TL: DR

• Digital identity is the representation of a person's actions online.

• Companies gather this data legally or illegally as part of their marketing data for content or advertisement targeting.

• Governments use this data to establish identities and keep track of their citizens.

• Blockchain can help in securing and simplifying the creation of a digital identity.

Introduction

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If the available data about a person, which exists online, is compiled, it forms a sort of online persona. This online persona provides a digital representation of the individual, referred to as a digital identity. Digital identity entails personal information such as name, address, social security number, and date of birth used to access different online services. Businesses can obtain this information and use it to send targeted ads and content to such individuals, just as governments often use it to establish identities, monitor, and create a database for all their citizen's information.

In the same light, service providers and forums can request and store some of this information to establish and verify users' identities during the sign-up and sign-in processes. However, the soft underbelly of the digital identity is that a person could steal it from the databases where the information is stored to access services such as social media accounts and online banking and harm the owner.

What Are Digital Identities?

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A digital identity is the collection of information about a person that exists in digital form — this can include anything from date of birth to social media activities. Two broad categories of information form an individual's digital identity: digital attributes and digital activities. A person can be identified through these pieces of information, alone or combined. Examples of digital attributes include Date of Birth, Medical History, ID Numbers (Social Security number, driver’s license), Government-Issued ID Card or Document (passport, driver’s license), Bank Details, Login Credentials (username & passwords), Email Address among others. Digital activities, on the other hand, include Likes, Comments, and Shares on Social Sites.

Photos on Facebook, Instagram, Purchase History, Forum Posts, Search Queries, Signed Petitions, and so on.

How Digital Identity is Established

There are two ways an individual can establish and contribute to digital identity. These are conscious and unconscious.

• Conscious -

The conscious ways of establishing identity involve knowingly putting personally identifiable information online (PII) to access a service or for other reasons. Individuals can upload documents like birth certificates, national identity cards, and social security documents to access online services like banking services, government recruitment, government benefit programs, etc. Information like date of birth, contact address, and bank account details can also be shared to access some services. This information consciously transmitted becomes a part of his digital identity.

• Unconscious-

The unconscious ways of establishing or creating digital identity pivot around digital activities a user engages in, which do not involve directly sharing personally identifiable information. In this category, other information like browser history, likes, comments and shares, and purchase history are unconsciously shared data which is sometimes gathered and stored and even shared without the individual's express permission. This information creates a pattern that makes it possible for the user’s identity to be tracked.

What are Digital Identity Forms

Digital identity can take different forms. However, the four categories below give a general overview of forms of digital identity.

1) Digital Identification for Character Building

This is the kind of digital identity an individual builds to specifically identify themselves online. To put it another way, it is a way for users to portray themselves through their own self-de_script_ions, discussion, interactions with other users, and other behaviors.

The most prevalent components of this identity category include profiles on social media, dating apps, and the metaverse.

2) Digital Identification for Credential purposes

These are typically generated following an initial identity verification process that includes a check against an official ID document and, increasingly, some form of biometrics. This kind of digital ID has specific data on it that you can use to identify yourself. Any government-issued identification, such as your birth certificate, social security number, driver's license, passport, etc., are typical examples.

3) Digital Identification for Professional Use

This form of identity is collected by recognized and approved organizations and includes details about a person's background or track record in a certain field. Examples of typical indicators are work history, education, credit scores, and criminal histories.

The components of this identity type frequently have an impact on prospects for jobs or financial gain.

4) Digital Identification of Self

The information that has been compiled about your online conduct makes up this version of your digital identity.

Your tastes, routines, and priorities may be among the components that make up this identity. As an illustration, your web browser history, your preferred websites, your online transactions, the webinars you attend, etc.

In the majority of situations, a counterparty that you deal with online, together with any third party that you have given permission to, can gather this information and use it to assign an identity.

Digital Identity Verification Processes

How to precisely identify a person in cyberspace has become a crucial cybersecurity concern. In other words, how can you verify if someone online is who they claim to be?

Governmental bodies and businesses use different processes to verify digital identities. These include:

Database checks for ID records:

Background checks evaluate user information against extensive databases, such as consumer, credit, and utility databases, and provide a low-friction solution for customers. Let’s take a look at some of the common verification processes:

Proof of address check:

Checking for proof of address is a crucial step in complying with various AML regulations when onboarding new customers.

Document Check:

Database checks alone can't always assure a customer's identity due to legal requirements, fraud susceptibility, or a lack of coverage. By authenticating a legal document, document verification increases customer confidence in their identification.

Face Check:

Assists in confirming that the individual presenting an identity document is the rightful owner. Security increases by comparing a customer's face biometrics to their documents.

Prospects Of Blockchain In Securing Digital Identity

The two most pressing concerns surrounding digital identification in today's culture are the security and privacy of our data and the inconvenience attached to the multiple declarations, usernames, and passwords needed for different online experiences.

If possible, it would be ideal if there was just one quick and safe confirmation process for all the different login types.

It is possible to cut down on time and security threats by using a single ID based on the Blockchain. Personal information previously provided by an individual for the Digital ID will be stored on a distributed ledger.

Examples of blockchain projects providing these solutions include:

1. Shocard Identity Platform: Shocard is one of the projects using Blockchain to provide data and identity solutions. It allows users to prove their identities as well as enterprises in a secure way. Logging in, sharing personal information, and completing financial transactions can be done seamlessly through the platform.

2. Velix.ID: Velix.ID is another identity project that uses smart contracts, Stellar Consensus Protocols (SCP), to decentralize identity verification process. It uses the native token VXD for users to transact identity verification in the network.

3. Xenchain: Built on e-KYC technology, Xenchain utilizes a decentralized blockchain network to enhance personal data security. It ensures personal data is secured in cryptography, and no one can access a user's data except with the data subject's permission.

4. Civic: Civic is a project that currently works in about five countries to facilitate low-cost, secure, and on-demand access to identity through the Blockchain. Civic uses its platform to empower consumers to take charge of their identities.

Relevance of Blockchain in Securing Digital Identities

• User Relevance -

As long as an individual has all his paperwork maintained under a single Digital ID, there won't be a need to go through the same process every time he declares it online. This makes it user-friendly and convenient.

• Government Relevance-

Businesses now developing these blockchain solutions use private blockchains. Only governmental agencies, hospitals, banks, and other organizations that provide us with daily services are allowed to put up nodes on private blockchains. These businesses follow security protocols and can only access an individual's information with permission. As a result, the blockchains' settings minimize the chances of data theft. You can also track its activities on your data by monitoring its activity log.

• Commercial Relevance-

The blockchain-based Digital ID solution lowers organizational costs associated with authentication procedures because this process is set on automation.

Conclusion

From all angles, Blockchain offers seamless solutions to our digital identities' storage, transmission, and security issues. Blockchain solutions for digital identities are not yet universally accessible, but enthusiasts and developers are optimistic that this breakthrough will eventually expand and be accepted globally.