November 11 2020

Evolution of Decentralized Identity - Collaboration & Global Impact

Isaac Patka

Decentralized identity has matured as foundations, working groups, and consortiums emerged to align standards across companies. However it has diverged significantly from the early days when it was closely aligned with the Ethereum developer community. We see potential to accelerate global impact on underserved populations by bringing these communities together. If there is something you want to build at the intersection of decentralized identity & crypto, we’d love to hear from you.

Email: isaac@bloom.co | team@bloom.co

Telegram: @IsaacPatka

This is the blog post version of the talk I gave on October 30 at the EthOnline impact event

"Decentralize it with smart contracts" could have been the theme of the crypto space in 2017 and 2018. Lending, trading, derivatives, credit bureaus, and identity were all being coded in Solidity and deployed on Ethereum testnets. Some efforts have worked, some have fizzled, and some have branched off in different directions.

Decentralized Identity is a prime example of an effort from the early days of Ethereum that has matured significantly, but independently of the rest of the crypto space.

The true value of Decentralized Identity is the ability to identify everyone, even where data is lacking. Hundreds of millions of people globally are excluded from traditional identification systems. Institutions see these individuals as high risk, and expensive to onboard. Unique, localized dynamics for credit and fraud further add to the problems of financial exclusion.

They don't need on-chain identities

While these individuals are perfect candidates to be onboarded directly into an adaptive and decentralized approach to identity, they don't need on-chain identities - yet. The key detail here is that smart contracts don't solve any problems that these individuals face.

Problem 1: How do we uniquely identify individuals, when they might not be registered with any government systems, or are in a market where government identifiers are frequently stolen & impersonated?

Solution: We can uniquely identify people with a public-key infrastructure.

Problem 2: How do we source data to strengthen individual identities where data is lacking?

Solution: We can leverage traditional and alternative data sources, as well as environmental data, such as P2P relationships and everyday interactions. We can associate this data with public keys associated with individuals.

Problem 3: How do we ensure Decentralized Identity complies with emerging legal frameworks for privacy & personal information?

Solution: We don't store any identifiable information on chain, even at the direct request of a user. Instead, we store it off chain, in a way that only the user controls the access and sharing of their information.

None of the challenges above are solved by putting individual identities on-chain. We realized this mid-way through 2019, at which point we were submitting a mainnet Ethereum transaction for every new user sign-up. We stopped anchoring individual identities, but we never stopped registering new users.

But - they are enabled by blockchain technology!

Most Decentralized Identity approaches are using Ethereum or Bitcoin keys under the hood. An identity wallet is often a wrapper around a simple Ethereum wallet, the same wallets that are used in on-chain monetary transactions, like Trust Wallet.

Decentralized Identity standards are maturing

Concepts that started as smart contract account registries, and attestations have evolved into standards.

BloomID → DID (Decentralized Identifier)
Bloom Attestations → Verifiable Credentials
Bloom Vault → Encrypted Data Vault & Secure Data Store community
Bloom Selective Disclosure Merkle Tree -> Mattr BBS signatures (among others)
Bloom Attestation Smart Contracts → W3C RevocationList2020 spec (among others)
Bloom Share Kit → Presentation Exchange Specification & Credential Handler API (CHAPI)
Bloom Share Kit Payload → Verifiable Presentations

More than 60 DID methods have been invented, none by Bloom. Bloom products have adopted the Element specification which is supported by multiple companies and is based on a protocol called Sidetree, maintained by Transmute and Microsoft (among others).

Identity wallets are maturing as well - here is a video of an identity document verifiable credential being shared with an application, with all data being routed through the user's device.

And the standards are already being adopted and supported by Big Tech as shown in these credential issuance docs on Azure: https://didproject.azurewebsites.net/docs/overview.html

In order to bridge any gap, we need to understand how this technology is being used to impact real people, now

Good Worker is a platform in India that connects blue-collar workers to jobs that fit their skills. Right now, they are correcting inefficiencies in the seasonal worker job market. However, in the future, the data individual workers accumulate as Verifiable Credentials on Good Worker will enable them to unlock adjacent services, like banking, lending, housing and more.

Trustana is a cross-border trade network that connects pre-screened suppliers to buyers in other markets to improve efficiency and expand their customers' markets. As suppliers and buyers transact on the platform, they will accumulate Verifiable Credentials about their business and activity, which they can leverage to get access to adjacent services.

The Health Passports project is an effort in Southeast Asia, where government and labs are working together to re-open travel that has been limited by the COVID-19 pandemic, by issuing digital Verifiable Credentials to patients that contain their test results. Once an individual holds a credential with their test results, they can provide the proof they need to cross a border or enter a work site. In the long term, there are countless use cases for user-controlled, portable, verifiable health data.

Bridging the communities for greater impact

Many of the individuals leading the developments in the decentralized identity community have roots in the Ethereum hackathon community. Winners of previous Bloom hackathon prizes at EthGlobal events have gone on to launch companies around the world based on the principals of open & decentralized identity. If there is something you want to build at the intersection of decentralized identity & crypto, we’d love to hear from you.