The Decentralization of Identity

Decentralized identities are to identity what cryptocurrency is to money: complete ownership

Mutual recognition of identity is essential for virtually all human interactions. It denotes authenticity and is a prerequisite for trust. The majority of interactions that do occur within a given community are based on the ability of participants on some level to identify themselves.

In fact, early human communes relied on the ability of members to identify each other to function. What has changed nowadays is that we live in gatherings with populations greater than Dunbar’s Number, meaning we cannot possibly identify and relate to all those we live with.

Semi-formalized methods of identification are one of the key reasons our species is the only vertebrate able to live in larger societies.

The rise of digital networks that are geographically agnostic has led to new types of identifiers. Today, the most frequent identifier most individuals use are emails and passwords, which enable us to create accounts with websites and applications to establish a relationship. This creates digital identities which we use to interact in a virtual world.

The issue that has arisen with our digital identities and the accompanying data is that it is collated: lumped together to create a rather accurate digital representation of ourselves. This in itself is not an issue, the issue is that there is little to no transparency over how they are managed by the intermediaries which are trusted to manage them. Unfortunately, happenstances such as the Cambridge Analytica Scandal have shown that this data is sometimes put to use for less-than-savory purposes: eroding our faith in these intermediaries.

This means that no potentially negligent/malicious third parties need to be trusted with our Personally-Identifying Information (PII) and that our identities may be managed by ourselves; granting us the ability to manage and leverage our reputations and identities to access services in a trustless way, such as obtaining an undercollateralized MakerDAO or Compound loan.