Facebook, Twitter, PayPal, LinkedIn, Gmail, Skype, Slack, Instagram, iTunes, Telegram, Pinterest… We bet you check up on these apps at least once a day.
Can you remember all your passwords and usernames to log in with all online services? If not, you’re most likely to keep all of them stored in one place (as a doc, as a note in your mobile phone, as a note on your fridge at home), or utilize several similar passwords for all your profiles. Wait, but how safe is that?
It goes without saying that whenever we need to prove we are who we say we are, we need to reveal a lot of information. No matter you’d like to sign in with the new mobile app, travel to another country or even prove you’re old enough to drive a car or drink alcohol.
Almost every interaction or online transaction can’t go without some type of digital identity. And it’s not about the future. Digital identity is already here and has become a part of our lives.
Read on to learn how blockchain can help you take your users’ security to the next level and avoid the trade off between security and user experience.
What is Blockchain?
A blockchain is simply a continuous list of records, which are linked together through cryptography. These records or blocks, all correspond to a distributed ledger, which records transactions. Every block contains a timestamp and transaction data, locking the content and preventing unauthorized modification.
Is Blockchain Just About the Crypto World?
You mostly hear people talking about blockchain within the world of cryptocurrency, but its applications are actually far more diverse. Blockchain technology can be applied to any chunk of data online including your personal information. It allows you to choose segments you want to share and prevent access to pieces you wanna hide.
Data exchanges are generally referred to as transactions. A transaction occurs, once a smart contract is completed. A smart contract controls the transfer of digital currency or data once a specific criteria is fulfilled. Users can dictate what criteria an entity needs to fulfill before information is exchanged.
For large financial institutions this means an automatic transfer of funds once the stipulated criteria is met. For individual citizens, this means the ability to restrict access of data to certain entities. In essence, blockchain technology allows you to control and automate the circulation of any piece of data you wish.
Can Blockchain Eliminate Fraud?
Many advocates of blockchain technology suggest that it can eliminate fraud. Whilst it’s true that blockchain makes it extremely difficult for hackers to tamper with your data, it isn’t infallible. With blockchain, whenever you make a payment or data transaction you can trace the transfer information. This means you could track the end location of stolen money, for example.
The problem is that your ability to trace the transaction would end once the money is converted to a physical currency. So whilst blockchain technology makes fraud more difficult it isn’t impervious to being breached. Recent hacker attacks on a number of online wallets prove blockchain is a desired target for hackers.
That being said, blockchain does offer serious improvements in terms of its identity management potential. If you’re able to segment and dictate which data third parties have access to, you can manage your online presence and privacy much more effectively.
The Future of Identity Management with Blockchain
As mentioned above, blockchain technology is truly revolutionary with regards to identity management. We live in the age where almost everything about our personal identity can be found on the web. Our online data footprints are extensive, combining everything about us from our name, age, financial history, work history, addresses and social records.
Each piece of information comes together to develop our online profile. As it stands, we have little influence over how our data is used because it’s not accessible to us. We can’t see who has access to our data let alone how our data is used.
Right now we’re in a position where data controllers are largely unaccountable and are free to share our data with third party companies. Likewise, we’re also in a vulnerable position when it comes to fraud, because we can’t see where our data has been used until it’s too late.
Blockchain technology will enable us to track where our data is used so if someone is fraudulently using our information we’ll be able to react. All our data will be stored in a centralized location offering a clear transaction history to help identify unauthorized usage.
In a nutshell, using blockchain as an identity management solution allows the user to take control of their own data. By controlling and tracking how their information is distributed, citizens are able to pick and choose who they opt to provide their information to.
Reimagining the Future
At its core, blockchain technology offers us the opportunity to take control over the circulation of our personal data and centralize it. Whenever we put data online, blockchain will be able to take it and compile in one location. This means the user could file taxes without having to manually put information into each and every account they own.
The use of such technology will result in much more efficient online services. With the subjects permission, companies from car insurance to mortgage lenders will be able to obtain data on credit, title and insurance information in a more efficient way. Today our identity data is decentralized with multiple steps required to prove our identity.
Instead of waiting hours, the process could be reduced to minutes (it goes without saying paperwork would be reduced). Rather than spending hours online filling out extensive forms, users will be able to simply grant permission to their central data storage.
Top 3 Industries to Apply Blockchain First
Blockchain for Finance Industry
One potential application of the blockchain is the finance industry. We’ve already seen blockchain used as a central part of cryptocurrency, but it also looks promising when applied to financial services. This technology can be used to increase the efficiency of international transactions and remove the limitations that characterize the current bricks and mortar approach.
What’s more is that blockchain will also act as a way to avoid middlemen taking a cut of the funds. This will increase the cost efficiency within the industry. On the other hand, consumers will be able to better control how their data is circulated. This will force the finance industry to be more transparent about how data is used.
Blockchain for Insurance Industry
In terms of scaling, one of the largest industries that lands well to blockchain is the insurance industry. Like the finance industry, most insurance firms rely heavily on the global market to make money. Blockchain technology makes it easier for insurance companies to manage the data present in insurance contracts and turn it into smart contracts.
A smart contract can stipulate what data is shared, and who has access to it. In terms of insurance payouts, claims can be handled much more effectively, as shown in a recent case by AXA. The french giant has utilized the Ethereum’s public blockchain as a new flight delay insurance to store and process payouts .
Blockchain for Healthcare Industry
Implementing blockchain and smart contracts could redefine how doctors and hospitals transfer information. As it stands, health professionals don’t have a secure network to share data with each other. In many cases, this leaves them vulnerable to fraud and poor efficiency.
Blockchain technology will allow medical professionals to share data across hospitals more efficiently and securely. For patients this will mean less misplaced medical records and more prompt and informed treatment.
What Do Industry Leaders Say?
Among the industry leaders feeling sure about the future of identity management with blockchain, Jerry Cuomo, IBM Fellow and VP of Blockchain technologies, has been extremely positive about this approach in his recent interview for TechCrunch:
“Imagine a world where you are in direct control of your personal information; a world where you can limit and control how much information you share while retaining the ability to transact in the world. This is self-sovereign identity, and it is already here. Blockchain is the underlying technology paving the path to self-sovereign identity through decentralized networks.”
Still thinking blockchain is just a hype? No wonder it will soon become a common identity panacea used by most successful startups and software product owners who take their users’ privacy seriously. Are you ready to fade away and let your competitors hold the top spot?
Centralized Data Gives Users Greater Control
Ultimately, Blockchain will remove the current constraints placed upon our data by centralization. Once our data is centralized we’ll have much more influence over who has access to our data, and what they can do with it. Blockchain is a great identity management solution because of its transparency.
In an environment where cyber threats are abundant, identity management is well needed. Most organizations and private citizens are stuck in an uncertain situation when it comes to keeping their data secure.
Right now, Zfort Group development team works on several blockchain-related projects, so if you want to take your customers’ security to the next level, contact our expert team for an advice on keeping your data safe.