By Nick Marshall
Whatever type of crypto you pick in the market, whether it’s Bitcoin or Ethereum, the real currency is trust. That’s why we believe that our launch of the first offchain title registry for crypto assets cannot come a moment too soon. The market cap of a coin may fluctuate, but not the intrinsic value of a currency that is free from central control and quasi-anonymous. Supporting that decentralized structure is self-sovereign identity (SSI). It’s a central tenet of cryptocurrency and an exciting feature that will increasingly define our future. Find out what self-sovereign identity means and why it’s such an important benefit in crypto.
What Is Self-Sovereign Identity (SSI)?
Both in-person and online, we’re constantly challenged to register and prove our identity. Rarely are we in control of the process, however. Take the example of a social security number or passport. These forms of centralized identity are issued (and possibly revoked) by organizations beyond our control. We have to apply for them through an often convoluted process. In digital terms, the hardware or device we use is proof of identity, whether it’s our IP or email address, yet we have no guarantee that the data collected about us is secure or transparent.
Single sign-on (SSO) authentication seemed to offer a better alternative, allowing us to sign into a number of different platforms or services through a single service (Facebook and Google being the most obvious examples). However, we soon discovered that these tech giants collected an astonishing amount of data about us with every click.
Self-sovereign identity finally puts control of our digital identity in our hands. With SSI, we can manage and share our credentials across a decentralized ledger that no single organization controls. Thanks to public and private keys, we can share the data we need to with third parties without having to grant them full access to our records.
How Does SSI Work?
Self-sovereign identity exchanges data between an identity owner, issuer and verifier. The owner chooses what attributes of identity they want to show, and no personal data is stored on servers, where it would be vulnerable to data breaches. Whereas the owner of a passport who wants to show proof of citizenship also has to reveal their birthplace, age and gender, the owner of self-sovereign identity can share the identifier necessary for verification and nothing more. All the owner needs to remember or cold-store is the master password to their keychain wallet.
Self-sovereign identity is built on three key pillars:
- Blockchain technology for a single source of truth. This secures trust and authenticity without requiring personal data to be stored.
- Decentralized identifiers to enable unique, private peer-to-peer connections between parties without the need for an intermediary (e.g. Google).
- Verifiable credentials using public key cryptography. These allow organizations to verify credentials without having to access personally identifiable information.
What Are the Benefits and Risks?
The so-called “trust triangle” between owner, issuer and verifier minimizes the risk of sharing unnecessary amounts of data with third parties while keeping overall control with the user. However much you may trust your bank, there’s always the chance that their security systems could be breached and your personal details stolen. Many hackers will then hop from platform to platform, accumulating passwords, usernames and personal identifiable information (PII) to wreak more havoc.
When your encrypted wallet is secured with SSI, on the other hand, the only option for a hacker is to compromise your private key to gain access. Even if they did, they would still only have access to your assets, not a backdoor into your entire online identity.
Accordingly, the biggest risk associated with SSI is losing your password. There is no equivalent of a backup email, security question or password reset. That also underlines the importance of title registry where cryptocurrency is concerned, so that users can still present proof of crypto asset ownership should they be unable to access their wallet.
Investing in Self-Sovereign Crypto
As an investor in cryptocurrency, you can get an extra layer of protection with TransitNet. It’s the most transparent, reliable solution for demonstrating proof of ownership. To find out more about protecting your crypto assets from self-sovereign identity to off-title registry, sign up today.
Sources
Bosch – Digital identity – enabling secure collaboration with blockchain technology
Tykn – Self-Sovereign Identity: The Ultimate Beginners Guide!
Sovrin – What is self-sovereign Identity? – Sovrin
Coindesk – Self-Sovereign Identity in 2030 Explained