Governments and private companies think that blockchain identity systems could empower citizens to take control of personal data.
The rapid onset of technological advancement is not evenly spread. Society is increasingly becoming digitally literate and uses emerging technology for work, to communicate and pay for things in ways unimaginable just 15 years ago. So, why are methods of governance largely unchanged since the invention of liberal democracy hundreds of years ago?
Although many aspects of government remain entrenched in the past, one area is being brought into the 21st century: identity. With fears regarding third-party data abuse, citizens are more concerned than ever about how this affects their lives and their sovereignty. A number of innovative government departments have sensed these fears and are trialling blockchain solutions to better protect and empower their citizens.
As it stands, most personal data created runs through the hands of governments and tech giants such as Facebook and Google. In the wake of the Cambridge Analytica private data scandal, people are becoming more aware of the value of data and how it shapes the world. By virtue of lives being increasingly lived online, data is generated by things like medical records, browser history and property records.
This information can be used to make decisions about individuals with far-reaching consequences, such as whether or not a defendant appearing in court is likely to commit another crime, or whether someone qualifies for a mortgage or health insurance. In the same way, missing or incomplete data can prevent people from accessing their pension or other financial services.
The infrastructure for defending all this valuable personal data is not fit to defend itself against threats from malicious actors, as Alastair Johnson, CEO of the e-commerce payments and ID platform Nuggets, told Cointelegraph:
“For years, the digital space has been a playground for malicious actors to exploit and abuse user data on platforms in finance through to social media. From incompetence to sophisticated attacks, it has become clear that the attack surfaces are broad, fundamentally insecure and utterly unprepared for an exodus into a digital paradigm. No entity is impervious — giants like Equifax, Aadhar and Facebook have all proven themselves to be corruptible, with terrifying consequences.”
The use of blockchain in data has a simple objective: to place data back in the hands of those who create it. Decentralization and encryption play a central role in securing personal data on blockchains. By storing personal data on encrypted, decentralized networks, users are able to grant limited access to third parties using keys, much like sending cryptocurrency. Johnson said that by placing users at the forefront of the process, blockchain ID systems can both empower individuals and cut costs for governmental bodies:
“A blockchain ID system, conversely, adopts a user-centric approach, eliminating central points of failure by empowering individuals with self-sovereign possession over their own data. A blockchain ID system would not require government bodies to store or share personal information in order for individuals to access services.”
Phillip Shoemaker, executive director of Identity.com, spoke to Cointelegraph, saying, “There’s a fundamental underlying problem in figuring out how to identify millions of people electronically using identity verification,” when it comes to governments looking to move their technology platforms online to directly serve citizens.
“The introduction of digital identity gives us the ability to know who is on the other side of a digital platform interaction or a transaction and know who we’re engaging with online, or in real life. Identity verification solutions are a step towards protecting democracy and our livelihood.”
With projects on at least three continents striving to secure citizen data through blockchain technology, what are the latest developments in identity systems?
Catalonia unveils IdentiCAT
The government of Catalonia became the latest to explore blockchain ID systems, when President Quim Torra and the Minister of Digital Policies and Administration Jordi Puigneró announced the launch of IdentiCAT.
According to a news release published by the Department for Digital Policies and Administration on Sept. 9, the project claims to be the first of its kind that seeks to empower citizens by making them the “exclusive owners” of their digital identity in both public and private life:
“IdentiCAT intends to be the first digital identity in Europe, which will be driven by the public sphere and self-managed by citizens themselves with full legal guarantee and effectiveness to operate not only with public authorities, but also with private entities, thus fully ensuring compliance with personal data protection regulations.”
IndentiCAT will use Self Sovereign Identity (SSID), a system in which custodianship of official IDs is transferred from public bodies to citizens who will safeguard and manage the details of their personal identities and activities:
“This implies a change of paradigm in respect to the digital identity models that existed until now, as government bodies will only act as validators of the technology, and citizens will become the issuers and managers of their own identities.”
According to the news release, the government will act only as a secure valiator of the IDs, providing citizens with public and private companies that have trustworthy, legal and resilient frameworks and tools to operate the system. The release went on, explaining that Catalonian citizens “may demonstrate any required feature of their identity keeping the rest of their data contained in their ID private.”
Igor Kotsiuba, executive vice president of innovations and business development at the International Social Survey Programme (ISSP), told Cointelegraph that the move to implement SSID models will respond to citizen concerns over how their data is managed, and places them at the centre of the process:
“Self Sovereign Identity models are seen mostly as new means to satisfy the increased privacy demands, brought by constant data breaches and privacy legislation. Users want to control their data as they see how hackable state owned registries are. Governments want to build completely trustworthy technological environment which also allows user to decide whether to share their personal data with different service providers.”
As per the release, the Catalonian project is protected by government competences in electronic matters and is in accordance with the 2014 European Union eIDAS regulations for electronic identification and trust services. The primary goal of this legislation is to facilitate the mutual acceptance of electronic identities between EU member states, and the announcement claims that IdentiCAT could be used to access online services and carry out electronic transactions within the EU28.
President Torra has stressed that digital citizenship is an important concern for the Catalonian government and that it could represent an important step for empowering its citizens. Puigneró expects some criticism but maintains that the project would be a force of good for its citizens, saying:
“Some will want to question the project because they may be scared to empower people, let’s be a country moving forward. Because they know that when we empower people we are an unstoppable country. […] The republic we want is one that empowers citizens, not that it controls them, represses them or treats them as digital merchandise.”
According to Shoemaker, “There are certainly many benefits to using a blockchain-powered decentralized identity verification system, and indirect benefits like citizen empowerment and economic boosts are probable.” However, he also believes it may take some time for the benefits to trickle down to citizens, telling Cointelegraph:
“As with all new foundational technology, adoption requires behavioral changes, which take time. So, while ancillary benefits are indeed possible, it is likely that they will take time to grow steadily.”
Sierra Leone will fully adopt blockchain IDs
Having already explored how blockchain can improve elections, along with the launch of a blockchain credit history platform in late August, Sierra Leone is among the most technologically proactive countries in Africa.
Dubbed the National Digital Identity Platform (NDIP), the project is a collaboration between the United Nations and Kiva, a San Francisco-based nonprofit that has played an important role in driving technological advancements in the country since 2018.
The president of Sierra Leone, Juilius Maada Bio, allegedly claimed that a new blockchain identity system will permit financial institutions to verify identities and build credit histories. NDIP will be rolled out in two stages: The first will digitize identities and the second involves the creation of national identification numbers that cannot be reused.
As Cointelegraph has previously reported, blockchain is set to play an important role in revolutionizing the tech landscape of Sierra Leone, a country in which more than 85% of the population lacks internet access, with at least 75% remaining unbanked.
New Argentine project aims to help citizens break out of poverty
A partnership between the Innovation Laboratory of the Inter-American Development Bank Group, NGO Bitcoin Argentina and the Argentine subsidiary of NEC Corporation is working on a project it thinks could help break a phenomenon known as the “poverty penalty.” It seeks to create a blockchain-based digital identity for residents in underprivileged neighborhoods of Buenos Aires.
Javier Madariaga, the general coordinator of the project, told Cointelegraph that the poverty penalty refers to the relatively higher cost shouldered by the poor to participate in certain markets when compared to those who are wealthier. This phenomenon often manifests itself as poorer people spending more to buy, eat and borrow than richer members of society.
According to the three partners, inaccurate and incomplete data can worsen an already difficult situation for those attempting to enter the market, with data from the city government of Buenos Aires revealing that 16.2% of the city’s inhabitants live below the poverty line. According to Madariaga, the project grew out of concern for poor inhabitants of Buenos Aires, who are unable to access basic financial services such as savings accounts and money transfers:
“This information asymmetry can be solved through technology, in particular blockchain, by facilitating the poor to report their daily cash flows and their financial behaviour at a very low cost. Our project will help overcome asymmetric information by empowering unbanked people through creating a Digital identity that will include a history of transactions that may voluntarily make available to microcredit institutions or banks.”
The project, which has an initial duration of four years, will be introduced in Barrio 31, the largest informal neighborhood in the Argentine capital.
The project’s chief technology officer, Milton Berman, and Madariaga also outlined that the DIDI project, which will run on the decentralized permissionless blockchain RSK, will also use SSID protocols based on W3C standards of Decentralized Identifiers — or DIDs — and Verifiable Credentials. In an email to Cointelegraph, Berman and Madariaga wrote:
“This is the best possible triad to attend digital identity solutions, as it enables portability, makes it cryptographically verifiable by third parties, assures non-repudiation and data integrity without a central administrator or third-party middlemen, reducing even more costs and avoiding the possibility of censorship.”
Stumbling blocks: What stands in the way
Although it may seem at first glance that blockchain provides a simple solution to the problems that come with data and digital identity, the reality is that outside of cryptocurrencies and a few other notable exceptions, blockchain use remains limited. Implementation issues aside, Madariaga said that digital literacy and information-handling obstacles among users are still prevalent:
“Although the penetration of smartphones in informal neighborhoods of Buenos Aires is high, there are limitations linked to the connectivity infrastructure and the ability to make proper use of the devices. It is essential that during the design of such a project, activities related to promoting digital literacy and financial education among beneficiaries are included or granted by project partners.”
Shoemaker agreed that user experience is critical for blockchain projects to succeed, saying, “On the technical side, interoperability with existing systems will be a challenge.” However, he believes that “adoption always takes time, but with user experience as a priority, some of these hurdles will be more easily surmounted.”
Phillip Windley, chair of the foundation board of trustees for Sovrin, an international nonprofit founded to govern the world’s first SSID network, told Cointelegraph that startups and organizations will have to slowly pioneer SSID until the tipping point of acceptance is reached:
“Organizations and others are doing the hard work of getting people used to a new model, building partnerships, and launching systems. But once enough of these exist in isolation, the interaction of these people starts to put pressure on others outside those ecosystems to accept these credentials, or organizations outside these ecosystems start to see how accepting these credentials could save them time or money.”