Blockchain identity management is increasingly being adopted for validating identities through blockchain authentication, ensuring data privacy and integrity, and managing access. With the massive growth of online business and data comes the equally massive complexity of securing business transactions and system or data access. Cybercrime risks require industries to incorporate technical solutions to keep systems and data safe. One solution leading the field for cyber security and privacy is blockchain technology.
Current identity and access management systems offer a few security and privacy weaknesses which a blockchain based technology can help solve. However, blockchain is new and may offer risks associated with sensitive data stored on blockchain public ledger.
Blockchain or Distributed Ledger Technology (DLT) in identity management helps control data in a decentralized manner. Traditionally, businesses use a centralized system for identity management which makes the database a honeypot for hackers. For example, the popular use of Lightweight Active Directory Protocol (LDAP) stores information in a database owned by a single organization.
Identity management with blockchain works in a different way. There is no centralized database, instead, information is stored over a peer-to-peer type environment, by adopting a decentralized framework. The data is stored immutably in publicly owned blocks over the network. This solution provides flexibility, security and privacy for data management with reliable authentication and integrity check.
The Small Business Innovation Research program, supported by the Small Business Administration describes blockchain as “a common, public ledger, which utilizes cryptographic mechanisms to verify transactions and information in a decentralized manner.” In this way, blockchain integrity is verifiable by businesses without relying on third parties to ensure trust.
The role of blockchain in identity management is to provide a means to verify identities, control access, and ensure the integrity the data and transactions. Everything stored in the database is publicly owned and immutable.
The future of blockchain identity management as a standard solution for cryptocurrency and other online transactions looks bright. The World Economic Forum reports that while banks spent $75 million to develop this technology in 2015, they spent closer to $400 million in 2019. This is because blockchain technology costs less to develop and implement than standard technologies, offers data integrity, and ensures data is not modified or manipulated by unauthorized persons. According to International Data Corporation (IDC), global blockchain spending will be around $19 billion by 2024 compared to $6.6bn in 2021 as reported in IDC’s Worldwide Blockchain Spending Guide forecasts.
Blockchain technology is in its infancy. There are clear signs that future business solutions for security and privacy will include blockchain technology. The question that remains is how long it will take to see its full potential. That said, blockchain does not come without challenges and will require time to mature. While blockchain offers a beneficial model to make identities portable, verifiable, secure and private, potential challenges remain to be addressed.