Are decentralized identities the way forward?

The much-vaunted digital shift has long remained commonplace. Then a virus arrived and overnight the world of work and private life shifted to cyberspace. Digitization is no longer an empty word, we are right in the middle. The fingerprint we leave on the Internet is getting bigger and bigger, people are becoming more transparent and Big Data is getting “bigger” every day.

Without resistance, the tech quartet of this world – Amazon, Meta (formerly Facebook), Apple and Google – will not loosen the digital screws. Data processing as the most important resource in the information age therefore needs to be rethought.

The thorny issue of data storage

Two questions in particular are burning, as the debates on data retention and the Corona-Warn-App in the summer of 2020 showed: how to store data and strengthen user rights? Central data silos, from which no one knows who has access to what information and for what purpose, could pretty much be avoided with the tracing app. Consumer advocates protested for good reason: the more data converges in a few nodes, the higher the vulnerability to data misuse.

A huge problem, especially with regard to Google and Co. Bundesdruckerei also describes the fact that Internet companies are absorbing more and more access data via their platforms and social networks as “a critical development”. If lax security precautions are added to this, large amounts of personal data can end up in the hands of third parties.

Show me your bones and I’ll tell you who you are

Research by Bayerischer Rundfunk was able to reveal that this threat is real as early as 2019. For years, several million data records, including 13,000 from Germany, were freely accessible on unsecured servers – including the name and date of birth of the patient as well as x-rays. To ensure that such an incident does not happen again, it is necessary to develop concepts of digital identities that protect the privacy of consumers.

Decentralized identities

One of these key concepts is that of “self-sovereign identities” (SSI). Self-sovereign identities put control of identity data in the hands of users, who decide who has access to what information and when – and who does not. As with the Corona-Warn-App, the magic word is: decentralization.

The data is not bundled in decentralized networks with a single provider, but is distributed over any number of computer systems. Since hackers would have to attack not just one, but multiple computers at the same time, the data is resistant to manipulation.

The urgency of such identity solutions is increasing with the rapid growth of the digital economy. Industry 4.0, Internet of Things and eHealth are just some of the future technologies where secure authentication methods can protect us against identity theft. Legislators, who are gradually setting the course for ISS solutions, have also recognized this.

Politics opens doors to decentralized technologies

The EU is already promoting identity concepts under the European Blockchain Service Infrastructure (EBSI) initiative, the first of which is expected to be ready for the market this year. The Federal Government is also supporting corresponding pilot projects within the framework of the “Digital Identities Showcase” funding project. However, there are still a number of hurdles to overcome, both technically and regulatory.

According to the digital association Bitkom, one of the biggest challenges is to “achieve interoperability between different identity providers and technologies”. However, big tech is extremely unlikely to voluntarily abandon its data monopolies. From a consumer perspective, however, there is no getting around this. We will only achieve data sovereignty and therefore self-determination 4.0 if the internet giants let themselves be put on a leash.


This article was previously published in August 2020. It has been reviewed and updated accordingly for republishing.

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