Decentralized identity: blockchain-powered identity for the internet age

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(Kitco News) – The promise of blockchain technology extends far beyond crypto speculation and digital wealth stores as it has a wide variety of everyday applications, from identity verification to secure database management.

Last Thursday, the Polkadot ecosystem announced that Deloitte had become the latest major corporate partner to work on a project in the network, specifically the KILT Protocol, a project focused on providing digital identities.

According to the announcement by KILT, Deloitte Consulting AG has integrated with KILT’s blockchain technology for issuing reusable digital credentials to support KYC and KYB processes. “These credentials have multiple use cases, including regulatory compliance for banking and decentralized finance (DeFi), age verification for e-commerce, private logins and fundraising,” the announcement said.

At the recent consensus conference held in late April, Kitco Crypto sat down with Ingo Rübe, the founder of the KILT Protocol and CEO of BOTLabs GmbH, the first developer of KILT, to learn more about decentralized identity and how businesses can use technology advances.

Rübe said KILT is a layer-one blockchain and parachain within the Polkadot ecosystem that has a single function: digital identity.

What is a decentralized identity?

While many blockchains strive to do everything from smart contract support to host a variety of decentralized applications related to DeFi and NFTs, KILT leverages the collaborative power of the Polkadot Parachain to focus on digital identity.

“What it can do is it can provide DIDs, which are decentralized identifiers, and it can provide verifiable credentials,” Rübe said. “Together, these things generate decentralized identity.”

Decentralized identity is somewhat similar to what we have in the physical world at the moment, Rübe said, because it is based on identifiers such as your face, fingerprint or signature. “These things are absolutely decentralized because they belong to you, they’re not given to you by the government or by a company or an organization. It’s just yours, 100% yours.”

In the physical world, you receive credentials from trusted entities, like a degree from a university or a passport from a government, and those credentials refer to one of your identifiers, he said. For example, your passport has a picture of your face so that the two things can be linked.

These credentials are issued by a trusted entity but controlled by the individual, meaning you decide when to show them, where to show them and to whom to show them – without the issuing entity knowing who you’ve shown them to to – which makes them decentralized, Rübe explained. “So, for the last 500 years we had a pretty perfect system for our identity – then the internet came along.”

This led to the creation of “big data” and “big identity” players who control 100% of your identity, he said. “They check your identifiers because [the identifiers] is inside their database and they check your credentials because they are in their database. They can turn you off and they can do whatever they want with it, which is wrong and potentially quite dangerous.”

This state of affairs led firms such as Microsoft, IBM and Kilt to decide in 2017 that something had to be done, and over the next five years they developed standards for data distribution services (DDS) and verifiable protection.

Kilt specializes in implementing these standards in a decentralized setting. “You can use decentralized identity for anything where you want to use your physical identity,” said Rübe. “You can use it for access control to buildings, logging into websites … there’s basically a ton of use cases, even some that we can’t imagine yet.”

DID used cases

An example Rübe gave was a hospital that wanted to sign its research work before it was published and needed a time stamp on the blockchain to do so. “We built an application for that project and it worked,” he said.

DIDs can also be attached to any kind of object or asset, such as newly mined gold ore that is on its way to processing and refining, so that it can be recorded and tracked on the blockchain.

Rübe went on to note that governments have also shown interest in and understand the concept of verifiable credentials, but they “are not very excited about DDS because they think that they own the identity today, so they should own the identity in the future.”

“But this is wrong because they don’t own the identifiers. I own my identifiers and not the government,” Rübe said. identification.”

He warned that a future where governments control your identity is one where they can turn off your identity if you do something they disagree with. “When digital identity gets more and more use cases, for example in healthcare and banking, and you do something that displeases the authorities, they can, with just one click, turn off your identity. You’re basically digitally dead,” he said. “I don’t want the government to have this capability.”

KILT specializes in creating the infrastructure on which companies can build their own identity systems. One potential application is the creation of “social KYC”, which verifies that you are the one in control of certain social media accounts, such as Twitter, GitHub, Discord, etc. The KYC system will challenge you to demonstrate that you control each account, and once you’ve passed the challenge and proven you really control the account, you’ll receive a credential.

“This credential is then entered into your identity wallet,” Rübe explained. “You control it, and can use it to verify your identity in the future. And we can have 10 of those credentials. This makes it much more secure that you are actually who you say you are.”

He then touched on the upcoming announcement from Deloitte, saying that in the following week, an internationally recognized KYC provider will unveil an identity solution based on KILT. “You can have your identity verified with this KYC provider and they will provide you with another credential that you can use, for example, to participate in an initial coin offering (ICO) or open a bank account.”

Risk of DID theft

As for identity theft, Rübe said the risk of someone accessing and using your decentralized identity is low because, like the physical world, identifiers like your photo will be attached to allow proper verification when a DID is used. “Signing with DID is like taking your face and putting it next to your signature,” he said. “A thief must have access to DID and to verified identification at the same time.”

This is where blockchain technology plays a crucial role in the process. “The validity of any credential is stored on the blockchain and can be changed by the issuer,” he said. “That means if I have a verified credential and I lose my DID because it was compromised, and I lose my verified credential at the same time and someone gets access to both of them, I can still call the issuer and ask them to invalidate my credential.”

This capability was noted in the KILT-Deloitte partnership announcement. “The credential is digitally signed by Deloitte,” it said. “Deloitte can revoke credentials using blockchain technology if the customer’s circumstances have changed after the credentials were issued.”

Why KILT chose to build in the Polkadot ecosystem

When asked why KILT chose the Polkadot ecosystem to build its protocol, Rübe said an important factor was the variation in transaction costs on Ethereum “which the industry cannot cope with.” Attaching a DID to something that has a production cost of $2 but having to spend $1 one day and $20 another day to complete the same process is impossible, he said.

“The only way to have stable prices is to run your own blockchain,” he said. “So the decision was made to launch a level one blockchain.” Being part of the Polkadot ecosystem means that KILT can leverage other parachains to do things like host smart contracts and DeFi platforms, allowing KILT to focus specifically on decentralized identity.

“The basic idea of ​​Polkadot is collaboration, cooperation and lack of competition in other networks,” he said. “We do not compete for computing resources. We all have our own computer and this enables us to collaborate and make the ecosystem better. We only focus on one thing – identity. And this works with all the other Polkadot parachains. Forced cooperation is much better than competition.”