Threat actors are getting smarter and so are their ways of eliciting funds and information from victims. Cyber defence techniques are continually evolving as a result.
In the identity and access management arena, the next big thing among regulators, organisations and individuals is decentralised identity, an approach that gives people more control – and organisations less responsibility – over personal information. In fact, Gartner predicts that decentralised identity will be the standard by 2024.
What is decentralised identity?
More often than not, documented proof of existence is a prerequisite for people to engage in financial, political, social and cultural activities. In fact, proof of identity determines our ability to exercise citizen’s rights and access essential services, including education, healthcare, banking, housing and state support.
Decentralised identity systems make it significantly easier for users to access this information.
In a decentralised framework, the user receives credentials from a number of issuers (e.g., government, educational institutions, employer) and stores them in a digital wallet. The user presents those credentials to the relevant issuing authority, who then verifies their identity through a blockchain-based ledger that does not store the user’s data.
The big benefit is that anyone can access this sort of digital identity − all that’s needed is an internet connection and a smart device.
Who needs decentralised identity?
Decentralised identity offers substantial benefits to individuals, organisations and developers.
First and foremost, it enables all users to access the essential services they need while retaining control over their personal information. The system provides a secure repository for people to store their credentials. It’s secure by design, giving everyone peace of mind that their personal information is safe and that they are at lower risk of identity fraud.
For organisations, decentralised identity reduces the risk of information misuse, minimises the risk of account takeovers, and simplifies compliance requirements. This is a major benefit, as failing to comply with increasingly complex data privacy regulations can lead to huge fines and penalties. With decentralised identity, firms can also verify identities with less information from users and customers, which ultimately creates a greater sense of trust and transparency between all parties.
In addition to the above, decentralised identity opens up a variety of digital transformational opportunities for organisations:
- Passwordless opportunities: Decentralised identity enables organisations to go fully passwordless by connecting to federated identity infrastructures. This ensures a user’s wallet contains digital credentials, which identity providers can quickly verify with single sign-on.
- Credential storing opportunities: Most digital wallets enable users to store credit card data and purchase receipts, but that’s now expanding to include credentials like passports, drivers’ licenses, and health insurance information. Better yet, this can all be confirmed through recovery devices and custodians.
- Login opportunities: Many social media platforms already utilise federated identity systems that enable simple logins to connected applications. As decentralised identity evolves, there are significant opportunities to develop a proof of concept for organisations in finance, healthcare, government, and many other industries.
Within the industry, the benefits of decentralised identity extend to developers too.
For them, decentralised identity opens the gates to better standards of app design, effectively eliminating the need for passwords or stringent authentication processes.
This means developers can create more convenient and engaging user experiences, further enriched by participation in an open, standards-based ecosystem. This way, decentralised identity lets organisations form new alliances, which partners can use to securely communicate approved information and provide more efficient user services.
All in all, decentralised identity is a promising enhancer for cybersecurity and user experience, and an inspiration for other digital transformation initiatives across the enterprise. Business and security leaders should start thinking about how decentralised identity and other next-generation technologies can make their business tick more emphatically in the post-Covid era.