What Is a Digital Identity?

There are several types of digital identity already in use. The most obvious of these is government identification, which is used for purposes including access to banking, corporate registration and, of course,  surveillance purposes. 

Identification systems also exist for customers to transact online, log in to digital services and prove their identity to organizations such as employers.

Traditional identity systems tend to suffer from a number of common problems. They can be inaccessible (often by design), insecure and at high risk of attack, very easy to defraud, and extremely fragmented.

Blockchain technology can be used to solve many of these problems. There are experiments currently being conducted on the use of blockchain for digital identity applications, and some of these are already in operation at scale — for example, a number of national governments are moving their entire identity schemes onto blockchains.

Blockchain-based digital identities are seen as particularly useful for millions of people around the world with no proof of identity — often because of cost, complexity or inaccessibility. A lack of proof of identity locks these people out of crucial facilities such as banking. However, the explosion in use of mobile phones provides a route for the development of simpler, free blockchain-based identity solutions.

Crucially, blockchain technology is also vastly more secure than the digital identity technologies generally being used today. While it is currently extremely easy to forge an identity online, blockchain-based identity solutions allow for absolute confidence in the validity of an identity because of the immutable nature of blockchain-based recordkeeping.