Decentralized Identity Is Set to Revolutionize Daily Living

Our sense of identity is a fundamental part of who we are, shaping everything from our thoughts and emotions to our actions and relationships. Identity allows us to interact with one another and build trust with other people and make informed decisions.

Digital identity, in particular, is a rapidly evolving concept with far-reaching implications. In its simplest form, digital identity is the online equivalent of our physical identity. It encompasses everything from our name and Social Security number to our biometric data and online activity. As we increasingly conduct our lives online, our digital identity becomes more important, influencing everything from our financial transactions to our social interactions.

Challenges In Centralized and Federated Identity Models

With increased connectivity comes the need for an efficient verifying and managing of identity. In today’s world, two main models of identity exist, i.e., the federated and the centralized identity models.

Under the centralized model, service providers, apps, and other platforms issue unique identifiers to each user. This poses a major security risk because when hackers gain access to this database, they can steal our personal information and potentially even assume our identities. With so many personal identities and private information stored in online databases, there is an increased chance of hacks and breaches which could leak personal information. 

Additionally, users with multiple logins are more likely to reuse the same password or make them easy to remember, so hackers may have further success stealing personal information. One of the main problems is that users must remember multiple login credentials for different platforms. This can be cumbersome and lead to security risks if passwords are not managed properly.

The federated identity model is better because it allows individuals to create their own digital identity while still being able to share it with other organizations. For example, platforms such as Google and Facebook allow users to log in to external sites with their existing account information. Scenarios like this effectively make sites like Google and Facebook act as intermediary services between users and third-party platforms. 

However, this model is not without its challenges. Another challenge with both of these models is that they are based on trust, i.e., we have to trust that the organization managing our identity data will keep it safe and secure. With the recent spate of high-profile data breaches, this trust has been broken, and many people are now reluctant to share their personal information with centralized organizations.

The Importance of Decentralized Identity

In recent years, we have seen a range of new technologies that will fundamentally change how we think about and manage digital identity. One such technology is decentralized ledger systems such as blockchain, often referred to as distributed databases. These systems provide a powerful means for storing and managing data securely and transparently.

More importantly, blockchain allows us to create decentralized digital identity systems controlled by the individuals themselves using NFTs (non-fungible tokens). This means that we will no longer have to rely on centralized organizations to manage our identities. Instead, we can use highly secure technology such as blockchain’s NFTs and Verifiable credentials, which leverage the power of blockchains to store data or redirect data off-chain.

Socio-Economic Impacts of Decentralized Identity

The emergence of decentralized digital identity systems is likely to impact all aspects of our lives profoundly. As more and more of our lives require the verification of identities, we will feel more in control of our personal information, but we will also benefit from increased security.

According to experts, it could also lead to greater financial inclusion and efficiency and increased trust between individuals and organizations. In addition, decentralized identity systems have the potential to reduce fraud rates in a range of industries such as healthcare and banking, which would translate into significant cost savings for companies.

Ultimately, the benefits and impact of decentralized identities grow as more businesses and individuals use them. For instance, a government can issue verifiable digital credentials (DVCs) that can be used by its citizens in a variety of interactions, from filing taxes to accessing healthcare services. In the private sector, companies can use decentralized identity systems to verify the identities of their employees and customers.

With conversations about the metaverse gaining speed, innovations that facilitate the transfer of identity from one application to the other, such as decentralized digital identity, are likely to become increasingly important.

Gamium (a decentralized social metaverse platform) is a good example of a project already looking to develop a decentralized identity system online. Just recently, Gamium closed a $2.25 million private token sale set to make the platform the center of the metaverse.

As a Web3 technology company, Gamium builds a platform where users can build and develop their digital identity and use it across Web3 and metaverse-ready applications.

The Future of Digital Identity

As we enter this new era of digital transformation, it’s clear that decentralized identity will play an essential role in how we interact with each other and the world around us.

The trend toward decentralized digital identity is already well underway, and several initiatives and projects are working to develop this technology further.

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In government and the private sector, projects leveraging decentralize identity technology are moving forward with mentionable participants such as Ontario’s Digital ID and the European Union.

So far, we’ve only scratched the surface of what’s possible with decentralized digital identity. In the years to come, we can expect to see this technology continue to evolve and become an integral part of our lives.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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