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Application Of Blockchain For Identity Management

Blockchain technology adds value to several industries with its transparency, security, and other features. With Blockchain Identity Management, users are able to regain control through a distributed trust model that offers a decentralized and secure solution. Therefore, it is poised to transform current identity management practices as well.

The current identity management system is highly unreliable and raises security concerns. You are required to present multiple government-issued IDs at every point, such as a voter ID, passport, and pan card. This is becoming increasingly susceptible to privacy and data issues.

“Blockchain provides a platform for self-sovereign identity through decentralized networks.”

What are the challenges with the traditional identity management system?

The current identity management system is riddled with four major challenges, viz., Identity Theft, KYC Onboarding, Lack of Control & Privacy, and Username-Password Combinations. We can add privacy as well as it is one of the reasons to build identity management

Identity Theft Issues
Personal information is shared online via a variety of unknown sources and services, putting identification documents at risk. As online applications store data on centralized servers, hackers have an easier time hacking those servers and stealing sensitive information.

Username-Password Combinations
Users are required to create unique usernames and passwords each time they sign up for an online platform. When an individual has to remember a combination of usernames and passwords for accessing different online services, it becomes difficult to maintain different authentication profiles.

KYC Onboarding
In the current authentication process, there are three stakeholders, i.e. verification companies, KYC companies, and users. As KYC companies serve banks, healthcare providers, and immigration officials, they require more resources to meet their needs quickly. Individuals are then charged hidden processing fees by KYC companies for verification. Consequently, the complete process becomes expensive for all the parties involved. Additionally, third-party companies suffer from longer wait periods in order to onboard a customer. 

Lack of Control & Privacy
It is currently impossible for users to control their personally identifiable information (PII). No one knows how many times their personal information has been shared without their consent. This constitutes not only a lack of control but an absolute breach of privacy. 

It is, therefore, necessary to innovate the existing identity management process. With blockchain identity management, individuals can gain ownership of their identity by creating a global ID that can be used for multiple purposes.

How does the blockchain identity system work?

Presently, people manage their identity with the help of paper-based documents. However, with a blockchain identity management app, they could authenticate their identity in real time.  

A Blockchain-based Identity Management Process typically would have the below components and process –
– Individual Android/iOS app.
– An Android/iOS native app for third-party verification companies.
– An decentralized file system for storing user PII.
– The permissioned component of the blockchain.

Step 1: Installation of Mobile App
Dapps Mint Download the mobile app from the play store/app store.  
Dapps Mint Create a profile on the app.
Dapps Mint The user will get a unique ID number, which organizations can access for identification.

Step 2: Uploading the documents
Dapps Mint Upload the government-issued IDs on the app 
Dapps Mint It will be saved in the IPFS with hashed addresses in the blockchain.
Dapps Mint The app will extract the personal information from these IDs 
Dapps Mint The self-certification of his/her details is done by the app. 

Step 3: Trust score generation
Dapps Mint Smart contracts generate a trust score for a user 
Dapps Mint This is done from the information received by the user while creating a self-sovereign identity.

Step 4: Third-party companies requesting access 
Dapps Mint Notifications will be sent to the individuals owning the identity.
Dapps Mint This is done when the company accesses specific details of a person for authentication. 

When a user allows a company to access their details, third parties can use the identifiable information to authenticate them. Individuals will also be able to trace how their PII has been used. 

User data or information is not stored in a blockchain. Transactions between identity holders and companies will instead be recorded on the blockchain. In blockchain identity solutions, users own their data. They can decide whether or not to share the information with organizations. No data whatsoever can be shared with any identity seekers without the consent of the user. 

Hire professional services of Dappsmint, a leading blockchain development company. We have experience in working on both Public and Private chains such as Ethereum, Binance, Polygon, Hyperledger and other Blockchains.Our skilled team of developers have experience working on Frontend and Backend with the languages such as Solidity, Web 3, Rust, React JS, Node JS and Fullstack.

What are the top benefits of a blockchain identity management system?

Primarily, there are four benefits of using blockchain identity management from the user’s point of view.

1. Provision of Unique ID 
Users who register on the blockchain identity management system are provided with a unique identity number. The unique ID number consists of all personally identifiable information in an encrypted format stored on their device backed by IPFS. Users can share such unique IDs with any third party.

2. No Action Without Consent
User information is never stored in a blockchain identity management system. Furthermore, the system enables controlled data disclosure through smart contracts. This makes it impossible for any scope of data manipulation on the blockchain. Thus, a user gets better control over their personally identifiable information as no transaction involving the user’s information can occur without his/her consent.  

3. Decentralized Nature
Centralized servers will not store the personal identification information of users. Users’ identity documents are stored on their devices supported by IPFS, preventing mass data breaches. Such a system prevents hackers from stealing identifiable information. Due to the decentralized nature of the system, there will be no single point of failure (SPOF). The absence of SPOF represents the reliability of the system’s security. 

4. A Universal Ecosystem
Blockchain identity management is not limited to any geographical boundaries. An identity management exercise can be conducted in any part of the world using the platform. 

What can be the impact of using blockchain identity management on users and businesses?

Optimized for user
The blockchain ecosystem offers better efficiency in terms of time and cost. Moreover, businesses and users both save money by reducing the cost of verifying identities.

Transparency in transactions
Transactions recorded on the blockchain are accessible to everyone on the network. Every transaction is authenticated.

Confidentiality
Transactions on the blockchain remain confidential for all parties involved.

Decentralized Ecosystem
In contrast to storing all data on a single server, decentralization distributes the data throughout the network.

Universal Identity
Users can ask the organization for cross-border identity verification.

What are the various use cases of the blockchain identity verification system?

Dapps Mint Loans Processing

In the existing financial system, one has to undergo a lengthy manual verification process (involving several identity documents) to apply for a loan or open a new bank account. This in most scenarios may take up several weeks to complete. Blockchain-based identities could streamline the process by allowing pertinent information to be shared more quickly. Besides, it will also reduce the cost and effort as the user doesn’t have to maintain different IDs.

Dapps Mint Immigration

Travelers are required to carry a passport along with other documents for check-ins and clearance at airports. A digital identity on blockchain can be presented throughout the entire process of booking a ticket, passing security checks, boarding a flight, and moving to a new country. A decentralized identity would eliminate complicated security checks and procedures. As a result, blockchain identity management will make life easier for both the authorities and travelers alike. 

Dapps Mint Legal Procedures

To abide by any legal process, a user has to submit proof of age, occupation, address, and other different documents. A digital identity on blockchain might help people carry fewer documents wherever they go. As blockchain-based identity can be used by legal entities and government agencies to verify an individual, a regular comprehensive background check will not be required.

Dapps Mint E-commerce Checkout

Online orders require individuals to fill in information such as their name, email, phone number, address, etc. Signing up at an e-commerce site requires them to repeat this process every time, making the whole process time-consuming and tedious. A unique identification number can save users time and effort when signing up at multiple e-commerce sites.

Dapps Mint Previous Employment Verification

Background checks on employees are not standardized at present. The global employment sector requires employers to verify employees’ information written on resumes, previous letters, and reference letters. With a user’s permission, the blockchain ecosystem can be used to verify information contained in employees’ resumes.

Final Thoughts 

It is possible to enhance the level of security and privacy by implementing identity management blockchain systems successfully. As the ledger is immutable and decentralized, third parties are able to verify the user’s data without wasting time and resources.

If you are looking for an experienced team for blockchain development services, don’t hesitate to reach us at sales@dappsmint.com 

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