CAN DIGITAL IDENTITY BE DECENTRALISED?
With the emergence of the Web3, decentralization is often mentioned. A new form of Internet in which users would be masters of their personal data and their digital identity. In addition, blockchain technology via NFTS can potentially eradicate fraud linked to forged papers and create the support of tomorrow’s digital identity with the principle of Self-sovereign Identity (SSI).
In this context, it is not a state or a technology giant like Meta that holds your identity data but a decentralized system supported by the blockchain. You then become the sole owner and manager of this data, a «user centric» solution. For Christopher Allen, the ISS is composed of 10 major principles: existence, control, access, transparency, persistence, portability, interoperability, consent, minimisation and protection.
And the blockchain offers the ecosystem to make all this work with digital certificates (certifying information about the individual and property), decentralized identifiers and secured by a private key and a secure infrastructure. With this principle each individual could then administer and issue his information in order to replace the countless accounts held on websites and managing each of the personal data of users in more or less secure databases. In the long run, the ISS might even redefine the concept of physical identity represented by passports or identity documents. There will then no longer be any dependence on private and even public services (apart from the initial creation of the ISS), users will be able to control to whom they share their data and no external entity will be able to modify an individual’s identity data without their consent.
This new form of identity could be transposed into a new type of NFT evoked in January 2022 by the founder of Ethereum Vitalik Buterin. These are Soulbound Token (SBT). This token cannot be resold or transferred, it can be dynamic to allow the addition of information over time and it will be linked for life to the wallet of each individual.
The Binance platform has announced the use of SBT via its Binance Account Bond which is sent to users who have completed the KYC (Know Your Customer) formalities. Subsequently, with this type of identification Binance could monetize to third parties a KYC service like a Google Connect or Facebook Connect but this time with a real notion of trusted third parties.
The SBT, if they are deployed in our companies, will revolutionize the financial market as when they subscribe to a bank loan. In one click, a customer’s personal data will be shared with a bank to fulfill KYC needs. As soon as income, housing and other vouchers are registered in the blockchain and associated with the Soulbound Token. One can thus imagine moving towards the end of fraudulent forgeries. A real administrative revolution would then be underway thanks to simple tokens and blockchain. But beware, SBT must be well thought out and secure to avoid any disclosure of personal information and respect the anonymity of users.
Moreover, when we talk about SSI and Web3 we talk about decentralization, but with SBT issued and managed by a private company as with Binance we are clearly moving away from this decentralization. Indeed it is a private company that validates the information and not a decentralized and autonomous protocol. So wouldn’t Web3 be just a fantasy that ends in Web2.5?