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Decentralized Identifiers: The Much-Needed Solution For Better Data Privacy & Security

Disclaimer: The Industry Talk section features insights by crypto industry players and is not a part of the editorial content of

The existing version of the internet, also known as Web 2.0, is overly reliant on “digital identifiers” from centralized intermediaries like Facebook, Google, network operators, and email providers that connect us (the users) to the worldwide web. This has led to a significant rise in problems related to data security, ranging from identity theft, targeted hacking, and much more.

A possible solution in the form of decentralized identifiers (DIDs) has emerged as an answer to this problem, designed to enable users to retain more control over their data and how or who they want to share it with.

Yet, to fully understand the concept of decentralized identifiers, it first demands a thorough understanding of how things work in the existing format of the internet.

The Problems With Existing Identifiers

By enabling communication between multiple platforms through services like OAuth2, big tech companies, eCommerce platforms, and several other industries centralize user data. While this has made life easier for us and afforded us immense convenience, it has also led to several critical problems.

For instance, the majority of the users employ the “Sign In With Google” or “Sign In With Facebook” options to register on a new website or platform. While these OAuth2-powered options make things seamless and accessible for users, it also leads to data privacy issues. The data harvested from the users is stored in centralized servers, making it an easy target for hackers. As a result, an immense amount of PII (Personal Identifiable Information) is leaked across the web, leading to other severe problems like identity theft.

Another critical problem with the current version of digital identity management is that much of a user’s personal information is shared across multiple platforms, making it difficult for users to track how their personal data is being used and monetized. This also leads to the user gradually losing control over the personal data that’s rightfully theirs.

As we transition to Web 3.0, the decentralized version of the internet, cross-communication between different platforms will be a key factor in overcoming the limitations of Web 2.0. However, users will still need to prove their identity online to access certain products, services, and content. This means that tons of data will be generated and recorded across blockchain networks.

While data stored on the blockchain is abundantly more secure than comparable centralized servers, without a full-proof data security solution in place, Web 3.0 platforms will gradually mimic the same characteristics they were designed to disrupt and replace.

Enter Decentralized Identifiers

Decentralized identifiers come into this picture to reflect this changing approach to the web. According to Version 1.0 of the DID Specification proposed by W3C (World Wide Web Consortium), “decentralized identifiers (DIDs) are a new type of identifier that enables verifiable, decentralized digital identity. A DID refers to any subject (e.g., a person, organization, thing, data model, abstract entity, etc.).”

Think of DID as your “digital identifier,” just like your real-world identifiers like passport or driving license, but powered by blockchain technology. Each DID is unique, immutable, and globally identifiable. Individuals and organizations can create as many DIDs as they want to connect with other platforms, making it near impossible to target individuals using data correlation.

Additionally, DIDs are fully decentralized, free of centralized identity providers and third-party services, which means that you (the user) are in complete control of your data. But the best part about DIDs is that you can prove what is asked of you without revealing any other information. For instance, if an online platform needs you to verify your age, you can use your DID to prove that you’re 18 without having to reveal your actual date of birth.

In today’s digitized world, data is power. And that power is currently held by only a handful of companies that have built entire business empires around it. DIDs, on the other hand, are designed to redistribute this power to the users, eliminating all intermediaries, rentiers, and unnecessary gatekeepers from the equation. 

DIDs leverage blockchain technology’s transparency, immutability, and security features to restore control to users, allowing them to represent their identity online without revealing their personal information while exerting absolute ownership over their data. Since the entire network is peer-to-peer, DIDs facilitate a secure channel for data exchange between either party. In addition to this, the decentralized nature of this novel approach allows a “digital identity” to be verified at all times, unlike centralized servers which are more prone to outages and hacks.

KILT Protocol, developed by BOTLabs GmbH, is one such project harnessing the power of DID and blockchain technology to give back users control over their data. This open-source blockchain protocol allows users (and organizations) to issue verifiable, self-sovereign, and anonymous Web 3.0 credentials. KILT can be used to create a diverse range of DIDs for businesses, services, and machines that use identity verification.

At present, KILT Protocol is being deployed by the German federal energy agency (dena) to enable data exchange via machine identities and by DeBio Network to enable labs and bio-medical facilities to embed credentials on medical test results. Furthermore, the German Federal Ministry for Economic Affairs and Energy uses KILT Protocol for GAIA-X, an alternative to today’s centralized cloud infrastructure.

The platform recently launched its flagship SocialKYC product, a digital identity management solution that allows users to store and manage their personal credentials while giving them the power to decide which online services can access parts of their private information. SocialKYC aims to be the definitive future alternative to the existing KYC (Know Your Customer) verification process with this effort.

With SocialKYC, you can traverse the metaverse and Web 3.0 without worrying about data privacy. It can be used to issue self-sovereign identifiers, establish on-chain DIDs, and then connect “verifiable credentials” to the DID. Currently, SocialKYC supports Twitter and email. The team is now endeavoring to add more social platforms like Discord, Twitch, and GitHub, alongside other booming industries like eSports, healthcare, academics, and emerging areas like decentralized social media networks and the metaverse.

Overall, DIDs are the game-changers in the ongoing transition to Web 3.0. Other than being fully decentralized, DIDs solve the problems of data privacy and security while at the same time giving users more control over their data.