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How to Use Blockchain for Identity Management?

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"As many of you experience every day, the world is undergoing a global digital transformation where digital and physical reality are blurring into a single integrated modern way of living. This new world needs a new model for digital identity, one that enhances individual privacy and security across the physical and digital world," says Alex Simons, Microsoft's Director of Program Management, in his blog post.

Just like a decade ago, every single social or business transaction is carried out by a business/social source owner. One thing is clear: all we are known by our precious identities. As a result, every single company or social media interaction can't be imagined without identity management.

These days, to identify yourself, it's not enough to recall your name, user ID or home/business address. Instead, you have to use a bunch of specific data including, but not limited to, your name, age, work experience, financial history, address history, social status and social media history. All mentioned types of data can be combined in order to define your person in a particular business or social environment.

Modern Identity Management: too slow, bulky and… centralized

Generally, most users can hardly control private information comprising their identities. Every day you have to use centralized services in order to exchange identity attributes for authentication, verification and authorization. And every day you risk to get exposed to a trivial identity fraud.

Another challenge is that organizations like the State Department require single sign-on (SSO). At the same time, the whole mess of departments sub-offices use isolated and centralized identity management systems. This makes identity management, protection and verification very cumbersome, cost-intensive and risky for industry enterprises, government agencies and users like you.

How about to re-imagine the future?

To solve the issues related to the traditional ID management, it would be useful to re-imagine the future and give a try to the following technologies:

- Cognitive applications. In short, they are nothing but pieces of software collecting specific data from cumulative online interactions. This would make it safe and easy to perform routine tasks such as filing taxes.

- User-controlled payment systems. An app of that kind would help you to shorten payment information changing procedure in order to get a new credit card in a jiffy.

- Systems that simplify transactions such as car purchases by verifying identity, credit, title and insurance, and obtain approvals with trusted identity profiles. In other words, applications capable to shorten the buying procedure from hours to a few quick minutes and reduce paperwork.

- One-stop healthcare apps that make it possible for a doctor or pharmacist to access to your electronic medical record. Such an approach provides both you and your doctor with an opportunity to track dosages, receive automatic alerts for missed or incorrect dosages, monitor possible adverse drug interactions and even help prevent addiction. Comfy, isn't it?

Two main principles of Trusted ID Management

Just keep in mind: the aforementioned scenarios of the future are possible. Another pleasant thing is that scenarios are based on two main principles. Here they are:

1. Self-Sovereign Identity (SSID)

The self-sovereign identity in itself allows you to take full ownership and control of your identity data. Information keepers can provide and verify identity attributes, but your actual existence doesn't depend on the details. You can control how these attributes define you in the context of a business or social environment.

2. Distributed Trust Model (DTM)

Now, identity is decentralized by default. That's awesome, but it’s vital to establish trust among you, your identity provider and other parties. DTM makes it possible to use the advantage of an agreed-upon set of identity attributes to define, verify and authorize your person in order to perform business or social transactions.

Leave everything to blockchain

As you probably guessed, the best way to build the distributed trust model for decentralized ID management is to use the same decentralized digital ledger known as blockchain.

Blockchain technology provides a set of capabilities that can ensure your trusted digital identity network functionality. The list consists of:

- A shared digital ledger (append-only) containing only one version of the "truth" that can be shared with all legitimate network participants in real time.
- Smart contracts that ensure that verifiable and signed business logic is executed in each transaction;
- Pretty high trust level between known network users that help to verify transactions and ensure record validity.
- Privacy and security rules that grant access only to legitimate parties and prevent the network from potential data violation.

In addition, the aforementioned capabilities offer the following priceless values for trusted digital identity:

- User-centric design. It allows network users to control their identity profiles and personal information.
- Dynamic validation of identity and transaction data.
- Ongoing validation of information leveraging smart contracts in order to keep data updated 24/7.
- Trusted digitization. This capability allows to make network processes fully digital while maintaining trust in the data items.
- Auditable records provided for validation.
- Transparency (controlled): the ability to verify identity without disclosing actual user information.
- True decentralization. Say goodbye to hierarchy! In opposite to a database with a single control point, all participants within the network have equal rights and opportunities.

DIDs: a missing link of Internet's ID Management

Now that you know a blockchain can make identity management safe and failproof (well, in most cases), it's about time to learn more about a decentralized identity/identifier (DID). DID is nothing but a special scheme with several attributes that defines a person, object, or company.

Other identity management systems are commonly based on centralized authorities (corporate directory services, certificate authorities, etc). DIDs in turn can be controlled by their subject that don't depend on a centralized registry, identity provider or certificate authority.

In this regard, blockchain technology provides a chance to build a fully decentralized identity management (DIDM) model. The DIDM model, as a globally distributed ledger, allows all identity owners to share a common trust root.

In the ledger, every single DID record is cryptographically secured by private keys controlled by the identity owner. With this in mind, it's widely believed that DIDs make a missing link that makes it possible to redefine the security values of the Internet. The reason is, it can get the identity layer of the Internet!

As for other benefits you can get by using blockchain for ID Management, check out the following list:
- Decentralized system helps to get rid of redundant compliance steps.
- Decentralized system provides better end-user data security.
- Decentralized system provides the best end user experience.
- Decentralized system makes it possible for you and your company to meet global identity/privacy requirements.

Two notable projects using blockchain for ID Management


The project's mission is to develop digital identities for all people in a decentralized manner. Those identities would be compliant with various rules and regulations of the governments around the globe (just like a digital ID number).

To achieve the goal and prevent data from violation, Civic relies on blockchain technology. All information is verified by Civic itself or its partners. After that it gets anchored to the blockchain as un-decryptable data that can be shared between network participants using Civic tokens (CVC).


The SelfKey is one more platform using the advantage of a blockchain-based identity management system.
It allows average users and business owners to get, control and manage their identities on the blockchain. In a way, the SelfKey resembles the Civic project. Just like its counterpart, SK issued its own tokens that meet ERC20 standard. The SelfKey allows users to incorporate companies, buy various assets, choose projects for investment, participate in verified token sales, etc.

Merehead does professional development of blockchain in identity, management. If you have questions, contact us for a free consultation.

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