Modern technology gives us many things.

A decentralised blockchain network will help secure data privacy like nothing else


We all leave comprehensive digital footprints whenever we transact on the internet. The more platforms we use, the more digital traces we leave. Internet platforms that process financial transactions include Paypal, credit card processors, direct banking, Google Wallet, Apple Pay, Amazon Pay, Square, Stripe, Venmo, and cryptocurrencies. A user must disclose personal and financial data to use these services.

A person’s data is often stored in various different databases, and generated at different times. Some of these individual data changes over time (for example, residential addresses) and is therefore not the same across databases. The result is that multiple ‘digital clones’ of an individual exist across different databases.

There are many problems in the current identity management system. Users enter their data and register on several online platforms and websites, and have to create and remember numerous passwords. People can’t update all their credentials and digital identities simultaneously. This undermines security and convenience. Additionally, as the Equifax hack showed, bad actors need to break into just one major database to gain every user’s information.

Blockchains can ensure that a user’s single digital identity is stored in a secure and incorruptible manner. Image: Pixabay

In short, current data identity practices are unsustainable.

Similar, but not the same.

Government IDs

The governments of Estonia and India have experimented with centralised digital IDs. An individual’s ID can be used to vote, file taxes, withdraw funds from banks, register property and comply with other government reporting requirements. Since digital IDs are issued by governments, the information collected is stored in a centralised database. Centralised storage of data creates a single point of failure. To keep such data secure, extremely strict controls and protocols need to be in place.

Blockchain Solutions

Blockchain technology stores data in a decentralised, trusted and immutable manner. Blockchains can ensure that a user’s single digital identity is stored in a secure and incorruptible manner. This single digital identity can always be up-to-date with the latest user information.

Given this potential, companies are rushing to develop blockchain-powered solutions for digital identity management and authentication. Early movers in this space include Bitnation, Civic, Cambridge Blockchain LLC, BlockAuth, and Existence ID.

Bitnation’s governance platform seeks to provide the same services as a government. Its users are referred to as ‘citizens’ of Bitnation. Civic, which focuses on fraud reduction and protection from identity theft, had an extremely successful ICO last July.

Cambridge Blockchain LLC is working with financial institutions on an intuitive and user-friendly digital identity solution that is fully compliant with privacy regulations. To engender confidence from enterprise clients, the solution will have to be robust.

Companies are rushing to develop blockchain-powered solutions for digital identity management and authentication. Image: Reuters

IBM and SecureKey Technologies are also launching a blockchain-based digital identity network for consumers. It will be built on top of the Linux Foundation’s Hyperledger Fabric v1.0. The Hyperledger Fabric is a permissioned blockchain (which means that its network participants can restrict who can participate in the blockchain’s consensus mechanism). The permissioned blockchain will allow users to assign permissions for who can access their digital identity data.

Network Effects

Without buy-in from consumers, no digital identity blockchain solution will be useful for connected enterprises and institutions. Many of the industries looking to adopt blockchain-based identity management solutions are highly regulated, such as banks, credit card companies, and healthcare providers. Projects’ data privacy mechanisms, distributions of nodes, and development teams will be crucial for success.


In the future, each of us will have an up-to-date digital clone. Blockchain-based data encryption will defend against identity theft. We will be able to choose which data to share with whom, across different transactional channels of commerce and compliance. Which blockchain-based digital identity management platforms will achieve critical mass and leverage network effects is an open question.

Shaan Ray is the head of Denver Hill, a group that uses emerging technologies like blockchain, artificial intelligence, additive manufacturing and the industrial internet to create new products and processes.

(Also read: Understanding blockchain technology and its implications on the future of transactions

How blockchain technology can help in real-world supply chain management)

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