In mid-2017, an Equifax data breach exposed 145.5 million users’ data. The breach was caused by a software flaw which allowed the hackers to take over the company’s website.
Currently, people receive many different identification certificates, including social security and medical ID cards; however, their personal data may be stored in many places, including their bank, their insurance company, and on any subscription software they use, such as their Netflix account. Any of these intermediaries could be hacked, exploiting their users’ personal information.
To combat money laundering and other illegal financial activities, financial services firms must comply with know your customer (KYC) processes. These firms collect and verify identity information to screen new customers and assess risk. The process is slow and expensive—estimates of KYC costs are upwards of $15-$20 per new customer enrolled.
For better identity management, let’s explore some of the solutions that blockchain’s most prominent features could bring;
Better control over personal data
In blockchain, users know what data is collected about them and how they are processed. Due to blockchain’s open nature, any modification of the protocol requires the consensus of the nodes, meaning optimum transparency and security for all users.
With the transparency of the ledger, the combination of secure end-to-end encryption of communication also helps reduce the privacy concerns arising from the public nature of the ledger.
Engage in relationships with more trust
Blockchain removes the middleman and allows citizens to manage their own identity, allowing them to be better managed and traced to its source.
Identity management provides a promising opportunity to moderate identity theft and fraud and reduces overall costs and time. While cybersecurity concerns are a real concern still, improved technology will build trust in this new way for people around the world to manage their identity.