Misturat AlausaYou know when you sign up for a service, verify your identity, or access an account, you’re often asked to provide your name, date of birth, and a form of identification? Have you ever wondered what happens to that information after you submit it? This information is often collected, stored, and managed by organisations that serve as intermediaries between you and the service you want to use.
Decentralized Identity (DID) provides a different way of managing digital identities. Instead of relying on a central organisation to store and manage your digital identity, it gives individuals more control over how their credentials are stored and shared. It uses technologies such as blockchain, cryptography, digital wallets, and verifiable credentials to create a new approach to digital identity. This allows people to prove who they are without always having to share all of their personal information.
What Is Decentralized Identity (DID)?
Decentralized identity is a digital identity model that gives individuals greater ownership and control over their identity credentials, rather than relying entirely on a central authority or platform. A simple way to understand how it works is to think of it as a physical wallet. Your physical wallet may contain your driver’s license, national ID, or office badge. When you need to prove your identity, you take out the specific card you need and present it for verification. However, the card remains in your possession, and you choose when to share it.
That is the concept DID aims to bring to the digital world. It allows individuals to store digital credentials in an identity wallet and share only the information needed, rather than repeatedly submitting personal documents to different organizations. For example, if a website needs to verify that you are over 18, DID could allow you to provide only the information required to confirm your age without revealing other details, such as your home address or identification number. This approach is closely related to self-sovereign identity (SSI), which gives individuals greater control over their digital identity.
How Decentralized Identity Works
Decentralized identity typically relies on three key components: digital wallets, verifiable credentials, and decentralized identifiers.
- Digital identity wallet: Instead of carrying physical credentials in a wallet, individuals can store digital credentials in a secure identity wallet on their device. This wallet allows them to manage and present their credentials whenever they need to prove something about themselves.
- Verifiable credentials: Trusted organizations such as banks, universities, employers, and government agencies can issue digital credentials containing information such as proof of identity, educational qualifications, or professional certifications. These credentials are digitally signed, allowing another party to confirm that they were issued by the stated organisation and that the information has not been altered.
- Decentralized identifiers: It gives people, organizations, and other entities a way to create and verify their digital identity without depending on one central organization. Blockchain and other decentralized technologies can help support this process. However, this does not mean that personal information has to be stored on a blockchain. Instead, cryptographic proofs and publicly available records can be used to confirm that digital credentials are genuine.
Together, these components enable individuals to verify information about themselves without having to repeatedly submit copies of their personal documents.
Want more insights on digital identity, trust, and emerging technology? Follow Prembly Insights for more.
Why DIDs Could Change Data Ownership and Privacy
In many cases, people have to share more information than an organisation actually needs. Decentralized identity can help address this by supporting a more privacy-conscious approach, allowing individuals to share specific pieces of verified information instead of an entire identity document. This could also benefit businesses by reducing the amount of sensitive personal data they need to collect and store, which may help minimize the risks associated with maintaining large centralized databases.
However, decentralized identity does not eliminate the need for traditional identity verification or compliance processes. Businesses still need reliable ways to confirm that credentials are genuine, know who they are dealing with, and properly assess potential risks. This is an opportunity to create an identity ecosystem where verification and privacy can work together. As digital services become more connected, decentralized identity could change how people verify who they are online. It can give individuals greater control over their credentials while providing businesses with new ways to establish trust.