Can Blockchain Solve Identity Fraud?
A crypto-craze fueled by digital currency volatility is bringing blockchain technology, the digital ledger system that underlies such currencies, into the spotlight. At the same time, recent calls to take back ownership of personal identity are making blockchain’s decentralized nature more appealing. As demonstrated by consumer data breaches — including those affecting Orbitz, Saks Fifth Avenue and more recently, Delta Airlines — our personal information is highly susceptible to fraud when stored in centralized databases. As an increasing amount of the world’s banking and commerce moves online, the temptation for mischief and theft has increased as well. However, blockchain may hold the key to keeping identities safe through its core feature of decentralization.
Identity Data Risks Are Growing
Blockchain could act as the foundation of the root identity question “Who Am I?” as opposed to the authentication query “Am I Who I Say I Am?” These systems can securely store and make readily available all kinds of information, including sensitive data like our financial history and health records. As consumers, our need to present this data at the time of service, or the point of sale or care, has risen with service providers’ increased online presence.
Banks, governments and enterprises all require more of our information in order to verify that we’re the party entitled to their offering, but in an era of mass data breaches, we’re in a “risk race to the bottom” if we are going to keep up with this need by providing every enterprise with a complete profile of our personal and financial lives.
Keys To Our Own Data And Control Over Its Sharing
Blockchain-based data can be dispersed across an extensive network of individuals like us and therefore grant us more ownership over our own data. However, to be truly in control of our personally identifiable information (PII) — or self-sovereign — we must have control over the cryptographic keys that give us access to our data. In other words, just because a blockchain is involved doesn’t guarantee users they have more control over their data. The cryptographic keys, which function more similarly to long, complex passwords for securing information, are vital.
When you start putting the keys on a blockchain and proving you have the credentials, you open up new possibilities. A person can verify her or his information on the blockchain ledger rather than have point-to-point contact with an individual or organization. Mobile access to these ledgers would help us push our information to the loan officer or doctor, so instances where many enterprises have complete profiles on us will diminish as both parties’ approach to data evolves to a “shown as needed” model. This and other features of blockchain could completely transform today’s know your customer (KYC) processes by making them more certain.