How Decentralized Identifiers will unlock Web3
We live in a world where personal information is gathered and sold to companies or governments without our consent. This has led towards creating Self Sovereign Identities (SSI) and Decentralized Identifiers (DID), which are essentially fingerprints of yourself that can't be used by others for identification purposes - so much better than handing over your social security number.
In today's digital age, nearly everything we do is online. We have Gmail or AOL email addresses, social media handles, and username and password combinations for a myriad of different websites. We use these identifiers to access our favorite e-commerce stores, our favorite shopping sites, and audio streaming services, among many others. While these identifiers are incredibly convenient, they also create a unique set of challenges.
For one, we don't actually control any of these identifiers. They are all stored by third-party companies (like AOL or Yahoo controlling your personal data associated with your email account on those platforms), often in centralized locations that are susceptible to hacking. Additionally, these identifiers are closely tied to the organizations that store them. So if an organization bans you or goes out of business, your identifiers disappear as well. This was demonstrated when Donald Trump was kicked off Twitter. He lost his followers and his public identity overnight.
Clearly, there are some risks associated with relying on third-party companies to store our identifiers. But at the end of the day, the convenience factor often outweighs the potential downside. After all, it's a lot easier to remember one email address than it is a bunch of different usernames and passwords.
What are DIDs?
DIDs are unique digital identifiers (verifiers) that are used to identify individuals, businesses, and other organizations through cryptographic authentication. In the context of blockchain, DIDs are used to represent the identity of users on the network. By using DIDs, businesses and organizations can create digital identities for their customers and employees that are stored on the blockchain. This allows businesses to securely and efficiently manage their customer data. DIDs can also be deployed cross chain to prevent fraud or theft of NFT art by creating a secure link between the user's identity and their blockchain address. DIDs will be an important part of the Web3 infrastructure and will help to ensure that communication and transactions on the internet are safe, secure, and efficient.
These DIDs have certain characteristics, namely:
They do not require a centralized authority.
Many DIDs use distributed ledger technology or other decentralized networks, although this is not compulsory.
It is a permanent verifier, as it does not rely on third parties or a central entities.
It can be cryptographically verified for authentication.
They connect a DID subject (an object identified by a DID) to a DID document (a set of data describing the DID subject) to ensure secure communication of that object.
They are interoperable and portable if they conform to existing standards defined by the W3C.
What is the W3C standard, and what does it mean for DIDs?
The W3C standard is a set of guidelines that all organizations and service providers must adhere to when assigning DIDs. It includes requirements such as uniqueness, security, and interoperability. The W3C standard is important for ensuring that DIDs are fit for purpose and can be used reliably by organizations and individuals around the world. It also helps to ensure that DIDs remain compatible with future changes to the internet.
Where do DIDs live?
DIDs are stored on decentralized storage systems such as IPFS or STORJ, and they can be used to identify individuals, organizations, and other entities.
IPFS is a decentralised storage platform that allows DIDs to be stored on a network of computers around the world. This makes them more resistant to tampering and censorship, and ensures that they remain accessible even if one or more of the computers in the network goes offline.
While the Interplanetary Identifiers DID method supports trust on both public and private networks, IPFS is more commonly used for distributed ledger technologies like Ethereum. Even though IPFS is not a blockchain solution in itself, it can be possible that most of the reputable blockchains will eventually become an integral part of this system by providing additional security measures through their use as anchor points to help keep a subject data points (such as phone number or Twitter account) secure.
What is the relation between SSIs and DIDs?
Self Sovereign Identities (SSI) is an emerging technology that allows individuals to have full control over their digital identity. DIDs are a key part of SSI, as they provide a secure and decentralized way to store and manage identity data. So essentially DID functions as a storage system for SSI.
A case for DIDs in NFTs
The world of NFTs has been growing rapidly in the last couple of years, and it's never been easier for artists to mint their digital artworks. So how do you know if jpegs of Bored Ape Yacht that were found originally on the Ethereum chain, and then the same jpegs of apes getting minted on Cardano or Polkadot are from the same creator? This is where DIDs can help. By minting your NFTs with a DID, you can prove that you are the original creator of the artwork and that the NFTs on other chains are theft. This is important for maintaining the integrity of NFTs and preventing fraud. In 2022, we already have DID technology being deployed by companies that are able to work in an interoperable way on dozens of chains. Going back to the Bored Ape example earlier, if the creator of Bored Apes mints and wants to sell jpegs of apes on Cardano can prove their identity with DIDs and a Cardano native marketplace can put a verified check mark next to the apes being sold by the original creator.
The unique IDs that come with DIDs can be used to link an artwork to a specific website account, phone number or social media profile, allowing the artist to easily verify their ownership.
Here are 9 benefits of DID deployment:
1. Increased control over personal information: With decentralized identities, users will have more control over their personal information and how it is used. They will be able to decide who has access to their data and for what purpose.
2. Enhanced security: Decentralized identities will make it harder for bad actors to commit identity theft and other fraud. As more businesses and organizations adopt blockchain technology, we will see a shift towards a more secure and private internet.
3. Greater transparency: Decentralized identities will not only make a centralized verification process more decentralized but also bring transparency and trust in the digital world.
4. Improved user experience: The use of decentralized identities will improve the user experience by eliminating the need to remember multiple passwords and usernames. In addition, it will make it easier to sign up for new services and access existing ones.
5. Reduced costs: The use of decentralized identities can help reduce costs associated with identity management, such as those related to KYC (know your customer) and AML (anti-money laundering) compliance.
6. Increased efficiency: Decentralized identities can help businesses and organizations save time and resources by reducing the need for manual processes, such as onboarding new customers.
7. Better data quality: The use of decentralized identities can help improve data quality by eliminating fraudulent and duplicate data.
8. Enhanced privacy: Decentralized identities will give users more control over their personal information and how it is used. In addition, they will make it harder for bad actors to commit identity theft and other fraud.
9. Increased security: Decentralized identities will make it harder for bad actors to commit identity theft and other fraud. As more businesses and organizations adopt blockchain technology, we will see a shift towards a more secure and private internet.
Final Thoughts
DIDs are a critical part of the SSI , and their importance will only grow as we move towards a world where digital identities are more important than ever. By providing a secure and decentralized way to store and manage identity data, DIDs enable individuals to take back control of their personal data. DIDs will be key to unlocking the new iteration of the internet coined as Web3 because Web3 is not just about read and write but also ownership, and DIDs provide the perfect solution for data ownership.
We hope this article helped you to understand what DIDs are, how they work and why they are so important.
