What’s in a name?

Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.

On the cusp of 2022, we find ourselves immersed in a world where data protection is more important than ever before. As we’ve entered the age of instant communication and online anonymity; questions of privacy, provenance, and data ownership have gained a fresh complexion beyond simple identity theft (which remains a multi-billion dollar issue).

In just a few years, big data has carved out a $200B industry wherein the primary commodity is you. The troves of information now at the disposal of social media behemoths are actively monetized and shared, and agencies have the power to personalize advertising to the point that a single mention of your preferred tomato sauce will have Heinz in your feed for weeks. Like most developments supported by blockchain, self-sovereign identities (SSI) aim to flip that existing unipolar dynamic on its head.

What is an SSI?

Self-sovereign identities are just that – digital identities owned by the entities they represent. Currently, the veracity of one’s identity is predicated entirely on trust in centralized third parties. The State still uses physical ID documents, passports, and drivers’ licenses to verify different aspects of a single individual’s identity, while KYC remains a single-use system in the world of finance. Meanwhile, each of us boasts, quite literally, hundreds of online accounts tied to one or two email addresses – a scenario that leaves would-be hackers and social engineers salivating. 

A snapshot of the potential use-cases for digital IDs

Blockchain solves this – no, really

For many of us, the length and breadth of our digital footprints have grown to Yeti-like proportions, threatening to swallow us whole should we ever even attempt to reconcile what data we’ve shared with whom since we first engaged with the world wide web. 

Until recently, digital identities have faced one, crucial obstacle – overcoming reliance on third parties with information stored on centralised databases. Look no further than China’s Orwellian implementation of social credit ratings to understand that digital ID systems could pose significant threats to sovereignty under the current model. 

However, with the advent of decentralised networks, and the frenzy of competition in the Layer-1 smart contract space in 2021, SSIs may be closer than most would expect. They could serve to secure the most prominent crypto innovation of the past year – the nascent industry of NFTs.

NFTs and SSI

You may be familiar with the right-click-saver – those who bravely reject the disruptive potential of NFTs with the argument that by downloading an image of someone else’s NFT, they now somehow may lay claim to it. Predictably, NFT holders have memed this trope to oblivion, and for the most part, rightly so. The blockchain is an immutable ledger and enables provable ownership through NFT technology by linking assets to unique addresses. 

Regrettably, the right-click-saver’s stance, misled as it may be, does have some tangential merit – how does one verify that NFTs created and minted are done so by the creators themselves? Currently, OpenSea offers verification checks for collections, but this, once again, requires reliance on a trusted third party. Scammers have, no doubt, sold many “right-clicked” items in the frenzy of hype this year. With an SSI, a digital signature imbued by the artwork’s creator could be used to confirm the provenance of the asset in question, instantly and transparently.

Looking forward

The commoditisation of personal data has opened up a Pandora’s Box that leaves us entangled in webs of our own making, for the benefit of multi-billion-dollar corporations that prioritise profit over people. 

SSIs could prove a quiet contender to topple this hierarchy. Whether in the metaverse or just the regular universe, ownership of, and control over, one’s personal data, is a lynchpin of true democracy. Taken a step further, under an SSI model you could even choose what data you’d like to share with other entities, and be directly compensated for opting into offers like targeted ads. 

Corporate interests continue to adopt crypto culture and tech, largely out of necessity at this point, with varying degrees of success (pour one out for Pepsi and Meta’s marketing teams). While institutional adoption is welcomed, it’s vital that we do not allow the imposition of old dogmas onto a decentralised culture built by impassioned innovators seeking an inclusive future. That begins with securing our identities for ourselves, independent of predatory agendas.

Not sure that this was what Satoshi had in mind…