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Self-sovereign identity explained

Self-sovereign identity (SSI) or decentralised identity (DID) is a method of identity that centres the control of information around the user.

SSI safeguards privacy by removing the need to store personal information entirely on a central database.

This gives individuals greater control over what information they share. Unlike the existing system, it’s a user-centric and user-controlled approach to exchanging authentic and digitally signed information in a much more secure way.

Imagine, you need to open a bank account. Instead of bringing a ton of paper documents, you can simply show your digital identity (ID) to prove your identity in a matter of seconds, and the bank accepts it.

Sounds like a dream?

Nope, self-sovereign identity (SSI) makes it possible already. To understand how to let’s delve into the concepts of identity and credentials first.

Identity

Identity literally means the quality of being identical. To what? To yourself. According to the Mirriam-Webster dictionary, identity is “the condition of being the same with something described”.

Credentials

A credential, in an everyday sense, is an attestation, evidence or proof of qualification, competence or authority issued to an entity, either individual or person, by a third party with relevant authority or assumed competence to do so. This may be evidence of authority, status, rights, entitlement to privileges, or the like, usually in a written form.

credentials

Credentials are a means to verify identity

Historically we have relied on public issuing bodies to verify our identities — i.e. passports, driving licence, birth certificates, etc. These credentials go on throughout our lives, being Issued to us or requested by us at times we need them. We provide them to others regularly without ever wondering what happens to them, where they now sit, and how long they’ll be retained.

Self-sovereign identity as a user-centric identity model

The problems of current identity models make an argument for digital identity. According to gov.uk, “digital identities are an easy way to help us prove who we are without the need for physical documents. They can also help us prove things about us, such as our age or our qualifications.”

However, much of what has been developed within digital identity has ported existing problems with the paper-based system into the digital realm

To combat this, a more user-centric, trustworthy, and privacy-preserving digital identity paradigm can be made possible through self-sovereign identity (SSI).

SSI is a method of identity that centres the control of information around the user. It safeguards privacy by removing the need to store personal information on a central database and giving individuals control over what information they share.

To make this work, there are at least three participates involved;

01

The Holder

An individual in the scenario, although it can also be an organisation / company. The holder is the entity that the information attests to (i.e. you)

02

The Issuer

The organisation, be it a company, certifier body, or governmental organisation that has been awarded a level of trust to provide information (i.e. a public body that issued a passport)

03

The Verifier

The individual, organisation, company, government, and so forth to whom the holder needs to prove the legitimacy and trustworthiness of information (i.e. a bank that you want to open a bank account with).

Unlike the existing system, it’s a user-centric and user-controlled approach to exchanging authentic data in a much more secure way. Authentic data is information that’s source can be proven.

diagram

01

The Issuer writes a public identifier to a Verifiable Data Registry;

02

The Issuer issues a Credential to the Holder, signed by their public identifier;

03

The Holder can manage its credentials in a digital wallet it holds;

04

The Holder presents a Credential to a Verifier’;

05

The Verifier can trust this data by reading and resolving the public identifier on the Verifiable Data Registry.

According to McKinsey Global Institute research, SSI could be key to unlocking access to banking, government benefits, or other services. Research suggests it could boost economic growth by 3% in the UK in 2030.

The technical building blocks of widespread SSI adoption

Core to SSI’s success is the combination of a number of building blocks. These terms have been standardized by a W3C Working Group focused on SSIs widespread adoption:
A claim is an assertion made about a subject.
A claim is an assertion made about a subject.

SSI application and use cases

While self-sovereign identity (SSI) sounds like an unfamiliar concept for some, others are actively leveraging the technology to address industry-specific challenges — take the Financial Conduct Authority or the IATA Travel Pass. Overall the shift to the SSI paradigm is beginning to rally more support, and 2022 is poised to be a poignant year for global SSI adoption. In fact, Our estimates suggest that the potential of the decentralised or self-sovereign identity market totals ~$0.55Tr.

cheqd Use Cases - Regulatory Compliant DeFi

Know Your Customer

Arguably one of the most known within the Banking sector is Know Your Customer (KYC). SSI enables a reusable KYC concept that offers a much more seamless way of ID verification. When an ID verification is needed more often due to compliance or regulatory pressure, SSI can significantly reduce the friction for users improving a customer experience while providing a compliant service. In short, current KYC is ‘single-use’ while KYC’d SSI makes KYC ‘recyclable’.

Moving beyond traditional banking, Centralised Decentralised Finance (CeDeFi) also sees a robust application for SSI.

Travel & hospitality

The travel industry probably shows one of the most relatable SSI applications enforced by the pandemic developments. In the age of COVID-19, this has been made even more complex as another layer of health certification has been added. One of the projects in this space is the Covid Credentials Initiative, which aims to develop ‘privacy-preserving verifiable credentials’ to mitigate the spread of the virus through the use of SSI.

cheqd Use Cases - Travel Hospitality
cheqd Use Cases - NFT

NFT

Within the Non-fungible Tokens (NFT) space, self-sovereign identity helps to prove who created, owned and/ or currently owns NFTs across their lifecycle, as well as providing ownership of fractions.

Conclusion

SSI is certainly a future-proof concept that addresses issues that are universal and applicable across industries. With more and more companies leveraging SSI, the snowball effect of adoption will increase — making widespread SSI a reality soon.

We, at cheqd, help companies leverage SSI. cheqd’s network is built on a blockchain with a dedicated token for payment, which enables new business models for verifiers, holders and issuers. In these business models, verifiable credentials are exchanged in a trusted, reusable, safer, and cheaper way — alongside a customisable fee. Find out about our solution here.

Self-sovereign identity

How big is the market opportunity?

The report aims to establish a baseline total addressable market for self-sovereign identity specifically, which can then be iterated upon by the community.

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