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How Blockchain can be used for Identity Management

In this digital era, internet users are increasing. A report by statistics says that about 4.48 million people were actively using the internet in October 2019, which means about 58% of the global population is into the digital world. 

Every day, millions of people are actively online to carry out multiple activities. From social media networking to shopping and academic researching to perform financial transactions. The more an identity conducts online transactions, the more footprints it leaves behind in the network. 

Identity Management System and its Problems

To perform online transactions, most of the platforms ask the user for a specific amount of information before proceeding towards services. For instance, Amazon, Google Wallet, PayPal, etc ask for sign-in/login details before financial transactions. GooglePay now verifies the user through a biometric authentication system i.e. face recognition to verify the identity of users. The same user when provides information in online platforms every time it stores in a different database. This raises an issue of user’s Authenticator Online identity security.

Most of the platforms collect user information online without the consent of the owner. This data is then sold to third-parties who lack proper security measures for user’s identity protection. Thus, results in several ruinous circumstances that affect both the company’s reputation as well as the life of consumers.

Another scenario could be that while sharing database to some third-party, the internet service or medium used for data transfer could be vulnerable to cyberattacks. In the transit, data could either be tampered or breached. To combat this, a need for a secure database came onto the surface. Here is where the concept of Blockchain originated. 

Blockchain – A Secure Database for Identity Management

Blockchain provides a platform to secure the identities of online users. A secure database protects identities from being stolen or misused by any fraudulent entity. Blockchain is used by almost every industry that is exposed to online fraud, includes user authentication mechanism or collects user behavioral information through big data. Biometric identification for controlled access to a confidential database is replaced with blockchain. A decentralized database serves the purpose of user authentication, controlled access, eliminates the concept of one failure point and secures identities of users in an efficient manner.

Nodes in the Blockchain Ecosystem 

User identity is verified through master nodes in the blockchain. The master nodes perform consensus ver an identity that is supposed to be verified. All the nodes start verifying individual nodes. The business or person behind that node verifies the user document manually. The reward is distributed to the nodes that verify the identity after spending time on mining and verification. If one node fails to verify an identity correctly, it is the duty of the master node to transfer that identity to some other node for verification. 

There are three types of nodes in the blockchain. 

  • Simple Nodes

A node that operates over the blockchain network and sends/receives transactions.

  • Full Nodes

These are the clients that operate on the blockchain network and maintain a copy of the blockchain. They also send/receive transactions, add blocks in the ledger and entertain block confirmations given by miners.

  • Master Nodes

Master nodes are responsible for enabling a decentralized platform. This node, other than a copy of the blockchain, keeps data structures, cache, and memory pool of unconfirmed transactions. If the master node gets notification of a valid block, it updates the data structure and connects it into the ledger. The master node does not trust the verification of other nodes. After receiving valid nodes, it verifies each entity individually again.

Digital Identity Management

A decentralized blockchain serves the purpose of verification of digital identity. The watermark of each digital ID is created when an online user performs a transaction. These identities can be stored in the blockchain and can be verified against that database. This deters the risk of online fraud that is residing in various online businesses and is harmful in several ways. Online businesses that collect confidential information from consumers can now secure the user identities on the blockchain. This would ultimately prevent the incidences of identity theft, data breaches, and unauthorized access.  

To conclude, blockchain is the next step towards the development of a Biometric Verification management system. Users will have full control over their confidential data. With online identification, secure transactions can be performed, keeping user experience and security intact. With the blockchain identity management system, things will get easier. Just like biometric authentication, which ensures definite controlled access over confidential data, blockchain ensures this by maintaining a centralized database where users are supposed to enter their information and get verified. No third-party or unauthorized entity could access data stored on the blockchain. Hence it deters the risks of online fraud and malicious transactions in this digital world.

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