Blockchain-based Digital ID Market Could Grow More than $3B

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Blockchain-based dig­i­tal IDs have seen sig­nif­i­cant growth over time. Dif­fer­ent bod­ies, from the EU to Pacif­ic Islands, have show­cased sup­port. The blockchain iden­ti­ty mar­ket can grow a fur­ther $3.58 bil­lion by 2025 at a com­pound­ed annu­al growth rate of 71%. 

Every day, indi­vid­u­als car­ry wal­lets full of cards. But only a few a wide­ly accept­ed. Soci­ety has estab­lished glob­al norms for how we present and ver­i­fy these phys­i­cal card cre­den­tials. But there needs to be a tan­gi­ble equiv­a­lent for dig­i­tal certificates/credentials.

Traditional IDs concerns

There are a cou­ple of rea­sons for this. First, there needs to be a stan­dard mech­a­nism for issu­ing dig­i­tal cards. To give uni­ver­sal­ly accept­able dig­i­tal cards or cre­den­tials, one needs dig­i­tal iden­ti­fiers that indi­vid­u­als can own, inde­pen­dent of any enti­ty, orga­ni­za­tion, or institution. 

Email address­es and phone num­bers are used as iden­ti­fiers to access web­sites and apps. Still, access to these iden­ti­fiers and per­son­al infor­ma­tion is at the mer­cy of ser­vice providers, who can revoke them at anytime. 

Sec­ond­ly, there are only some­times accept­ed stan­dards for express­ing, exchang­ing, and ver­i­fy­ing dig­i­tal cre­den­tials across orga­ni­za­tion­al bound­aries. This is all about to change. A new form of dig­i­tal iden­ti­ty based on emerg­ing stan­dards, such as ver­i­fi­able cre­den­tials and decen­tral­ized iden­ti­fiers, can enable such dig­i­tal cre­den­tials to work every­where. Be more trust­wor­thy, and respect privacy. 

Blockchain IDs Play Here 

Lever­ag­ing the pow­er of blockchain and bio­met­rics can mod­ern­ize iden­ti­ty man­age­ment for orga­ni­za­tions and indi­vid­u­als. Main­ly by estab­lish­ing track­ing and man­ag­ing dig­i­tal iden­ti­ties in a more effi­cient, user-friend­ly, secure, and less open-to-fraud manner. 

Blockchain and Digital Identity: What is Digital Identity and Why Do We Need It?
Source: academy.moralis

Bio­met­rics are secure­ly cap­tured through an individual’s fin­ger­prints, voice, face, or iris scan, which can then be processed to cre­ate a unique iden­ti­fi­er using mul­ti­ple secu­ri­ty pro­to­cols. The iden­ti­fi­er can then be record­ed on the blockchain, which acts as an index with links to all applic­a­ble data. 

This makes it easy to locate, access, and share infor­ma­tion with­out the individual’s data being stored on the blockchain. The sys­tem allows indi­vid­u­als to gen­er­ate their pub­lic and pri­vate keys. Which they can use to sign the data they send to oth­ers. That way, third par­ties can be sure the infor­ma­tion is com­ing from the right indi­vid­ual and not a fraud­u­lent imposter. 

What’s the Benefit?

The pri­ma­ry ben­e­fit of this iden­ti­ty sys­tem is that indi­vid­u­als are always in con­trol of their data. An indi­vid­ual deter­mines which infor­ma­tion is shared, who sees it, and for how long. Instead of mul­ti­ple paper doc­u­ments, this dig­i­tal iden­ti­ty can use a sin­gle, easy-to-use mobile application. 

The sys­tem makes life eas­i­er for orga­ni­za­tions too. It’s inter­op­er­a­ble with oth­er data­bas­es, so exist­ing iden­ti­ty data stays put. It also makes back­ground checks eas­i­er. Trust can be placed in attes­ta­tions with­out repeat­ing the process. 

Look­ing to the end of how decen­tral­ized sys­tem items might evolve, this dig­i­tal iden­ti­ty com­po­nent would unlock pret­ty much every­thing. The key focus is to imple­ment it in a pri­va­cy-pre­serv­ing man­ner rather than allow­ing gov­ern­ments more control. 

What the world needs

Joseph Wein­berg, the co-founder of the Shyft Net­work, aired his thoughts on the regard­ing matter. 

“For the last ten years, iden­ti­ty sys­tems haven’t worked, and the rea­son is that we need some­thing that’s ten times bet­ter than what we have. Reg­u­la­tion is a forc­ing func­tion of usage and adop­tion. This adop­tion hasn’t been organ­ic for a vari­ety of reasons.

Source: YouTube

“First­ly, it’s the imple­men­ta­tion. Gov­ern­ments aren’t tech­nol­o­gy com­pa­nies. They’re not the fastest in the world at imple­ment­ing most things. That’s just the func­tion of how a gov­ern­ment works. The fastest way for peo­ple to adopt and adapt to any new tech­nol­o­gy at a nation­al or glob­al lev­el is a forced require­ment, which seems hard­er to imple­ment since there is a suite of pri­va­cy prob­lems that gov­ern­ments jug­gle. Sec­ond­ly, it’s con­trolled. Once iden­ti­ty and dig­i­tal tech­nolo­gies are embed­ded in a soci­ety, they nev­er leave.” 

Today’s world is main­ly demo­c­ra­t­ic, but it changes quick­ly. Hence, the ques­tion of con­trol of infor­ma­tion and sub­se­quent moral ques­tions come into play. Build­ing pri­va­cy and anonymi­ty in dig­i­tal iden­ti­ty sys­tems would be vital to solv­ing some of these problems.

Over the last 20 years, most great tech­nolo­gies, such as Pay­ment Sys­tems, video stream­ing, and dig­i­tal cur­ren­cies, have come from the inter­net. They haven’t come from gov­ern­ments. It is intu­itive to think that dig­i­tal iden­ti­ties will also come from that. 

Traction Across the Globe

A June 2021 report pub­lished by ReportLink­er men­tioned the poten­tial rise. Here­in, the blockchain iden­ti­ty mar­ket will grow a fur­ther $3.58 bil­lion by 2025 at a com­pound­ed annu­al growth rate of 71%.

The blockchain identity management market is poised to grow by USD 3.58 billion during 2021-2025, progressing at a CAGR of almost 71% during the forecast period.
Source: Tech­navio

Key fac­tors include the ris­ing demand for dig­i­tal­iza­tion and pri­va­cy con­cerns. As a result, var­i­ous solu­tions breached the mar­ket serv­ing this need in the form of non-fun­gi­ble tokens (NFT). As well as dis­trib­uted ledger tech­nol­o­gy (DLT), and bare-bones blockchain technology.

Geo­graph­i­cal­ly speak­ing, dif­fer­ent areas have shown an inter­est here. 

South Korea aimed to intro­duce blockchain-based dig­i­tal IDs for its cit­i­zens with a smart­phone by 2024, accord­ing to Bloomberg. Dig­i­tal IDs will be installed on smart­phones, and work as effi­cient­ly as phys­i­cal res­i­dent reg­is­tra­tion cards.

Oth­er coun­tries and glob­al orga­ni­za­tions are inter­est­ed in build­ing a dig­i­tal ID pro­gram to keep data secure. An exam­ple is the GLASS pro­gram in the EU.

First Government ID Deployed as NFTs

Mov­ing on to more of an exe­cu­tion approach. The Pacif­ic island nation of Palau became the first sov­er­eign nation in the world to issue dig­i­tal res­i­den­cy IDs to glob­al citizens. 

The Repub­lic of Palau and blockchain devel­op­ment firm Cryp­tic Labs col­lab­o­rat­ed to launch the Root Name Sys­tem (RNS), a dig­i­tal res­i­den­cy program. 

Sovereignty-Backed Web3 ID releases in a new region.
Source: rns.id

RNS is the offi­cial tech­nol­o­gy provider for the Palau Dig­i­tal Res­i­den­cy Pro­gram. Also, the world’s first dig­i­tal Web3 iden­ti­ty plat­form devel­oped to sup­port the appli­ca­tion and issuance of sov­er­eign­ty-backed IDs.

Bril Wang, the CEO of Cryp­tic Labs, the inte­gra­tion would pro­vide more transparency. 

Quote shared by Cryp­tic Labs

This pro­gram will offer any glob­al cit­i­zen a legal, gov­ern­ment-issued ID from the com­fort of their home. With both a phys­i­cal ID card and a dig­i­tal ID for con­nect­ed services.

The Palau Digital Resident Program’s ID comes in two forms.
Source: RNS

Over 80% of cryp­to exchanges world­wide sup­port RNS.ID. These include Binance, Coin­base, Bit­mart, Kucoin, Gate.io, Bybit, Huo­bi, etc. Oth­er report­ed use cas­es are board­ing an air­plane (with­in juris­dic­tion bor­ders), hotel check-ins, mem­ber­ship signups, and iden­ti­ty ver­i­fi­ca­tions at dif­fer­ent insti­tu­tions like Airbnb.

In addi­tion to this, the dig­i­tal iden­ti­ty Web3 plat­form is inte­grat­ed with RNS.ID makes it the first appli­ca­tion of using zero-knowl­edge proof tech­nol­o­gy for gov­ern­ment identification. 

RNS’ on-chain KYC solu­tion is designed around a “pri­va­cy engine” to encrypt users’ data. In addi­tion, cryp­tocur­ren­cy exchange Huo­bi part­nered with the Com­mon­wealth of Domini­ca to roll out a dig­i­tal iden­ti­ty and nation­al token service. 

Apart from this, Africa, too, saw Blockchain-based IDs roll out to mil­lions of stu­dents in col­lab­o­ra­tion with the blockchain firm and Car­dano devel­op­er Input Out­put Hong Kong (IOHK). 

Risks and Concerns 

Demand is there for dig­i­tal iden­ti­ties. While dig­i­tal iden­ti­ty comes with sev­er­al advan­tages com­pared to tra­di­tion­al iden­ti­ty sys­tems, reg­u­la­tion becomes a key area to address when dis­cussing a future with dig­i­tal identities. 

Since 2014, blockchain com­pli­ance has been very com­pli­cat­ed since there was no regulation. 

Disclaimer

All the infor­ma­tion con­tained on our web­site is pub­lished in good faith and for gen­er­al infor­ma­tion pur­pos­es only. Any action the read­er takes upon the infor­ma­tion found on our web­site is strict­ly at their own risk.

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