Is Blockchain a solution for digital ID systems?

Is Blockchain a solution for digital ID systems?

Your online data isn’t safe. That’s what some experts say, following high-profile data leaks in the last few years. So how can we protect ID against breaches?

It’s a question that even the highest-profile tech companies with sensitive customer data don’t have an answer for. Whether hackers are involved or data is being shared with third parties without consumers’ consent, it’s an epidemic in the modern world. Cambridge Analytica infamously harvested data from at least 87 million Facebook users. Google confessed that app developers have access to consumers’ Gmail accounts. On a whole other scale in India, cybercriminals charged Rs500 for a portal into the country’s Unique Identification Authority. Terrifyingly, the records of a whopping 1.1billion Indian citizens were at the payer’s mercy.

Privacy online is a very public topic and managing vast quantities of data these days comes with great responsibility. It’s a burden that tech companies everywhere are trying to find effective platforms to help manage.

One such solution may lie in blockchain. It was perhaps never intended for this technology to become a ubiquitous response for digital identity protection but more and more real-world companies are implementing blockchain-based platforms.

What is blockchain?

Bitcoin and blockchain are not the same thing. That’s the first misconception to address.

Blockchain is the fundamental technology behind cryptocurrency. Satoshi Nakamoto was the first person – or persons – to implement blockchain as a concept. Nakamoto built bitcoin around blockchain in around 2009, with blockchain acting as a data structure holding records. It ensures security and decentralisation, providing a “digital ledger” of transactions for anyone on a network to see. A network is essentially a chain of computers that must all approve exchanges before they can be verified.

So imagine that you want to send money to a friend. A“block” online represents the transaction: every computer in the network must approve the block, which is then added to the “chain”, which displays a transparent record of all transactions made within the network. It’s then that the money moves from you to your friend.


Blockchain offers something customers want and the race is on for companies to introduce decentralisation.


The likes of Microsoft are looking to put blockchain in place for payments, but what’s revolutionary is how the security of blockchain is being explored in digital ID platforms. The Chief Executive of the Canadian Bankers Association (CBA) has claimed the organisation are looking into using a blockchain-based solution as part of a future open-banking ID system, whilst the European Union released a report in December 2018 championing the idea of governments implementing blockchain-based self-sovereign identity systems.

Will companies start to implement blockchain?

Personal data is a profitable market. It’s been described by some as “the new oil”, with data brokers collecting detailed profiles. This is a billion dollar industry that many large organisations will be hesitant to cut ties with.

Self-sovereign digital identity systems are still in the slow development phase. The difficult part is getting consumers and businesses used to a credentialing ecosystem, but once more companies implement systems like this, the hope is that they influence the mainstream a little more. With a number of blockchain-based ID platforms out there at the moment, the expectation is that eventually, a select few dominant systems will emerge.

Decentralised digital ID offers transparency and security to users. Despite competing platforms, data requires flexibility and security. Blockchain offers something customers want and the race is on for companies to introduce decentralisation.

Blockchain is being used by big industries already

Major names in the financial sector are using distributed ledgers for use in banking. Some video games are rooted in blockchain technology. A number of organisations are working to implement blockchain in supply chain management and Spacechain have even launched two nanosatellite-based blockchain nodes into orbit.

It’s only a matter of time before blockchain is more commonly understood in the mainstream. What seems now like a buzzword associated with bitcoin could become one of the most important developments in the world of digital ID and data privacy. As notable organisations involve themselves in the sector with increasing regularity – coupled with the interest at governmental level – the future looks bright for blockchain.


Your data is important. Blockchain could be the solution to keeping it safe for good.

blockchain, Blockchain, Is Blockchain a solution for digital ID systems?

Mark White

Mark is a writer/editor who has written online and in print.