What is a decentralized identification system?
Decentralized IDs (DIDs), also known as decentralized identifiers, are digital IDs that replace individuals’ identifiers with self-owned IDs stored on the blockchain and their accompanying data on personal devices.
What is the significance of DIDs?
Due to their capacity to guarantee data integrity as well as end-user privacy, decentralized identities have grown in popularity over the last five years.
Three factors contribute to the importance of having a decentralized ID:
1. Ownership of data
Most of us today actively share our personally identifiable information (PII) with brands in exchange for convenient and tailored experiences (e.g., name, age, phone number, etc.).
When you create an Uber account, for example, you provide Uber your PII, In exchange for having an easy payment method without having to dig cash out of your wallet or tap in your credit card number every time you hail a cab, and most likely your credit card information.
2. Data security
Sharing personal information with corporations makes it more vulnerable to cyber-attacks and data breaches. More than 4,000 security breaches were reported publicly by the end of 2021, exposing 22 billion sensitive records, according to reports.
Using DIDs to communicate with businesses safeguards your personal information from being stored on centralized and vulnerable databases. However, you would be responsible for preserving your data saved on your devices.
Businesses will be able to assure compliance with global data privacy requirements while maintaining credible and verifiable KYC processes.
3. Identity consolidation
DIDs reflect all information about an individual, including demographics, financials, and social status, and offer users and companies a single version of the truth. This eliminates the need for several identities for various platforms, as we currently do (e.g. for each social media platform we have a different account).
How does Fractal make this possible?
Fractal ID technology provides transparency to data owners and ID users by letting them establish IDs and store their credentials within their wallets, as well as determine with who those credentials are shared.