The Future of Digital Identity and Its Real-World Impact

#HolochainChats with Lohan Spies

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How do we prove who we are in an increasingly digital world? 

The concept of identity has evolved from social constructs to centralized digital profiles defined more by technology companies than individuals themselves. Self-sovereign identity (SSI) aims to put personal ownership back into the equation through emerging solutions centered around distributed ledger technology and cryptography. 

In a conversation that ranged from philosophy to blockchain technology, Lohan Spies discusses how SSI and related innovations might empower youth in developing nations, enable marginalized populations’ participation in regulated economies, and help regenerate land while fighting climate change. 

Along the way, complexities around public/private key management, unintended consequences of new systems, and the excitement of driving real global change through collaboration come clearly into focus.

Defining Digital Identity

The concept of identity has shifted greatly in the digital age. As Spies explains, "The traditional way for identity was very much a social construct." People associated names and faces and built interpersonal trust through repeated interactions. 

The internet lacked an innate understanding of identity, however; online systems resorted to centralized user profiles attached to email addresses, unique IDs controlled more by service providers than individuals.

This approach enabled security risks, data breaches, and unilateral account shutdowns without recourse. Spies contrasts these realities with self-sovereign identity "where you have full control and ownership of your identity, meaning nobody can take it away from you." Control and ownership sit right at the crux of the philosophical and practical divide.

Realizing the Potential of Self-Sovereign Systems

For digital identity solutions to reach their full potential, Spies believes several essential ingredients need to coalesce. "The first thing that's extremely important is that we do have standards and video specifications," he explains, "because that is the one thing that aligns us or not."

However, Spies cautions against rigid standardization stifling innovation, noting that "some people might have a different view...but ultimately, I think we're going to get to a point where we will diverge into a common understanding of what's acceptable and what's not acceptable."

This balanced approach allows for experimentation on the fringes by "people that are willing to go through those extremely complicated use cases" while still working towards interoperable frameworks.

“The hope aligns us,” Spies notes of identity standards while allowing for “people that are willing to go through those extremely complicated use cases” on the fringes.

Second, spreading access to cryptography and related capabilities helps empower individuals rather than leaving specialized knowledge in the hands of a small subset of people. 

We kind of call it democratizing in a way, the concept of cryptography, Spies explains regarding this drive to distribute understanding and control, really giving it to everyone to leverage and utilize to their own benefit.

Finally, governance structures need to evolve in tandem with technological ones. From local contexts to national digital identity initiatives spanning public and private entities, multipronged coordination paves the road to real-world adoption.

The payoff of this coordination could prove immense in daily life for everyone. Imagine crossing borders digitally rather than waiting in queues. Consider accessing regulated financial systems regardless of formal government identification documents. Or think about connecting payments directly, not just to account numbers. 

In the realm of payments, self-sovereign identity could enable direct transactions without relying on intermediary institutions. "I think there's just a natural progression to bring identity and payments closer together," Spies explains.

Rather than sending money to an account number and routing through banks or payment apps, funds could move directly between verified individuals. The secure digital identities of self-sovereign systems would serve in place of centralized platforms that currently mediate transactions.

Use Cases, Obstacles, and Promise

If coordinated properly, self-sovereign systems could greatly benefit populations in need across the globe. Spies points to the YOMA project from UNICEF, which empowers youth in developing countries, where he is working to help integrate digital identity technology to increase access to education and employment credentials.

Other models help shift marginalized groups away from all-cash economies into greater digital inclusion. Environmentally, distributed identity solutions offer promise by securely tracking and verifying sustainability data. Spies details one such application in regenerative agriculture:

From the ground, it's verifiable data...we can make sure that a human or IoT device can be identified and how we can make sure that that data feeds up into the chain of various layers. But we know we can trust the data that originated from the ground.

This trusted provenance allows for the creation of what Spies calls "nature certificates," which go beyond traditional carbon credits:

Of course, obstacles remain in these early days. Complexities of public/private key management persist, though various startups work toward solutions. Mainstream understanding and education around the relevance of self-sovereign systems currently fall short as well. As the internet’s unintended impact shows, we must take care to avoid exclusion where promises of inclusion abound.

However, with expanding real-world deployment comes cause for optimism. Spies expresses excitement “to see this technology really being adopted, really solving real-world problems.” 

New collaborations between digital identity projects are driving tangible progress in addressing real-world challenges. If holistic human needs and ethical considerations guide developers and adopters alike, efforts like YOMA and Holochain could portend more equitable and empowered societies ahead.

Originally published on the Holochain Blog by Holochain on 13 March, 2024.

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