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What is Decentralized Identity?

Technology Updates Research
TL;DR: The current digital landscape presents significant challenges with traditional internet identifiers like phone numbers and emails, where users lack control over their identities, leading to privacy breaches and data misuse. Decentralized identity emerges as a solution, empowering users with ownership, control, and privacy preservation. With blockchain-based security and resilience, decentralized identity offers enhanced privacy, security, and user empowerment. Hypersign leads the way with its pioneering platform, providing full control over digital identities and personal data. Hypersign Entity Studio offers a low-code infrastructure for rapid development of decentralized identity products, supporting a safer and more user-centric digital world.

Problem with Digital Identity

In the current digital landscape, traditional internet identifiers like phone numbers, emails, and usernames pose significant challenges to users. One of the primary issues is the lack of user control over their identities. For instance, in cases like Twitter, where accounts were taken without user consent or phone numbers were assigned to others due to inactivity, users lose control over their identities.
Additionally, using the same phone number for multiple services leads to privacy breaches, as all these services can easily correlate user data. Moreover, users become susceptible to random phone calls and cannot easily change their phone numbers once linked to multiple services. Telecom operators' control over phone numbers also raises concerns, as they can revoke access if users fail to pay, compromising ownership and access to associated services.
Worst of all, you call a bank enquiring about a credit card, and suddenly you are bombarded with calls from different banks trying to sell you their credit card; how does this data even leak, given the bank you called should ideally not be disclosing information about your need to competition!
These problems highlight the need for an identity system that empowers users with ownership, control, and privacy preservation. Decentralized Identity emerges as a solution to address these issues, providing users with complete control over their identities and ensuring privacy in the digital realm.

Decentralized Identity Vs Centralized Identity

The significance of secure and trustworthy digital identity management cannot be overstated in the rapidly evolving digital landscape. Traditional centralized identity systems, while functional, have inherent limitations that compromise user privacy and control over personal data. This has given rise to the innovative concept of decentralized identity, which promises a groundbreaking approach to digital identity management, offering enhanced security, privacy, and user empowerment.
In a decentralized identity system, users are in control of their identity and data, and they decide whom to share and to what extent

The Emergence of Decentralized Identity

The concept of decentralized identity has its roots in the broader movement towards decentralization and the desire to address the limitations of traditional identity management systems. While the exact origin of the idea may not be attributed to a single individual or organization, it gained momentum and prominence in the context of blockchain technology and the growing interest in Self-Sovereign Identity (SSI) principles.

Benefits of Decentralized Identity

Enhanced Privacy

Decentralized identity provides users with complete control over which identity attributes are shared, offering heightened privacy protection and reducing unnecessary data exposure.

Security and Resilience

Built on blockchain technology, decentralized identity ensures robust security and resilience against data breaches and unauthorized access attempts.

User Empowerment

By granting users ownership and control over their identities, decentralized identity allows seamless access to services without constant identity verification, empowering individuals with greater autonomy.

How Decentralized Identity Works?

Decentralized identity operates through blockchain technology, which establishes a decentralized and immutable ledger of identities and their associated attributes. Each individual is assigned a unique Decentralized Identifier (DID), linked cryptographically to their public key and verified by the blockchain network.
By selectively disclosing specific attributes from their DID, users can access services without divulging unnecessary personal information. This decentralized and cryptographically secure approach ensures that identities and data remain protected and tamper-resistant.

What are Decentralized Identifiers (DIDs)?

Decentralized Identifiers (DIDs) form the backbone of decentralized identity. They are unique identifiers assigned to an individual or entity, serving as the foundation for managing and verifying digital identities.
DIDs are associated with their respective metadata, called DID Documents, which are stored on the blockchain and are globally resolvable, meaning they can be resolved to retrieve associated public keys and cryptographic proofs required for identity verification.
A user, also known as holder, controls a DID which inturn resolves into DID document where public keys and its purpose is mentioned
In the above DID document, you can see a public key is stored as “verificationMethod” and it is referenced in purpose “authentication” - “meaning this key should be used for authentication” Users do not need to go to any service provider to create a DID, they can simply connect with a Blockchain (which supports DIDs, like Hypersign) and create a DID for themselves!

What can I do with Decentralized Identifiers (DIDs)?

DIDs can potentially replace any internet identifiers such as phone numbers, emails, usernames, etc. DIDs are not only unique identifiers that can be used to reference artifacts in a database, but they can also be used for communications. Just like the way you use emails/phone numbers.
The difference is, DIDs bring privacy and user control on the table. Unlike phone numbers, users can deactivate these DIDs whenever they want if they decide to not use it anymore. They are cheap to create and manage, and hence a user can create 100s of them and can use a different Decentralizedent Identifier for different services to avoid co-relations.
User can manage multiple DIDs, and can use different DID for different contexts

Hypersign Decentralized Identity Solution

Leading the way in decentralized identity solutions is Hypersign, a pioneering platform that empowers users with full control over their digital identities and personal data. Hypersign's permissionless blockchain network offers secure and scalable verifiable data registry (VDR) implementation based on Self-Sovereign Identity (SSI) principles.
Additionally, various decentralized identity projects have emerged, offering unique features and capabilities in the ever-evolving landscape of digital identity management.
If you wish to dig deeper into Self-Sovereign Identity, you can go through our research in this field here: In-depth introduction to Self Sovereign Identity (SSI)

Hypersign Entity Studio

Hypersign Entity Studio is a full-stack identity infrastructure that enables the rapid development of digital identity products. Built on the Hypersign Identity Blockchain Network, it adheres to the World Wide Web Consortium (W3C) DID and Verifiable Credential specifications. The platform adopts a low-code approach and offers APIs and SDKs to empower developers to swiftly deploy applications in production.
The Entity Studio also provides an interactive playground called Entity Studio SSI Playground to learn and test Self-Sovereign Identity (SSI) concepts. Developers can experiment and explore the functionalities of decentralized identity in a secure and controlled environment.
Video Guide Below

Real-World Use Cases for Decentralized Identity

Digital KYC Process

Decentralized identity can revolutionize digital KYC processes by allowing individuals to maintain control over their personal information. With self-sovereign identity, users can provide specific data to verify their identity without disclosing unnecessary details. This approach enhances privacy, reduces the risk of data breaches, and ensures compliance with data protection regulations. Online platforms and financial services can implement secure KYC procedures while minimizing the collection and storage of sensitive data.

Healthcare Record

Decentralized identity brings a game-changing solution to healthcare records management. Patients can securely manage their medical data and share it with healthcare providers as needed. This seamless data sharing ensures accurate diagnoses, streamlined treatments, and improved patient care. With verifiable credentials and encrypted data vaults, patient information remains private and under the individual's control, contributing to better healthcare outcomes and data security.

Supply Chain Management

In supply chain management, decentralized identity can enhance transparency and trust across the entire process. Every step of a product's journey can be recorded on the blockchain, allowing stakeholders to verify its authenticity and origin. This technology helps combat counterfeit goods, ensures ethical sourcing, and facilitates quick recalls when necessary. Consumers gain confidence in the products they purchase, and businesses can optimize their supply chain efficiency.

Voting System

Decentralized identity can play a pivotal role in revolutionizing voting systems. By using blockchain-based identity verification and cryptographic techniques, digital voting can become secure, transparent, and tamper-proof. Voters can cast their ballots remotely, knowing that their identity and vote remain confidential. This approach fosters trust in the electoral process, encourages higher participation, and strengthens democratic governance.
These applications highlight how decentralized identity solutions, like Hypersign's technology, are poised to reshape various sectors, emphasizing data ownership, security, and individual control while contributing to the broader goal of a more efficient and privacy-conscious digital landscape.

Challenges & Future of Decentralized Identity

While decentralized identity shows immense promise, it faces challenges such as standardization, scalability, and user adoption. To realize its full potential, collaboration and the development of interoperable standards are crucial. With continuous efforts and advancements, decentralized identity is poised to revolutionize digital identity management, paving the way for a safer, more secure, and user-centric digital world.

About Hypersign

Hypersign is an innovative, permissionless blockchain network that manages digital identity and access rights. Rooted in the principles of Self-Sovereign Identity (SSI), Hypersign empowers individuals to take control of their data and access on the internet.
It provides a scalable, interoperable, and secure verifiable data registry (VDR) that enables various use cases based on SSI.
Built using the Cosmos-SDK, the Hypersign Identity Network is recognized by W3C (World Wide Web Consortium), promoting a seamless and secure identity management experience on the Internet.