The Internet has sparked a new era of data security and privacy dilemmas. As more and more people continue to transition to digital technology, issues related to digital security, privacy and data integrity have come to the forefront. To illustrate the scope of these issues, the 2021 Javelin Strategy & Research Identity Fraud Study shows that identity fraud losses exceed $56 billion in 2020.
Today's traditional identity management systems are highly centralized, resulting in multiple third-party service providers controlling your data. This problem can be clearly seen across multiple existing social media and e-commerce platforms where users no longer have individual control over their personal information, leading to frequent leaks and misuse of their confidential data.
Currently, every online platform requires users to provide verifiable credentials in order to access products and services. This "digital identity" contains all relevant information related to the individual.
Centralized platforms typically collect sensitive and personal data related to a user's "digital identity" and then store it in centralized servers along with regular data. By design, centralized ecosystems are decentralized, offer minimal transparency to users, and are becoming increasingly insecure.
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In addition, centralized identity management systems lack the ability to self-sovereign identity management, resulting in redundant processes for verifying, validating and managing users' digital identities throughout their lifecycle. These operations quickly become too costly, repetitive and tedious, requiring manual data orchestration and validation.
As a result, we need a trusted and reliable solution that enables users and businesses to interact digitally while protecting data privacy and security.
Blockchain-powered identity management solutions have the potential to eliminate the problem of digital identity.
Essentially, blockchain ensures the security and invariance of a distributed network. Leveraging the power of blockchain distributed ledger technology (DLT), decentralized identity management solutions not only give users full control of their data again, but also prevent data leakage and misuse.
Decentralized identity management makes anonymous transactions transparent and immutable. It also reduces transaction costs and improves process efficiency because the lifecycle management of digital identities is managed according to the predefined rules of decentralized smart contracts.
Using blockchain technology, users (and businesses) can create and manage their decentralized identities. Decentralized identifiers (DIDs), pseudonym profiles linked to a user's IP address, can be generated for individuals, entities and even objects. A single user can have multiple DIDs to further limit the amount of privacy they need. For example, you could have one DID for a gaming platform and a different DID for a financial platform. Throughout this process, cryptocurrencyology plays a key role in ensuring data security, privacy, and invariance. DIDs are private keys, which means that only the key owner can prove that they own or control the identity.
The term "self-sovereign identity" has become a hot topic in recent years as the demand for end-to-end data privacy continues to grow. In its simplest form, self-sovereign identity means that end users must have full control over the personal information in the devices (and services) they use. At the same time, users can choose to provide only the information they need to third parties, at their own discretion.
The KILT protocol is one such platform that leverages the potential of blockchain technology to solve the current problems in digital identity management systems. Created by BOTLabs GmbH, the KILT protocol allows users to verify their identity without providing personal information. While keeping user data private and secure, KILT brings the traditional method of establishing trust by verifying credentials (passports, driver's licenses, certificates) to the digital ecosystem.
KILT's open source, decentralized technology allows for revocable and verifiable credential management. As a result, users can verify their identity online without having to provide confidential information. The DID, along with the public key, is stored on the chain, allowing applications to access shared information without having to ask the user again.
The KILT protocol team, which is leading the concept of self-sovereign identity management, recently launched SocialKYC, a decentralized identity verification service that replaces the existing KYC verification process for Twitter and email services.
Decentralization will undoubtedly play a key role in shaping the future of the Internet. The Web 3.0 revolution has already begun, and the demand for decentralized identity management solutions that shift power back to the user is at an all-time high. With platforms such as the KILT protocol at the center, data privacy and security will change dramatically, ultimately benefiting the global community.
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