Digital identity will be web3’s eureka use case

On December 3, 1992, the world changed. Neil Papworth, an unassuming 22-year-old test engineer, sent the world’s first text message. It was just two words—Merry Christmas—and he had to type it on a PC, but it would soon change how the world communicates.

Cellphones were, at that time, still a novelty. They were effective and interesting, sure. But they weren’t necessary. After all, you still needed both parties to be available at the same time for anything to happen.

They would have stayed that way if it weren’t for text messaging. This new use case of mobile devices made them ubiquitous, and a few years later, text messaging became the most widely used data application in the world.

That type of ‘eureka’ moment is about to happen for another technology. Blockchains are still considered by many to be a novelty, a passing fad, or a dream without a realistic use case. Web3 tech is popular but certainly not ubiquitous.

To change that, we need a text message. Digital identity is just that.

The digital dilemma

If we’ve learned anything from the recent US election cycle, it’s that online perception might just be the greatest political force in the world. Podcasts are essentially long-form debate platforms, social media turns every word into a wildfire, and vice presidential candidates are live-streaming video games.

Our world lives online, and that presents a critical challenge. How do you prove you’re you? We’ve seen deepfakes and other AI-generated content push the boundaries of our ability to tell. Our financial institutions are under immense stress from extremely sophisticated fraud technology, and governments are realizing that traditional identification is no longer effective or trustworthy enough.

Digital identity services are being developed (or implemented) worldwide. But most of them are just mobile applications authenticated by the real-world ID cards we’ve used for decades.

Just like how the original cellphones were just portable versions of the one you had at home.

It needs to be more than that. It’s more than just a portable version of your ID card. It must be irrefutable, unique, and intrinsically tied to your humanity. These ‘personhood credentials,’ as they were dubbed by a group of researchers earlier this summer, are only possible with web3 technology and, I believe, are the use case that will help integrate it into everything we do.

The honeypot

Why is a digital ID service tied to physical IDs, not the answer? Security. A centralized repository of information is ripe for the picking.

There’s an old saying I like to use to explain it. Show me a 10-foot wall, and I’ll show you an 11-foot ladder. There is no way to keep it completely safe from outside forces, regardless of how many guardrails you install from individual hacker groups, other nations, political forces, or even corporations.

Imagine a vault with comprehensive files on every single one of us. Enough details to impersonate, steal, or destroy anyone’s identity. It would be the most valuable bank heist in the history of the world.

Decentralization is the only answer! A blockchain with a built-in identity layer—like the one Concordium has built—is a starting point, but there needs to be more innovation and creative new solutions if we’re going to keep our humanity protected.

The modern wallet

For as long as we can remember, identification has just been a piece of paper with your name on it. There have been improvements and changes, like adding a photo or scannable barcode. But IDs are still, at the root of it, a piece of paper with your name on it.

Today, there’s a new way to do things. As explained by JP Morgan, digital identity has four distinct building blocks. The first three are simple:

●  Identifiers: Things like your name, email address, or account number.

●  Identity attributes: Data points like where you went to school or where you work.

●  Reputation: Things you’ve participated in, your social followings, or content you’ve created.

In years past, a Twitter account with the right username, a blue check mark, and three million followers would be enough to confirm it’s who you think it is. That’s not true anymore. Each of these three categories can easily be decentralized. Proof of Attendance Protocol is one technology already used to make reputation certifications.

The fourth building block of our modern identity will be digital assets. You will be able to prove who you are by what you own. Blockchain ledgers will keep immutable proof and record that you are who you say you are.

I don’t mean you’ll use a Bored Ape to confirm your humanity (though you could, I guess). Instead, we will create identity tokens that can’t be transferred, duplicated, or decrypted. They will be the lynchpin in the modern wallet.

The need for caution

But, like for the early text message systems, which were often defrauded, there will be challenges. While the Wild West days of crypto might be behind us, plenty of snake oil salesmen are still on the road.

Digital identity is too important to hand over to the people who will implement it as fast or as easily as possible. It must be a joint effort between government and private blockchain leaders who want to put regulation, privacy, and security first. It must also leave data ownership in the hands of the individual, not in some central repository.

When we do that, web3 will have its eureka moment. It will find its Neil Papworth.

Boris Bohrer-Bilowitzki

Boris Bohrer-Bilowitzki is the CEO of Concordium, a L1 blockchain and technology firm. He worked previously as the chief commercial officer for Copper.co and as the senior relationship manager at Newscape Capital Group, both in London. He attended the University of St. Gallen and holds an MBA from IMADEC University.