See the fate and revolution of digital identity in one article

Kyle Liu, Investment Manager, Bing Ventures

It’s unclear which vertical of Web3 social will take off, yet even the major Web3 social products lack traction compared to their Web2 counterparts. However, there is reason to believe that Web3 social will surpass Web2 in the long run. The reason is simple: while Web2 applications accumulate data on their own, it has a superior network effect. When Web2 products accumulate data in silos, Web3 applications use and contribute to a shared data ledger and therefore enjoy network effects at the ecosystem level, rather than at the application level as Web2 does. We’ll see what the right combination of protocols and applications is to be able to turn this vision into reality.

Difficulties faced by current digital identity solutions

Security & Privacy Issues

Digital identities often require data to be stored and processed on multiple nodes, so there may be risks such as security breaches and data breaches. In addition, digital identities need to address issues such as how to ensure the security of user authentication, how to prevent malicious attacks, and how to implement data encryption and access control. In addition, privacy protection is also an important issue, as these projects often require the collection and processing of users’ personal information.

Short time for users to build reputation

The construction of digital identity needs to evaluate the user’s behavior on the Blockchain, and then form the corresponding reputation evaluation. However, this kind of evaluation requires users to accumulate credit for a long time, and for new users or new users entering a certain field, the on-chain credit system can play a very limited role.

Data is complex and difficult to classify

On the chain, a huge number of operations are recorded every second. So how the identity system classifies these behaviors, boils them down to categories such as transactions, Mint Non-fungible Tokens, third-party DAPP interactions, and then displays them to the Address or domain name corresponding to each identity, is a very complex process.

Reputation system is not interoperable

There are more and more ecosystems centered on public chains, but the Interoperability between public chains is extremely limited. It’s easier to build a reputation system for a single ecosystem than for the entire crypto world. However, improving the interoperability between public chain ecosystems is also a key point to be solved in the future.

Lack of scalability

Because digital identities often require data to be stored and processed on multiple nodes, systems can become slow or unstable as the number of users and the volume of data increases. There are also issues to be addressed, such as how to manage large amounts of data, how to ensure data consistency, and how to enable efficient data access.

Source: Dock

Build a new Decentralization authentication system

The main projects in the current crypto market to build identity solutions can be basically divided into the following categories according to different use cases and implementation methods: 1. Data/behavior tags; 2. Decentralized Finance credit score; 3. Badge/certificate; 4. Privacy proof; 5. Identity resume. This article will start with different subdivision development trends and analyze the prospects of such tracks.

Source: Bing Ventures

Standardization Trend: Modularity + Interoperability

Moving into Web3, the main discussion points are centered around identity ownership and interoperability, which in traditional Web2 is mainly achieved through federated identity management, where information stored across identity management systems can be linked, as well as single sign-on systems (SSO). Here’s the thing: Identity data is provided by organizations, companies, and service providers, not by the individuals to whom they belong and access is controlled. Whereas, Web3 identity solutions are centered around a user-centric ownership model.

Sismo

Sismo is a modular proof-of-proof protocol on Polygon that focuses on Decentralization, Privacy, and Usability, issuing proofs in the form of non-transferable badges. Features the use of Zero-Knowledge Proof to issue badges to the user’s other accounts such as ENS as well as twitter or github to build their Ethereum profile, and users can aggregate their reputation into a public profile with confidentiality.

Sismo allows users to apply for ZK authentication and use Sismo’s SDK, and developers can now use Sismo’s authentication to target user groups. It is currently in alpha testing. Use cases such as anonymous proof of Non-fungible Token holdings without revealing which BAYC and which Ethereum account (and its full history) to prove ownership. And access the community of holders through the ZK badge. In addition, in Decentralized Finance, ZK badges can be used to obtain loans at better borrowing intrerest rates without revealing specific transaction data.

Spruce

Spruce is a digital identity company that advances digital identity while protecting user privacy and attempts to re-establish trusted interactions between businesses and governments. Spruce connects with existing identity and data devices in enterprise environments, including identity servers, internal resource APIs, secret key management systems, ERP, and cloud services.

The Ethereum Foundation and Ethereum Name Service (ENS) announced support for Spruce’s proposed system for secure logins using Ethereum, allowing users to log in with encrypted identifiers, such as their EthereumWalletAddress. By using Spruce’s system, users can use their cryptographic identifiers to verify their identity without having to provide their personal data to third-party agencies.

Enhance user experience: Decentralization governance + privacy protection

Compared to Web2, the enhanced user experience of Decentralization digital identity projects is more important because Web2’s authentication and data storage are centralized, which means that users’ personal information and data are stored on a central server and are vulnerable to hacking and abuse. Decentralization digital identity projects are Decentralization for authentication and data storage, which means that users’ personal information and data are stored in a distributed network, which is more secure and private.

BrightID

BrightID is a Decentralization Anonymous Social Platform that aims to solve the problem of identity uniqueness by building and analyzing social graphs. Users can prove the uniqueness of their identity to the app through BrightID without having to use multiple accounts. At the same time, the application also does not need to collect personally identifiable information or cooperate with a centralized organization, thus protecting the user’s privacy to a certain extent.

BrightID uses P2P to encrypt and send any personal information of users, including text, photos, etc., to avoid data storage on the network. Its official token is BRIGHT, with a maximum supply of 100 million, an initial supply of 25 million, and a maximum supply of 10 million BrightDAO per year. Specific use cases for Bright Token include: Liquidity Mining, governance and voting, Hacker bounties, Faucet testing rewards, and more.

FaceDAO

FaceDAO is an anonymous Social Web built on DecentralizationBlockchain that protects user privacy through facial recognition as a login threshold. It uses Private Key and DID as the carrier of data, allowing users to have absolute control over the data. In order to motivate users to contribute to the development of the platform ecosystem, FaceDAO will issue Token rewards to users, and use Decentralization and Autonomy as the operating model to allow users to participate in platform governance decisions.

In less than three months since its founding, FaceDAO has already had more than 500,000 real community members. According to official data, the top three countries in terms of the number of users of FaceDAO are Indonesia, Bangladesh and India, which account for 80% of the platform’s user base. At the same time, a large number of people from developing countries such as Nigeria, Vietnam, and the Philippines are also joining FaceDAO.

The future development direction of Web3 identity system

Clear and comprehensive on-chain identity map

One of the key points in Web3 is decentralization social, the identity system can help users build a more comprehensive personal resume, and the on-chain social graph is more clearly visible. Users demonstrate their capabilities and loyalty to Non-fungible Tokens, protocols, ecosystems, etc. through various certifications, thereby presenting their reputation across the entire social graph, and also facilitating users to carry out a series of other activities.

Higher level of privacy

On-chain reputation is built based on trustworthiness, but there will be users who don’t want to show all of their behavioral data. Therefore, while building on-chain reputation, it is also necessary to consider the issue of privacy protection. This requires a more flexible and secure approach to authentication, as well as better data management and control for users.

Solutions that make Decentralization authentication possible

At present, the digital identity project is relatively simple, and has not yet formed a basic architecture, but is only established according to the specific needs of the market. With the further development of DID and the establishment of consensus on on-chain reputation, it is believed that a mature on-chain reputation system will emerge in the future. However, we haven’t seen a killer app yet, and the path to mass adoption is unclear.

But it’s entirely possible to draw conclusions about the digital identities we’ve seen so far, and at the moment Web3 digital identities still can’t compete directly with Web2 in terms of user experience. Rather than competing directly with Web2 applications, it would be wise to leverage its unique ecosystem in Decentralized Finance, Non-fungible Token, and other verticals to provide users with unique, innovative utilities. We think the following projects are worth paying attention to:

• Silky account portability. A person’s online identity should not be owned by a company that is not responsible for its users. Users can silkily transfer their own accounts from one provider to another without losing any data or social graph.
• Strong interoperability. The world needs a diverse marketplace for connected services to ensure healthy competition. Interop needs to feel like second nature to the web. Different models of interoperability frameworks address different needs, but the essence should be to help users get more out of their money.
• Secure private network. It can also be seen from the popularity of multiple anonymous social networks on the traditional Internet from time to time that people have a strong demand for privacy, but it has also proved that the soil of Web2 is difficult to nurture towering trees in this field. Fortunately, Web3 offers a new kind of testing ground.

In short, in the future, decentralization digital identity systems will develop in the direction of more standardization, strong interoperability, good privacy protection, excellent user experience, and democratic and transparent governance mechanisms. Web3 digital identity is currently in the experimental stage and has not yet achieved brilliant results, but if the “validator” model is deeply designed, the value of the “proof economy” is explored, and the gameplay of social networking, wallet, investment and even intelligence is integrated to build and share, can the new model of these magic elements become a breakthrough?