- Every year millions of people’s sensitive data are exposed through security breaches.
- With the decentralized digital identity, IOTA provides a solution that can close currently existing security gaps and be used in thousands of applications.
Last year, massive data breaches exposed sensitive information from hundreds of millions of people, causing millions of dollars in financial loss. In 2019 the number of security breaches increased by 17% over the previous year. These breaches are most prevalent in the data banking, credit and finance sector, which is responsible for 61% of all incidents. With its decentralized identity, IOTA provides a tool that should solve this problem in the long term.
Many industries can benefit from IOTA’s Decentralized Identity
Sensitive personal data of individuals are collected, especially in the financial sector, e.g. for opening a bank account, for credit assessment or for other provision of financial services. The implemented “Know Your Customer” (KYC) procedures are complex and often cost small and large banks alike millions of US dollar per year.
IOTA’s Decentralized Identity (DID) solution promises to solve this fundamental problem and return control of personal information back into the hands of the owner. DID is also known as Unified Identity and is the digital representation of collected information that can be associated with an object, person or organization and verified through the use of Distributed Ledger Technology (DLT).
The DLT provides a public key with which the stored identity can be verified. This allows any person or entity to verify that e-mail communications or the information available on a web page are genuine and that the person or entity is the one specified.
If an invoice has to be paid, it is signed with the public key of the organisation registered for an identity in a DLT like the one from IOTA. If all information could be verified, the invoice can be paid. This is a very simple way to prevent fraud and theft of personal information.
Dominik Schiener, co-founder of IOTA is convinced that the use of a decentralised identity will soon be part of people’s everyday life:
The use of Unified Identity or Decentralized Identity protocols will soon become commonplace in the financial sector and public services. Distributed Ledgers are perfectly suited to serve as the underlying trust layer in the validation of a person’s identity.
Using DID, personal data, such as a copy of a birth certificate, is not uploaded to a server. Instead, this sensitive data is stored where the holder chooses to store it; mobile phones, digital terminals or RFID chips are also conceivable. If a customer now wants to open a new bank account, he will go to a digital machine where the person only has to scan a QR code via mobile phone.
The bank will make a request to the customer to see if the required data can be viewed. If the bank asks for more data than the customer wants to disclose, the request can be rejected. If the customer agrees, the bank will know within seconds that the data is trustworthy and the bank account can be opened immediately without the need for any further intervention by a third party.
Industry experts see great potential in DID
David Sønstebø, also a co-founder of IOTA, says that this new technology has to be secure and scalable, because only then mass introduction is possible. Furthermore, trust plays an important role in the future adaptation in the population, so that these new systems must be sufficiently tested and proven in practice before they are used in sensitive industries such as the financial sector.
Industry experts such as Richard Soley, CEO of the Object Management Group, and Michiel Sollet, Innovation Manager at the Volksbank, see great potential in DID, as valuable time is lost in the implementation of KYC processes:
There is no waiting time or risk anymore because the data can be trusted, so the customer no longer has to spend time entering repetitive information.
IOTA is working within the recently founded Tangle EE Working Group on the Unified Identity project, which aims to build an interoperable trust layer that enables the decentralized identification of organizations and things. This protocol is intended to promote the adoption of a decentralized identity on IOTA and to lower the entry barriers for organizations.
It remains to be seen whether a proposed solution from IOTA can actually be implemented, as there are other providers on the market and of course the competition is not sleeping. IOTA’s price follows the current market trend by showing an increase of 0.83% to $0.17 within the last 24 hours. With a market capitalization of $476 million, IOTA ranks 24th among the largest cryptocurrencies.
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