adoption.
Industry leaders are already exploring options on how distributed ledgers can be utilized for the identity verification space. We are all eager to participate in building standards that the industry as a whole can adopt.