Home Features How Does Blockchain Help with Digital Identity?

How Does Blockchain Help with Digital Identity?

Blockchain technology can assist digital identity management by replacing traditional identity and access management strategies with blockchain counterparts.


Digital identity plays an essential role in the information security architecture of every organization. It is an online or networked identity accepted by the organization’s security layout for data and devices access. The aim of implementing digital identity is to maintain and ensure information security in the organization. Blockchain technology provides an infrastructure where data cannot be deleted, manipulated, or hacked due to the data being stored in blocks with fixed storage capacity and encryption. Incorporating digital identity with blockchain technology is crucial for the growth and viability of the digital economy. With such implementations, the level of bureaucracy is reduced while increasing the processing speed resulting in better interoperability between the sectors/departments. 

By Tim Chase, Field CTO – Enterprise, Lacework

Blockchain for Digital Identity 

Digital identity is vulnerable and can be easily compromised when stored on a centralized server. According to a statistic by tykntech, more than 600 million personal details have been hacked since 2017. Credit card numbers, addresses, and other personal/private information were stolen or were leaked. The employees/individuals register themselves by providing accurate data required for authorization and authentication on various platforms. The data entered is stored in different databases on multiple platforms. Data is changed for several reasons, such as the other user or mobile numbers or changes in bank details; therefore, the information isn’t the same across all the databases. The traditional identity management methods have various usability, privacy, security, and globalization issues. 

With time, blockchain technology has developed and evolved significantly. It is an added advantage as Blockchain is decentralized, immutable, and interoperable infrastructure, making it difficult to hack. Blockchain technology can assist digital identity management by replacing traditional identity and access management strategies with blockchain counterparts. Blockchain can authorize and allow users to manage their identities more efficiently and helps them to overcome persisting issues such as data insecurity, fraudulent identities, and inaccessibility. 

How Is Blockchain Efficiently Used in Digital Identity Management? 

Blockchain, which offers decentralized digital identity management methods, is utilized in various ways. Some of the well-known use cases of blockchain technology for Decentralized and digital identity management could be listed as follows: 

  • Self-Sovereign Identity (SSI): It involves the users storing their digital identities on their own devices and managing them on their own. Choosing what information is to be shared with others without a central authority is achieved by SSI, which can be created independent of the nation, state, corporations, or global organizations. 
  • Data monetization: It could be defined as using an individual’s personal data for calculable economic benefits. Instances that are derived from personally identifiable data significantly increase the value of the underlying data. More than 60% of the global GDP is expected to be digitalized by 2022, confirming that personal data’s value will increase with time. 
  • Data portability: Data portability involves the transfer of the user’s data from one controller directly to another without causing any chaos. EU GDPR’s article 20 grants the user the right to data portability. It enhances the user experience and removes the need to verify identities when porting the data to different and various other platforms and services. 

With the help of decentralized identifiers, any blockchain network can identify and verify the data entered was distributed by a trusted entity. This process takes place without storing the data in the database, adhering to the GDPR standards/policies. Decentralized identifiers are responsible for the separation of the data and direct identifiers. It ensures that there is no link or a connection to the user.  

Advantages of Using Blockchain in Identity Management 

There exist many benefits and advantages of using blockchain technology towards digital identity management, some of which could be listed as follows: 

  • The blockchain ledger is immutable and transparent, the fundamental factor for identity management, increasing users’ trust. 
  • Blockchain-based digital identity has many benefits, such as authentication of users over a wide range of online services or online platforms, thus reducing or eradicating multiple logins while guaranteeing a streamlined and smooth user experience. 
  • Decentralized identities are secured using the cryptography method. Private keys are only known to the user, and public keys are distributed on a large scale. The pairing of the private and the public key results in authentication when the public key holder can verify that the private key holder sends the message and encryption, where the paired private key holder possesses the decryption key to decrypt the encrypted transmission of the public key. 
  • With the help of Blockchain-based digital Identity, users can manage their own digital identities with ease. 

Future Trends and Challenges 

It is well understood that blockchain-based digital identity management is robust and encrypted to ensure security and ease of portability. Hence, mandating its effective incorporation for improving the socio-economic well-being of the users, which is mainly associated with digital identity. With time and advanced technologies, digital identity has become an essential entity that enables users to have various rights and privileges. Although Blockchain has various benefits while managing digital identities, it cannot be considered a panacea. Blockchain technology is continuously developing, and though it offers multiple benefits, there also exist various challenges when aiming to completely replace the traditional identity management methods with the latter. Some of the known challenges include the constantly developing technology and the lack of standardization of data exchange. 


Considering the benefits that come with transparency and the trust earned through blockchain frameworks, numerous organizations are merging to ensure interoperability across their borders. Decentralized digital identity systems are on the rise. Almost everyone is switching from the traditional identity management systems to Blockchain-based digital identity systems, which may develop to a greater extent in the near future, with many more advantages. As the technology matures, solutions will evolve and can achieve the best interfaces with robust security.

About the Author  

Tim chaseTim Chase carries a strong technical experience in testing and quality control endorsed by many software & security engineers and leaders and is also an expert at resolving challenging security incidents. He has nearly 20 years of experience with digital and information security architecture, which augments his ability to manage security and risks. Tim is also a member of the Global Advisory Board for EC-Council, a renowned speaker, and a columnist associated with multiple cybersecurity forums, as well as a hard-core information security professional who takes pride in coaching and mentoring strong teams that deliver excellence in technology and business. 


Views expressed in this article are personal. The facts, opinions, and language in the article do not reflect the views of CISO MAG and CISO MAG does not assume any responsibility or liability for the same.