Blockchain and digital identification

Scandals related to personal data leak happen painfully often, and the consequences become worse each time. So in society there is a serious need for more reliable ways of storing and transmitting personal data, which the blockchain network can fully satisfy.

The authenticity of any information recorded in the blockchain block is ensured by the simultaneous operation of many network nodes. And if you try to make changes to one block, it will quickly jump out of the general chain, while maintaining the data reliability.

Therefore, the blockchain network can be used as a verifying authorized body, guaranteeing the validation and reliability of digital documentation of any kind. The chance that someone will successfully change the contents of such a document is negligible. So any such document becomes no less reliable and resistant to falsification than an official certificate issued by any government agency and sealed with a signature.

Cryptography and data protection

The main blockchain network advantage in confirming the data authenticity is that everything happens not only automatically but also without familiarizing yourself with the contents of this data. Most often, the following working mechanisms are used:

• Hashing. Any text and any picture can be converted into a unique hash — a combination of letters and numbers of a given length. This is something like a “digital fingerprint”, according to which you can recreate the original picture, if necessary. And instead of the original documents, it is quite possible to operate with their unique hash images.
• Digital signature. If you hash the official document, be it a passport, marriage certificate, title deed, you will get a digital fingerprint. This fingerprint can then be turned into a unique digital signature, using special algorithms specific to each organisation or system, which eliminates their misuse. It means we have the first encoding level — the basic image hash, and the second level — digital signature. Possession of this signature indicates ownership of both the hash and its original source.
• Zero-disclosure evidence. The ability to confirm the data authenticity without familiarizing yourself with their contents. The same digital signature, for example, says nothing about the content of the original document, but can be used to confirm the right to possess it.

Self reporting

This is a concept according to which the user decides whom and to what extent to provide information about him- or herself. So, for example, a person can share complete information about the number and password of his/her credit card with someone he/she trusts, and can use a digital signature taken from this card, which will still allow a one-time transaction to be made without looking at specific data. At the moment, unfortunately, the user is forced to rely on the conscientiousness of the data recipient and the reliability of the data storage.

Pros

High confidentiality. When the user decides what personal information to provide, the risk of leakage is significantly reduced. And even if the central server where the data is stored is hacked, the criminals will still not be able to use it since it still needs to be decoded. In addition, a protocol with zero disclosure allows you to effectively use confidential information without fear that someone might read it.

High reliability and stability. Making changes to the stored information is almost impossible. Decoding is real, but rather difficult. Taking digital code is also quite difficult, especially if you use some tricks when creating it, such as a time reference, which turns each record into a unique and “single-mission” one.

Cons

Being highly resistant to traditional hacking methods, storing information using the blockchain is still vulnerable to a certain kind of cyberattack and fraudulent activity.

The most common technique is the interception of encoded information and its blind use without decoding. Or, which also occurs, a combination of various pieces of information that the system responds to as reliable since each individual piece is reliable. Simply put: a criminal can intercept the encoded credit card information and substitute it in a standard transfer report; each element is reliable, but in general, it is fraud.

In addition, small decentralised systems are less resistant to 51% attacks, so the main defence mechanism of the blockchain can be trivially disabled. Alternatively, you can use small private blockchains where only proxies act as validators. This, of course, is a step away from decentralisation, but it provides some security.

Conclusion

Despite the fact that the blockchain technology is now used primarily for working with cryptocurrency, it also has the potential to work with any other unique information. High resistance to hacking, reliability, transparency and anonymity — all these elements contribute to this. It is possible that in the future, specialised services will be opened to directly produce digital identifiers and digital signatures taken from official documents that can be used in any areas of human activity.