What is Decentralized Identity?
Imagine walking into a bar in the future and not having to dig out your ID from your bag. Instead, you simply beep your phone and the bartender knows you meet the age requirements, without worrying about losing your ID or having your personal information recorded and used by malicious individuals.
This type of application can be achieved through the use of Decentralized Identity (DID) technology on the blockchain, which can enhance personal privacy and data security.
In April, WEB3+ hosted the “Blokparty” event, inviting Huang Yanlin, a digital development engineer from the Department of Digital Development, Wang Zhiqing, co-founder and digital director of LeadBest Consulting Group, and Lin Hongyu, chairman of the Bitcoin and Virtual Currency Development Association, to share the future development possibilities of “Decentralized Identity” in their talk titled “Decentralized Identity: A New Solution for Identity Verification”.
What are the advantages of Decentralized Identity and where can it be applied? This article summarizes the key points from the event.
Digital Wallets: “Own Your Identity, Manage It Yourself”
Huang Yanlin first shared the three main challenges faced by digital certificates in Taiwan’s development.
Challenge 1: Balancing privacy protection and convenience while reducing digital footprints and platform surveillance.
In the Web2 world, there are many convenient digital services, but they are becoming increasingly centralized. These platforms often face scrutiny for potentially tracking digital footprints and engaging in capitalistic platform surveillance.
It is difficult to strike a balance between privacy protection and convenience, as these two aspects are like the ends of a scale that is hard to tip. Huang Yanlin said, “Is it possible to find a third way in this balancing act? This is the problem that Decentralized Identity aims to solve.”
Challenge 2: Lack of interoperability in decentralized identity systems.
At present, there is a lack of specific standards for decentralized identity systems. However, for the past 20 to 30 years, people worldwide have been promoting similar concepts in both the Web3 world and in various countries. Due to the lack of interoperability, these concepts have ultimately failed. It was not until recent years that relevant standards, such as the Decentralized Identifier (DID) Recommendation v1.0 and the Verifiable Credentials Data Model (VCDM) Recommendation v1.1, were established by the World Wide Web Consortium (W3C) in 2022.
Challenge 3: Limited understanding of digital signatures.
For the general public, the concept of digital signatures is not yet widespread. While progress is being made in terms of electronic signature laws and related regulations and infrastructure, many people still prefer traditional handwritten methods.
Huang Yanlin emphasized that the focus of Decentralized Identity is the concept of Self-Sovereign Identity. In simple terms, it means “owning and managing your own identity.”
Huang Yanlin added that users’ personal data should be managed by themselves, rather than being controlled by service providers. With the maturity of technology and standards in recent years, the Digital Democracy Bureau has proposed the “Digital Wallet” project, hoping to achieve individual authorization and autonomy over digital personal data.
The Digital Wallet is a data authorization switch and a digital democratic social verification infrastructure established in reference to international standards.
For citizens, it will serve as a convenient and privacy-protecting authentication and verification mechanism that connects various services. For the government, it can accelerate the goal of building a smart country by providing the necessary foundation for digitization across different departments. On a larger scale, whether Taiwan’s certificates can be globally recognized by foreign countries in the future is an important issue. For example, passports are currently based on international standards and are circulated and used in over 100 countries. Decentralized identity can play a crucial role in many applications involving verifiable credentials.
Can Blockchain Technology be Combined with E-Voting?
After the 2024 presidential election, the possibility of e-voting has once again sparked discussions in the community. Traditional manual voting has its benefits, but human errors and mistakes are possible. While e-voting can reduce the risk of human errors, many people are concerned about the possibility of tampering and manipulation.
The transparency and immutability of blockchain technology, combined with zero-knowledge proofs, can address various aspects of the voting process, from candidate registration to the allocation of campaign funds. It can also allow citizens to monitor and verify the process.
Wang Zhiqing gave an example. Candidates can register on a blockchain contract, and users can obtain identity verification through a natural person certificate or a DID digital wallet. During the voting process, individuals can sign and encrypt their votes using their personal private keys. Zero-knowledge proof technology can then verify the legality of individual votes without revealing too much information, in line with the principle of secret voting.
One of the biggest concerns people have about e-voting is whether the programming process can ensure that it is not tampered with or vulnerable to external network attacks, which could affect the credibility of the election. However, through blockchain technology, anyone can verify the process, and the likelihood of tampering is relatively low.
Wang Zhiqing mentioned that Taiwan still faces several challenges in moving towards e-voting. Firstly, it is crucial to pass legislation and complete the transition process from traditional voting to e-voting. Secondly, public awareness and acceptance need to reach a certain level for widespread promotion and implementation.
Is Decentralized Identity Feasible Under Current Regulations?
From a legal perspective, what challenges or concerns might arise in the development of decentralized identity?
Lin Hongyu pointed out that “this issue is still at the forefront, and finding appropriate regulations is not easy at the moment.” However, based on current technology and application observations, decentralized identity can achieve faster consensus through efficient verification, combining on-chain and off-chain information. Additionally, decentralized identity offers modularity, enabling collaboration across different blockchain protocols, public sectors, and even international organizations, accelerating global collaboration.
The founder of Ethereum previously proposed a concept called “soul binding,” where an NFT permanently bound to a wallet can prove that a user “once existed” and provide evidence of their participation in activities.
Lin Hongyu explained that if this concept is expanded, it could potentially be used for educational experiences, work licenses, and even criminal record verification.
Lin Hongyu also used the recent WorldCoin project, which sparked global discussions, as an example to illustrate the concerns surrounding decentralized identity.
The WorldCoin project, established by Sam Altman, co-founder of OpenAI, aims to create a global financial service and promote it using its native tokens. The project’s main feature is collecting iris data from people worldwide through photographs, converting them into codes, encrypting them, and uploading them to the blockchain for identity verification. In return, users receive a certain percentage of platform tokens as rewards.
Currently, more than 3 million people worldwide have contributed their iris data and received 30 WorldCoin tokens as rewards. However, since its launch, the project has faced extensive community scrutiny and discussion.
The biggest concern is that the WorldCoin Foundation is responsible for collecting and storing iris and code data from people worldwide. Lin Hongyu gave examples of similar projects, such as those launched by Facebook or Taiwan’s previous proposals to combine identification cards with fingerprint collection, which ultimately failed. Human iris data is a highly private and unique biometric feature, making it extremely challenging to execute on a global scale.
Furthermore, all users’ iris data is stored on a third-party online server controlled by the WorldCoin team. Although the team promises not to directly access this personal data, there is no trusted third party to verify this claim, leading to concerns among users.
Lin Hongyu believes that projects involving large-scale collection of biometric features like this will face numerous obstacles. The two development directions he sees as more promising in the future are the application of blockchain domain names and decentralized identity applications on a smaller scale.
Lin Hongyu emphasized that regardless of digital assets or e-voting, the biggest challenge for the future development of decentralized identity is how to ensure that people properly safeguard their private keys and perform legal and appropriate operations and signatures.