The Future of Digital Identity: How Decentralised Identities Will Disrupt Finance, Education, the Creator Economy, and even…Pet Care.

The Future of Digital Identity: How Decentralised Identities Will Disrupt Finance, Education, the Creator Economy, and even…Pet Care.

Digital identity is set to redefine how individuals, organisations, and, yes… animals… interact.

Broadly speaking, digital identity refers to a set of attributes linked to an individual or entity that are digitally authenticated and verified. Historically, identity verification relied heavily on centralised institutions such as governments or banks, which are often inefficient, siloed and prone to breaches. Now, we're evolving from these centralised systems to user-owned, decentralised models. This shift is exciting because it offers something radically new: control.

Instead of having your identity spread across multiple platforms, a decentralised ID is like your personal passport for the internet, allowing you to prove who you are while only sharing necessary information. This can boost privacy in industries such as finance and healthcare, transforming how individuals and institutions handle data.

This transition is driven by Web3 technologies, particularly blockchain, decentralised identifiers (DIDs), and zero-knowledge proofs (ZK). DIDs enable users to create and manage their digital identities independently of central authorities, working with verifiable credentials (VCs)-cryptographically signed claims issued by trusted authorities. For example, an employer can issue a VC proving employment, which anyone can verify using the employer's digital signature.

ZK plays a crucial role by allowing someone to prove they possess certain information (like being over 18) without revealing the underlying data, e.g. being able to verify your age when buying alcohol without exposing personal details to the checkout assistant. This more granular privacy aligns with privacy regulations, such as the EU's GDPR, by minimising unnecessary data exposure. Blockchains and applications such as zkPass and Aleo are pioneering this.

Everyone could have a unique ID tied to a blockchain, allowing them to store credentials, such as academic qualifications or financial records, providing a public and verifiable record of their activities, accomplishments, and interests. The cryptographic integrity, immutability and authenticity offered by blockchain make it exceedingly difficult for bad actors to alter or tamper with the stored credentials.

Human ID cards are the most widely known use case due to their presence in Parliament and the press. However, more novel use cases are emerging.

Innovative Use Cases for Digital Identity

In the creator economy, for instance, creators could carry their content across platforms without losing ownership. In finance, where Web3 currently has the most utility, identities could facilitate internet-native credit scores, with users carrying their financial history and reputation seamlessly across borders, solving the issue of fragmented credit scoring systems. Governments are exploring blockchain applications for secure voting and digital banking, reducing fraud and enhancing transparency.

Healthcare is a particularly promising industry, especially in complex systems like the US. An ID could store verifiable medical records that patients can control, enabling secure, quick access for healthcare providers regardless of location. This would eliminate the need for intermediaries and lengthy data transfers, where medical records are often fragmented between states, providers, insurers, and hospitals. Streamlining healthcare services would reduce administrative burdens and allow patients to share only necessary information, preserving their privacy while ensuring a better continuity of care.

In education, students could instantly share verified academic credentials with potential employers, bypassing the delays of waiting for third-party verification from universities. Back in 2021, Ethiopia's Education Minister confirmed that the government is collaborating with IOHKto develop a blockchain-based system for monitoring student performance in schools. Secure, unalterable, records of educational achievements for 3,500 schools, 5 million students, and 750,000 teachers will be created to help identify areas of underperformance and enable better distribution of educational resources. The goal is to give all students blockchain-verified digital qualifications to minimise fake university and job applications.

How Pawpass is Bringing Digital Identity to the Pet World

At Pawpass [LINK usepawpass.com], we're building on these advancements to create digital IDs for animals. Just like humans, pets have records that need to be secure, verifiable, and accessible across different platforms. Our platform lets pet owners store vital information, such as vaccination records, travel documentation, microchip numbers, and health data. These verified records can then be shared instantly with veterinarians, pet services (e.g. pet sitters), or even government authorities for travel.

We envision a future where pets (or, rather, their owners!) and humans can securely and efficiently manage their digital identities. In the pet industry, this could lead to better care, disease prevention, easing international travel restrictions, enhancing biosecurity, and providing peace of mind for owners, among many other benefits.

Transitioning from Web2 to Web3

The transition from Web2 to Web3 isn't without its challenges. On one hand, decentralised identities offer unmatched transparency, security, and user control. On the other, these systems need robust privacy mechanisms to prevent misuse and ensure that users can maintain control over their information, especially as more of our lives (and now our pets' lives!) are recorded on-chain.

A big challenge is refining the user experience and making these systems more accessible. Current blockchain interfaces are complex and not widely understood by the average user. We'll need smoother on-ramps and UX for people to link their offline achievements, such as academic degrees, job histories, or even personal hobbies, into their decentralised wallets. Companies like ourselves and others, e.g., Violet and Spruce, are already working on mapping these real-world experiences onto the blockchain, but we are just scratching the surface. At Pawpass, our customers won't know they're interacting with blockchain or a wallet. Similarly, managing data will require creating new standards and frameworks. Currently, systems like Etherscan allow us to view blockchain transactions, but more sophisticated tools are needed to interpret, filter, and showcase the vast amount of information in a user's wallet.

The potential for decentralised identity to reshape industries both online and offline is enormous. Whether in finance, healthcare, the creator economy, or even pet care, Web3 is building the foundation for a more secure, transparent, and user-controlled digital future. Instead of having our data and identities fragmented across different platforms, we'll own and control our online presence. And at Pawpass, we're excited to be a part of this transformation.

Welcome to techUK's 2024 Digital ID Campaign Week! On the 14-18^th Oct, we are excited to explore how our members are increasing efficiency for both businesses and users, combatting fraud, as well as what creative and innovative ways our members are expanding our understanding of Digital Identities.

Whether it's how we're communicating, shopping, managing our finances, dating, accessing healthcare or public services, the ability to verify identity has quickly become a critical vanguard to the Digital Economy.

Follow us on LinkedIn and use the hashtag #UnlockingDigitalID to be part of the conversation!

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