3 ways blockchain tech can protect against identity fraud

Nick Brogden
3 ways blockchain tech can protect against identity fraud

Identity fraud is the digital world’s biggest problem, but it doesn’t have to be that way

So much good comes from a digital ecosystem. People collaborate in creative and productive ways like never before. But the ability for bad actors to hijack and manipulate user data leads to incredible friction and fear.

Blockchain is one of the most promising ways to protect users’ identities. And as organisations develop trust ecosystems and protocols for user-controlled data sharing, the internet becomes a safer place.

Since blockchain is colloquially known as “the internet of money”, safety has always been a top priority. Here are three ways that blockchain is protecting people from identity fraud while enabling them to act as sovereign digital citizens around the world.

1. Blockchain Stops Data Oversharing

When corporations control data, they tend to want as much of it as possible. It’s lucrative for Facebook to collect every last piece of data from their users. They collect photographs, social interaction metrics and all kinds of other information. Why wouldn’t they? It makes them money. Unfortunately, it also harms the end consumer.

Data oversharing is a huge problem. Users who simply want to explore a new app for a few minutes will accidentally share their entire life history. This will not work as people continue to put more of their data online.

Blockchain enables users to control each piece of data on their identity. They can verify that they only share the minimum data necessary, such as a name or even a zero-knowledge proof of age, to travel through the digital space without revealing information they’d prefer to keep private.

Also read: Cashless payments come with security and privacy challenges from the viewpoint of consumers and businesses

2. Organisations Will Also Benefit From Secure Identities

The benefits of robust identity security apply to organisations as well. One person I have seen talking a lot in this space is Jed Grant of the blockchain identity platform Peer Mountain. In a recent AMA, he points out that zero-knowledge proofs will help companies serve their customers without collecting unnecessary data. He gives the example of an alcohol company like Jack Daniels using a blockchain system in a vending machine to verify a user’s age without collecting any other data. They could then provide proof of verification to the government to show that they have followed all regulations relating to the sale of alcohol.

Most organisations would be better off not collecting so much user data. While some companies like Facebook have grown rich and powerful from data, others find this information to be a huge liability. Much like legal paperwork and accounting, data security is a huge responsibility that must be managed on a daily basis. With blockchain, these problems can be left for the users to handle as they see fit. It’s a win/win situation.

3. Blockchain Enables Trust Ecosystems

Today’s digital space forces users to blindly trust people and organisations with no way of verifying trustworthiness. It’s like trying to buy a house without being able to do due diligence. To unlock the real value of the internet, trust must be measurable on a moment-to-moment basis.

Blockchain’s trustless nature enables the development of trust ecosystems. Reputation scores, like those seen on the Steem blockchain platform, can give people a quick way to assess trustworthiness.

As time goes on, much more nuanced ecosystems of trust will emerge. Reputation will be more than a single score representing a person’s actions in one social ecosystem. Instead, users will be able to measure anybody on any trust-based metric from the data available. This will work for financial applications like SALT, wisdom-of-the-crowd applications like Augur and much more.

Identity is the Next Big Thing

With all of the mania around big data and analytical science in the last decade, there has been a serious lack of conversation around individuals’ identities and data safety. Blockchain is turning the tide, allowing for the development of platforms that give users control and security when they participate in digital ecosystems.

The world of identity is heating up and we are at the very beginning. This article explained three of the cutting-edge developments blockchain is bringing to the world of identity. There are many more to be discovered in the coming years, so keep an eye out for continuing developments in this space.

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