The massive password heists keeping coming, and one thing is certain: the way we prove our identities online is in need of a major upgrade. A growing chorus of technologists and entrepreneurs is convinced that the key to revolutionizing digital identity can be found in the same technology that runs cryptocurrencies.
Their bet is that we are on the verge of a fundamental shift—away from a model in which our valuable digital identities are managed by companies, banks, governments, and other central authorities to one in which this information is kept on a decentralized ledger, or blockchain, under the full control of individuals. Advocates say systems like Bitcoin, which uses cryptography and a network of computers to facilitate the secure exchange of digital coins without a middleman, can do something similar for identity credentials. (For more: “What Bitcoin Is, and Why It Matters” and “Why Bitcoin Could Be Much More Than a Currency”)
Blockchain technology can eliminate the need for companies and other organizations to maintain centralized repositories of identifying information, and users can gain permanent control over who can access their data (hence “self-sovereign”), says Drummond Reed, chief trust officer at Evernym, a startup that’s developing a blockchain network specifically for managing digital identities.