Distributed Identity (DID) Opens the Future of Digital Identity - Balancing Privacy Protection and Convenience
With the advent of the digital age, our identity management has reached a major turning point: according to a 2021 study, approximately 15 million personal information breaches will occur annually around the world, costing approximately 4 trillion yen in damages!1The DID technology has been touted as an innovative solution to this serious situation. Distributed ID (DID) technology is attracting attention as an innovative solution to this serious situation. This article provides a detailed explanation of DID, from basic concepts to practical cases, as well as future prospects and challenges.
What is Distributed Identity (DID)? - A key player in the digital identity revolution
Realization of self-sovereign identity
Distributed Identity (DID) is an innovative mechanism that gives users complete control over their own digital identities. Traditional centralized identity management systems, in which large IT companies and government agencies manage users' personal information, DID fundamentally overturns this structure.
For example, conventional systems require users to deposit their user information with the platform when logging into a social networking service. With DID, however, users can temporarily provide only the necessary information while keeping their own information at hand. This greatly reduces the risk of information leakage and enhances privacy.
Furthermore, DID enables the concept of "self-sovereign identity". This means that individuals have the right to fully own and manage their own digital identity. In traditional systems, users entrust their personal information to individual service providers, who manage the information according to their own terms and conditions. With a DID, however, the user has fine-grained control over where, how, and how much of his or her information is shared.
For example, when age verification is required on an online shopping site, the conventional system requires uploading an image of a driver's license, but with a DID, only the information that the customer is "18 years of age or older" can be verified. This avoids disclosing more personal information than necessary and enhances privacy protection.
DID also enables "portability" of personal information. This means that users can easily move their information between different services. For example, identity verification information created at one bank can be reused at another financial institution. This will greatly simplify the process for the user when using a new service.
DID's technical structure - leveraging the power of the blockchain
DID is built on blockchain and distributed ledger technologies. These technologies prevent data tampering and provide a highly reliable distributed system. Specifically, DID consists of the following elements
- DID identifier: globally unique identifier
- DID document: contains metadata such as public keys and service endpoints
- Verifiable credentials: digital documents that prove user attributes and qualifications
Together, these elements result in a secure and reliable digital identity system. a DID identifier is typically expressed in a format such as "did:example:123456789abcdefghi". This identifier consists of a specific DID method (e.g., "example") and an identifier that is unique within that method (e.g., "123456789abcdefghi"). This identifier is globally unique, similar to a URL on the Internet, and is used to refer to a specific DID. the DID document is written in JSON-LD format and contains the following information
- Public key: Used to verify digital signatures
- Authentication method: Proof of DID ownership
- Service Endpoint: How to access the service associated with the DID
Verifiable credentials are digital documents that attest to attributes and qualifications about the DID holder. These credentials are digitally signed by the issuer (e.g., university, government agency) and can be presented by the DID owner to third parties as needed. Through the use of blockchain technology, the DID system has the following characteristics
- Tamper-resistant: Once registered, information is extremely difficult to tamper with due to the characteristics of the blockchain.
- Decentralized: No central administrator exists and the entire system is fault-tolerant
- Transparency: all transactions are public and auditable
These features make DID more secure and reliable than traditional centralized identity management systems.
Innovations in Digital Authentication - The Passwordless Era
DID is revolutionizing the digital authentication process. In traditional systems, users had to prove themselves with complex passwords, two-step verification, and other methods. With DID, however, users can easily and securely authenticate using only their own digital signature.
For example, when logging in to an online banking account, users used to have to enter their account number and password, but with DID, they can now log in securely by simply signing with a private key stored on their smartphone. This frees the user from the hassle of managing passwords and creates a more seamless user experience.
Distributed ID (DID) use cases - the potential to change everyday life
Protecting Online Privacy - Minimum Necessary Disclosure
DID provides strong protection for user privacy. For example, when shopping online for products that require age verification, users used to be required to upload identification such as a driver's license. With DID, however, you can prove only that you are 18 years of age or older, avoiding unnecessary disclosure of personal information. This is achieved by utilizing a cryptographic technique called zero-knowledge proof. By using zero-knowledge proof, it is possible to prove that certain conditions are met while not disclosing that specific information.
Centralized management of digital identity - free from the hassles of multiple accounts
DID streamlines identity management in the digital world. Currently, the average Internet user has approximately 90 online accounts2With a DID, these accounts can be centrally managed for increased security. For example, a DID-powered digital wallet allows users to authenticate to multiple services with a single identity. This frees users from the hassle of account management and enables a more convenient and secure online experience.
Digitization of administrative procedures - efficient public services
The introduction of DIDs by governments has the potential to greatly simplify administrative procedures. For example, Estonia has introduced an electronic citizenship system and offers 99% administrative services online3DIDs could further promote such digitization and make administrative services more efficient and transparent. Specifically, the following administrative services could be improved with DID
- Tax Filing: Automatically collects required information and simplifies the tax filing process
- Elections: Implementing online voting and improving the transparency and reliability of voting
- Medical Services: Securely manage patient medical records and assist in providing appropriate medical care.
The Future of DID and Digital Identity - The Potential to Change Society
Expanding Social Impact - Building an Ecosystem of Trust
DIDs have the potential to bring about significant changes in social structures. For example, the introduction of DIDs into election systems could lead to a more secure and transparent voting process. In addition, the interoperability of digital identities across borders could facilitate global economic activity and the movement of people more smoothly. Specifically, DIDs are expected to be used in the following areas:
- electronic voting system:
An electronic voting system that utilizes DIDs can ensure the legitimacy of the vote while preserving the anonymity of the voter. For example, Estonia already has an electronic voting system in place, but the use of DIDs will make it even more secure and transparent. Voters cast their ballots using their own DIDs, and the results are recorded on the blockchain. This makes it extremely difficult to tamper with the votes, while at the same time allowing for instantaneous tabulation of the vote results. - Cross-border identification:
International interoperability of DIDs will make international travel and international transactions easier. For example, a DID-based identification card issued in one country could be accepted as valid identification in another country. This could simplify the presentation of passports and complex identity verification processes, making cross-border movement of people and economic activities smoother. - Improving the credibility of the sharing economy:
DIDs can also contribute to increased credibility in sharing economy platforms such as Airbnb and Uber. Users can use their own DID to prove their past transaction history and reputation. This makes it easier to verify the user's trustworthiness and safer to use services for the first time. - International certification of academic credentials and qualifications:
DIDs facilitate the international authentication of academic and professional qualifications. For example, a university degree or professional qualification earned in one country can be easily authenticated in another country through a DID. This could lead to greater international mobility of human resources and a more active global labor market. - International sharing of medical information:
A DID-based medical information management system allows patients to securely manage their own medical records and share them with medical institutions around the world as needed. For example, if a patient needs emergency medical care while traveling abroad, he/she can use his/her DID to provide necessary medical information to local medical institutions. This will enable the patient to receive appropriate medical care across language barriers.
These examples show that DIDs have the potential to go beyond mere technological innovation to transform entire social systems, and it is hoped that the widespread use of DIDs will create an "ecosystem of trust" in which individual rights are better respected, while at the same time improving the efficiency and transparency of society as a whole. However, in order to realize such a transformation, it is necessary to overcome not only technical challenges, but also various issues such as the development of legal systems and international consensus building.
For example, the legal status of DIDs and the mechanism for mutual authentication of DIDs internationally will be important topics for discussion. In addition, as DIDs become more widespread, improving digital literacy will also be an important issue. Education and awareness-raising activities will be necessary to ensure that individuals can properly manage their own digital identities.
The social transformation that DID will bring about has the potential to have a profound impact on the lives of each and every one of us. The future of DID will be built on a balance between technological evolution and social acceptance.
Technological Challenges and Solutions - Frontiers of Innovation
There are several technical challenges to the development of DID technology:
- scalabilityAbility to process large transactions
- interoperabilityCompatibility between different DID systems
- usabilityEase of use for the average user
Research institutions and companies are actively addressing these issues. For example, Microsoft has developed a DID network called "ION" to address scalability issues.4DID Core 1.0 is the first standard to be developed by the W3C. In addition, the World Wide Web Consortium (W3C) is working on standardization of DID, and DID Core 1.0 was officially recommended in July 2022!5This is expected to improve interoperability between different DID systems.
Balancing Privacy and Security - Using Zero Knowledge Proof
DID technology must ensure a high degree of security while protecting user privacy. In response to this challenge, a cryptographic technique called zero-knowledge proof is attracting attention. By utilizing zero-knowledge proof, it is possible to prove that certain conditions are met without disclosing personal information. For example, it is possible to prove that a person is 20 years of age or older without disclosing his or her specific date of birth. This allows for both privacy and security.
Looking to the Future of DID Technology - The World in 2030
Looking to the Future - Toward a $3 Trillion Market
The World Economic Forum estimates that by 2030, DID technology has the potential to create 31 TP3T (approximately $3 trillion) of global GDP in economic value!1DID will create innovative services in a variety of fields, including finance, healthcare, and education. Specifically, DID is expected to be used in the following areas
- Financial Services: Simplify KYC (identity verification) processes, streamline cross-border transactions
- Healthcare: secure management and sharing of patient medical records, streamlining clinical trials
- Education: verification of academic credentials and qualifications, record keeping for lifelong learning
Establishing Global Standards - Achieving Interoperability
Currently, W3C (World Wide Web Consortium) is working on standardization of DID, and DID Core 1.0 was officially recommended in July 2022!5. The establishment of such international standards is expected to improve the interoperability of DID technology and accelerate its global diffusion. Furthermore, governments and international organizations are also moving forward with efforts to standardize DID. For example, the European Self-Sovereign Identity Framework (ESSIF) is being developed in the EU with the aim of making DID available throughout the EU.3The following is a list of the most common problems with the
Contribution to Digital Transformation - Transformation of Industry Structure
DID will be a key element in accelerating the digital transformation of businesses and governments. For example, DID in supply chain management will enable more efficient product tracking and quality assurance. Also, in the healthcare sector, DIDs can be used to manage patient medical records to enable secure and seamless information sharing. Specifically, the following transformations are expected
- Manufacturing: Improve traceability of parts and products, strengthen anti-counterfeiting measures
- Logistics: Streamlining cargo tracking and management, simplifying customs clearance procedures
- Insurance: Refinement of risk assessment, automation of claims processes
Summary - DID opens up a new digital society
Distributed Identity (DID) technology has the potential to revolutionize our digital lives. Its potential benefits are immeasurable, including the protection of privacy, improved security, and more efficient digital services. However, technical challenges and legal and ethical issues also exist. Overcoming these challenges and properly utilizing DID technology will help build a safer and more transparent digital society.
It is important that each of us understand the possibilities and challenges of DID technology and take an interest in its development. The future of digital identity is in our hands, and in 2024, DID technology is in its infancy. It will be remarkable to see how this technology develops and how it changes our lives over the next decade. We are about to take a giant step toward a safer and more convenient digital society.
1 World Economic Forum, "A Blueprint for Digital Identity," 2018
2 LastPass, "Psychology of Passwords Report," 2020
3 e-Estonia, "e-Governance", 2023
4 Microsoft, "ION - We're on Bitcoin!", 2021
5 W3C, "Decentralized Identifiers (DIDs) v1.0", 2022
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