Decentralized Blockchain IDs: Everything you Need to Know

Decentralized Blockchain IDs: Everything You Need To Know. For many, the present identity management models are ineffective. For instance, if the identity system is paper-based. Such as a birth certificate held in the basement of a town hall, it is vulnerable to loss, fraud, and theft.

However, what if there was another way? Decentralized blockchain identification solutions may make it easier to use and preserve your critical identity documents while retaining them permanently in your control.


Decentralized Blockchain

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What Is a Decentralized Blockchain ID?

While a digital identity reduces the danger of loss. It is vulnerable to cybercriminal attacks if it is stored on a centralized network. In 2020 alone, the FBI’s IC3 received 791,790 cybercrime complaints, totaling over $4.1 billion in reported losses.

The majority of identity systems in use today are insecure and out of date. This is set to change, though, with the advent of decentralized blockchain IDs.

The World Wide Web Consortium (W3C) developed the concept of Decentralized IDs (DIDs) in collaboration with a number of organizations. Including the Decentralized Identity Foundation, Microsoft, and IBM.

The notion revolves around the basic premise of restoring users’ authority over their identities through the use of Decentralized IDs in place of usernames.

Decentralized identification is essentially a blockchain-enabled point-to-point interchange of information about individuals, organizations, or things. It was designed specifically for a world comprised of numerous devices, networks, and systems that adhere to global standards.

Decentralized IDs, once realized, will give users complete control over their own identity. Users will be able to specify the amount to which they want to disclose or restrict information in a particular situation or engagement. This groundbreaking concept reduces the necessity for excessively disclosing and sharing information.

Why Is It Necessary to Have Decentralized Blockchain IDs?

In the majority of circumstances, the current identity systems are outside our control. They are issued by independent bodies that determine how and where they are shared, as well as when they might be canceled.

They have the potential to divulge sensitive personal information that we wish to keep private. Malicious actors are frequently able to fraudulently recreate these identities, resulting in “identity theft.”

To gain a better understanding of the need for Decentralized IDs, it’s necessary to examine current identity management models and their associated shortcomings.

  • The initial identity management strategy relied on individuals being provided credentials in order to access specific services. Any organization assigns each user wishing to communicate with the organization a username and password. This results in a substandard user experience, as you are required to register and remember your login credentials for each website you visit.
  • Due to the first identity management model’s poor user experience, third parties began offering identity credentials for access to services and websites. The “Login with Google” and “Login with Facebook” capabilities are frequent instances of this concept. Users must remember a single password and use it to log in to services and websites using this paradigm. As a result, firms such as Google and Facebook have become trusted intermediaries. While this enhances the user experience, it raises questions about privacy and security.
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The advent of Blockchain technology and Decentralized Identifiers paved the way for the production of Decentralized Blockchain IDs that enhance identity management security and privacy.

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Data Privacy for Individuals

While the United States lacks a central federal privacy law comparable to the GDPR. Some state privacy laws have already been enacted.

Individuals are frequently compelled to provide applications access to their personal information and data. The majority of which is superfluous and avoidable.

Decentralized IDs provide users more control over their own data, allowing them to limit the amount and scope of data they are required to divulge in the absence of decentralized IDs.

Additionally, by maintaining the security of their data, customers can safeguard themselves against privacy breaches, which have resulted in enormous amounts of tangible and intangible losses.

Better Compliance for Organizations

Legislation addressing cybersecurity, data breaches, and privacy is being drafted and introduced.

Decentralized Blockchain IDs may be similarly advantageous for firms, as increasing data restrictions increase the risk associated with operations and initiatives requiring user data. With the implementation of legislation such as the GDPR, firms face significant commercial risks and liabilities in the event of a breach.

Decentralized IDs mitigate these concerns by enabling enterprises to avoid gathering sensitive data that may be irrelevant to their operations.

They may focus their data collecting and storage efforts on what is truly necessary, allowing them to maintain corporate IT accountability.

Accessibility Enhancement

According to a World Bank estimate, approximately 1 billion individuals lack official identification. While the world continues its march toward the digital revolution, the World Bank’s inequity remains unsolved. To prevent the digital divide from widening further, the concept of Decentralized IDs is a positive move.

Inadequate identification is a barrier that prevents people from accessing critical facilities and services.

By providing more people with identities using blockchain-based decentralized IDs, the discrepancy would be reduced. This will increase their access to facilities that will help them enhance their living conditions and possibilities.

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How Does the Decentralized Blockchain ID Work?

There are various critical components necessary for the operation of Decentralized Blockchain IDs.

Decentralized Identifiers

The primary component is worldwide unique and durable decentralized identities or DIDs. They are totally produced and controlled by the user. DIDs are protected by a private key that is only accessible to the actual owner.

Additionally, a single individual may have many DIDs, allowing users to specify the scope and volume of data they wish to share for a particular purpose.

Decentralized Systems

All of this is connected and enabled through the Decentralized Public Key Infrastructure (DPKI), which comprises public key material, authentication descriptors, and service endpoints.

The process and features necessary for DPKI are developed using blockchain technology, which creates a safe and reliable platform for transmitting all information.

Needless to say, identities based on blockchain-based mediums are naturally more secure and safe than identities based on traditional channels, which is precisely why Decentralized IDs should work as intended.

DID User Agents and Attestations

DID user agents (applications) would be required to assist end-users in interacting with the ecosystem by assisting them in creating, managing, and utilizing DIDs. Microsoft is developing such an agent, which will function similarly to a wallet. Allowing users to manage their DIDs and everything linked with them.

Users will be able to generate, present, and validate claims through the DID attestations component. Which will encourage trust between users and the system. These attestations would be based on industry-standard protocols and formats. Therefore adding to the system’s integrity and reliability.

All of the components would complete the loop of a user’s contact with the systems. Allowing this ecosystem to operate smoothly and autonomously.


The concept of Blockchain-based DIDs enables us to continue evolving, growing and creating. While maintaining our privacy and authority over what we communicate.

Of course, the viability of this idea is contingent upon its flawless integration into current ecosystems. But throwing decentralization into the mix is undoubtedly a step in the right direction.

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