The promise of blockchain for sustainable digital identity solutions
With the fallout from the pandemic accelerating digital transformation at a pace that would have never been anticipated, it is clear that we are facing a revolution in the way our personal data is used. In this context, it is more important that privacy is safeguarded in the midst of rapid digitization. With that in mind, a movement towards decentralized technology is a vital step forward in the digitalization of digital identity management, writes Ivar Wiersma.
At the start of 2021, the government of Hong Kong launched a new biometric smartphone app providing residents with access to over 20 different public services. Dubbed iAM Smart, the app enables residents to utilise an all-in-one tool to prove their identity and authenticate themselves, and to conduct government and commercial transactions online. The list of services featured includes voter registration, tax payments, and COVID-19 vaccination bookings.
Hong Kong’s movement towards a national digital identity scheme will no doubt support seamless authentication processes that were previously lumbered by cumbersome and repetitive form filling.
However, digital identity solutions have historically raised concerns around privacy and guardianship over personal data. The owner of the data in question should ultimately have sovereignty and autonomy over its use. This can be tricky when apps such as that built by Hong Kong are government-led solutions. In response to these concerns, the key to unlocking this balance between privacy and technology lies in enterprise blockchain.
Digital identity during the COVID-19 pandemic
During the first wave of the pandemic, we saw a vast increase in government-led digital identity solutions to ‘track and trace’ the spread of the virus. Norway was one of the first countries in Europe to launch a national COVID-19 contact-tracing app, but usage of the app was soon suspended after the country’s data protection authority raised concerns that the software poses a disproportionate threat to user privacy.
In Singapore, the TraceTogether app was rolled out in March last year to track potential exposure to the virus. The country took this one step further and mandated use of their national digital check-in system the end of 2020.
These projects have huge implications for the way in which sensitive personal data about our health and location is shared with governments and private technology companies. While the key consideration for a government must of course be protecting the health of its citizens, there is no reason why, if the appropriate technology is used, we must lose control of our personal data. This concern has now been heightened with the recent leak of thousands of people’s personal information from the Netherlands’ Covid-19 track and trace program with an entire data set offered for sale online.
A decentralized identity solution
Blockchain can provide a viable alternative to these centralized digital databases, and the technology should be considered by governments, health agencies and tech firms building digital identity solutions. If developed appropriately, a blockchain-based app can enhance robustness for data privacy with an immutable decentralized ledger.
With blockchain, users can control which elements of their identity, location and health credentials are shared, and the user can store their data, such as medical records, as they see fit.
Taking this concept one step further, it is possible that the user’s data does not even need to be stored on the blockchain, therefore eradicating conflicts with data privacy regulations such as GDPR. Using decentralized identifiers, a blockchain network can verify that the data was issued by a trusted individual or organization without actually having to store that data, thereby conforming to GDPR standards.
Furthermore, decentralized identifiers can separate the data from direct identifiers so that linkage to a specific individual is not possible without additional information that is held separately. The correlation can only be made by those parties to which the user provides full access, while still allowing anonymised data to be used as necessary, for example in tracking the total number of COVID-19 vaccinations in a country or town.
Decentralized identifiers are just one example of a whole host of exciting new technologies in the field of identity and data management in the blockchain space. And these technologies are not hypothetical, they exist today, and in many cases have already been deployed in multiple different industries by institutions across the globe. If developed appropriately, a blockchain based decentralized ledger can enable individuals to exercise control over their digital footprint in a secure and sustainable way.
About the author
Ivar Wiersma has 20 years’ experience in banking, capital markets, fintech, venture building and corporate innovation. He has launched new banking products, Led innovation, Blockchain and Advanced Analytics teams at ING and co-founded ING Labs, responsible for creating 15+ ventures and company spin-outs. Ivar has been an advisor, investor and board member for start-ups and has served 2 years on the R3 board, prior to joining the firm as head of Venture Development.
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