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Decentralized Identity – The blockchain as a passport

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Decentralized Identity – The blockchain as a passport

Decentralized Identity – The blockchain as a passport

Decentralized Identity - The blockchain as a passportTired of entering a username and password all the time? Are you annoyed by the many passwords and constant identity checks on online services? Then you are not alone, because online identification is one of the biggest annoyances of today. In order to protect us from cybercrime and companies from tax evaders and fraudsters, certain security measures and registration procedures are required. The downside: Numerous problems, lost passwords, non-working two-factor authentication and security gaps. Fortunately, a remedy is in sight. The blockchain makes it possible, similar to the NFT area, to assign a unique identity to everyone. This article describes how this is possible and what the advantages are. If you like the article, please leave us a comment below and tell us whether you would be willing to accept one of the blockchain solutions or whether you would prefer to continue doing your identity checks yourself.

Identity definition

Decentralized Identity - The blockchain as a passportThe concept of identityThe identity[1] is often translated as the totality of the peculiarities, a definition that I personally like very much. We all have our own rough edges, our peculiarities, what sets us apart from others. It is precisely these special features that make us who we are. Of course, all of this plays a subordinate role in the identity check, but also with profile and passport photos it is more the extraordinary things that catch the eye and are used to identify you. In a crime film, it is more the mole that identifies a perpetrator than the standard haircut.The online identity on the other hand is not that easy to explain. The meaning and purpose of the identification must first be known before a decision can be made on the method of identification. The usual use cases are[2]:- to uniquely identify a person, for example when logging into a social network or an e-mail account. As a rule, several features are combined there – for example a user name and password or PIN code.- in the sense of a digital signature: proof of the consent of a person to a document or a contract with a digital signature or the like.- as a representation of a person’s interests in the online world, the likes on social platforms, the search queries, the pages visited.- all content that can be assigned to a person in the online world, regardless of whether it was posted by the person himself or by others.


Digital – decentralized identity (DID) via blockchain

… users sign up to a self-sovereign identity and data platform to create and register a DID. During this process, the user creates a pair of private and public keys. Public keys associated to a DID can be stored on-chain in case keys are compromised or are rotated for security reasons. Additional data associated with a DID such as attestations can be anchored on-chain, but the full data itself should not be stored on-chain to maintain scalability and compliance with privacy regulations[3] 

Decentralized Identity - The blockchain as a passportThe concept of digital identity via the blockchain brings the data back to its owners. At the moment we have to provide private information on a number of websites in order to be able to use their offers. This data can of course also be misused for advertising purposes or behavioral analysis! Even if the general terms and conditions, of which it is well known that very few people read them, say otherwise, none of us knows for sure what really happens behind the scenes with our data. What George Orwell wrote about total state control in his novel “1984” is a joke against what is really possible these days. We are certainly gaining freedom and openness to the world through the Internet, but at the same time we are completely transparent. The concept of blockchain identity has the potential to bring back some of our private data. All we have to do is register on a platform, ideally a decentralized one, and receive a DID. For this purpose, a pair of private and public keys is created, just like with a Bitcoin address, for example. In some use cases it is even a Bitcoin address. Only the essential data is published, the private information is not stored publicly, but the website operator knows that it exists and that it is not a fraud. The biggest “players” in IT business are already working on solutions, for example IBM and Microsoft. The Microsoft’s ION solution recently even went online and it is possible to create your own decentralized identity here. This is even based on the Bitcoin network, which in turn shows us that Bitcoin will be indispensable in the future. At the moment it is still relatively complex to create an identity at ION, advanced computer skills are required, but there will certainly be simple solutions for normal Internet users in the foreseeable future. As a crypto enthusiast, I am of course happy in several ways. On the one hand, I think the integration into the Bitcoin network is great and I am also pleased that Microsoft has chosen a decentralized solution. In addition, I can hardly wait for the day when I don’t have to log into every single exchange or online account with different credentials, but can only copy my public Bitcoin key into it.  

Digital identity and wallets

Decentralized Identity - The blockchain as a passportSimilar to how we keep our ID in our wallet, we can then “stow” our digital identity in our digital wallet, in addition to our crypto currencies. There are still many doubters, but I am convinced that digital currencies are the future. Many think, “oh, that doesn’t work yet, that is not possible at all in practice”. Here is an application example: Yesterday I was in the nearby zoo with friends. At the entrance I was able to pay with my Binance Visa card, the whole thing even free of charge. BUSD, i.e. a stable coin, were deposited. Nothing more was needed, it was a card payment like any other. I would say that cryptocurrencies have long since arrived in everyday life, many just don’t know about them yet. In addition to the payment, I also receive 2% of the purchase value as cashback from Binance. Up to 8 percent are possible depending on the BNB credit. When was the last time your bank paid you cashback on a purchase? 

Bitcoin kaufen auf der Binance Exchange - Binance Smart Chain erklärt

Back to digital identity. As already mentioned, there are other solutions besides Microsoft, some of which are already on the market. It will now be crucial that these solutions are also accepted by online providers, so I think it’s good that the Bitcoin network is used, as this is by far the largest and also the most secure. Even though I’m a big fan of Defi Smart Contracts and Ethereum, Bitcoin is perfect for things like online identification, as it doesn’t complicate matters unnecessarily and the simpler something is set up, the less error-prone it is. 

Conclusion – Decentralized Identity – The blockchain as a passport

We are in the middle of a digital turnaround. In 20 to 30 years, our children will look back and be amazed at many things that we take for granted today. Cash, ID cards, bills and fiat … all of these will in all likelihood slowly, or maybe quickly, go away. Certainly not everything is bad today. The world may become more impersonal, social contacts more fleeting and no longer in person. But in my opinion, we cannot stop the digital revolution anymore, because it is not ahead of us, we are right in the middle of it. 

Did you like this article “Decentralized Identity – The blockchain as a passport”? Please leave us a comment below and tell us whether you would be willing to accept one of the blockchain solutions or whether you would prefer to continue doing your identity checks yourself.


[1] https://www.bpb.de/politik/extremismus/rechtspopulismus/241035/der-begriff-der-identitaet visited 14.07.2021

[2] https://www.saferinternet.at/faq/selbstdarstellung/digitale-identitaet-was-bedeutet-das/ visited 14.07.2021

[3] https://consensys.net/blockchain-use-cases/digital-identity/ besucht am 14.07.2021

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