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Tuesday, July 16, 2024

How Blockchain Development Is Used In Digital Identity Management

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People are talking more and more about digital identities and blockchain technology. When we think about how important secure records and transactions are in a virtual world that depends more and more on privacy, safety, and trust, it’s easy to see how a blockchain development company is important to digital identity.

The global market for blockchain identity management is expected to reach $11.46 billion by 2026, with a CAGR of 79.2% from 2019 to 2026.

In this article, we’ll try to figure out how blockchain can be used to manage digital identities and explain why this technology is so important for privacy, security, and trust.

Let’s understand what Digital Identity Management is!

Digital identity management is used to figure out if a user is unique and if they are who they say they are. Digital identity management is the process of identifying and authenticating a subject or user, both online and offline. This is done by managing a digital representation of identity, which has traditionally been done by a central authority.

Digital identity management makes it possible for users and the decentralised platform on which they work to interact without having to trust each other. It leaves a paper trail that can be checked and used in court or by regulators if fraud or other crimes are found at a later date.

With digital identity management, many of the problems that centralised authorities have to deal with today can be solved. These include high transaction costs because of slow processing times, the need to rely on third-party processors whose interests don’t always match those of their customers, and outright fraudulent transactions.

A sneak peek at how Blockchain is used to manage identities!

Blockchain is starting to look like the perfect solution to the inefficiencies in identity management. It is one of the three pillars of a self-sovereign identity, along with verifiable credentials, decentralised identifiers, and distributed ledger technology. These three protocols can help solve the most important problems and make the world a better place.

Verifiable Credentials

This protocol gives users control over their digital identities and makes it possible for their reputations to follow them across systems and networks. It gets rid of passwords as a way to prove who you are and replaces them with cryptographic signatures made from asymmetric keys that come from random information about the user, like fingerprint scans and voice samples.

Verifiable credentials protocol also lets a user choose an endorsement key, which helps each system build a reputation for that identity. You no longer have to keep up with multiple profiles on different social networks. One profile will be enough for all of them.

Dispersed Identifiers

People think of decentralised identifiers as unique and personal identifiers that the owner of the identity has full control over. This kind of protocol gives the public a way to find the unique ID for an address. In addition, it is not controlled by a central authority or identity provider.

How is Blockchain used to keep track of identities?

Identity management is a problem that can be solved with blockchain. In particular, blockchain can fix the following inefficiencies:

Identity Synchronization

Identity matching is one of the most important parts of blockchain. It lets users prove who they are on multiple systems without having to use passwords. This stops account hacks and collisions from happening. If you own your private keys, your identity is no longer owned by a service provider. Instead, it is yours and yours alone. This system is much easier to use than having to manage different profiles on different social networks.

Problems with Layoffs

Using blockchain, digital objects can be compared to their older versions. So, in addition to the solution above, there would be no confusion about who owns these things, since all changes can be easily traced back to their original author. It makes possible the best way to timestamp something that can’t be disputed.

Using a Fake Identity

The above-mentioned Verifiable Credentials Protocol can also be used with blockchain, so users have no reason to make more than one identity. Also, a reputation system can be set up in which the past endorsements of an identity are shown on each new endorsement. So, as long as your initial reputation is confirmed (maybe by completing security tasks), everything you do after that will be permanently linked to your identity. One way to understand this is to think of each confirmation of a transaction as being like a fingerprint or an iris scan.

Proof of Existence

Blockchain is a public ledger that can’t be changed and can’t be disputed. You could say that this has been possible through the blockchain from the start. But for this situation to stay the same, it would need resources that are hard to come by at the moment.

Blockchain proves that something exists by keeping track of a transaction that is linked to the hash of a related document. This gives you proof that you can’t be wrong, and you can make it even stronger by adding a digital signature made with the originator’s private key.

A non-refutable proof of existence can be helpful when notarizing something. It is better than other solutions in the following ways:

It won’t change

The transaction on the blockchain and the digital signature can’t be changed after the fact.

It is out there. Anyone can look at this proof to make sure it’s real, which is why it’s so important to use a private key that is safe and that no one else knows.


The blockchain transaction with the document’s hash could be written into other contracts or sent to authorities who might need the owner of the private key to do something else.

Centralized control

Now that blockchain is here, we can finally take back control of our identities and reputations. We no longer have to give money to central governments that might censor, sell, or lose our personal information. Users now have something much better: decentralised organizations in which each person really counts.

Real Use Cases of Blockchain Digital Identity 

Identity management systems that use blockchain have been put in place in a lot of different places. Here are a few examples.

Asset management

Blockchain gives you a way to keep track of your assets and transactions through safe, open, and p2e game development channels. By getting rid of the need to trust a third party or rely on an outside party, like a bank, these systems could cut costs and keep a permanent record of who owns what.

Since blockchain technology lets people prove who they are without a third party, it can be used to let people access or manage their assets in a safe and reliable way. It also makes it easier for them to do business with the people who own the assets.

In the past, if someone wanted to prove who they were, they had to rely on a third party like the government or their bank. But blockchain technology lets someone own and control their private key without being fingerprinted or checked by the databases of other parties.

Global Payments

When digital currencies are used, there is no need for a third party to transfer money. Instead, the work is done by thousands of computers instead of by one central authority. This can make things safer by making it harder for cyber-criminals to commit fraud. Also, it can save a lot of money because it cuts out the need for middlemen in business deals between countries.

Blockchain digital identity is perfect for global payments because it can be used to instantly validate and verify both parties in a transaction. It can also be used to share information securely without needing a third party.

Also, blockchain identity verification for peer-to-peer transactions is safer and much more efficient than the system we use now, since all a person needs to make online payments is internet access and a digital wallet.

Also, the way money is sent around the world could be made a lot better by using blockchain digital identities instead of the current paper-based system.


Blockchain identity management is helpful in healthcare because it helps keep medical records in a safe and easy-to-find place. If patients know that their privacy is safe, they are more likely to be okay with their personal information being on the blockchain. Also, hospitals can do a better job of storing and getting to patient information.

Hospitals, doctors, and insurance companies in the healthcare industry are already using blockchain identity management to improve the way they do business.

The technology could also be used to make an online market where patients can sell their medical information. With this kind of system, patients would have more control over how their personal information is used.

Identity management on the blockchain could also make it easier for drug companies to make personalised medicine. The technology could help them keep track of drug verification, drug interactions, and other medical information.


Blockchain identity management could help colleges and universities protect their students’ personal information, like their SSNs and test scores. It would also make it easier for them to share that information with groups of alumni or other groups.

Universities are using blockchain identity management to keep track of transactions and store documents online in a safe way. A blockchain-powered platform lets students and staff access files from anywhere with an internet connection.

The technology also makes it possible for campuses to give students secure, verified ID cards. This will make students safer and keep their identities from being stolen. The people who work at universities could also store their credentials on the blockchain. This could be used as proof of their skills and qualifications.


Identity management on the blockchain could make it easier for people to get the services they need from their local, state, and federal governments. For example, if each member of a government agency’s staff has a blockchain identity, they can easily access records from a number of agencies. This could make government work run more smoothly.

Just as important, governments all over the world are already using blockchain-based identity management in their many processes. This makes it easier, cheaper, and less risky to manage sensitive information.

Bottom Line

Decentralized identity management is a very new idea, and it is likely that in the future it will be used to its full potential. In the past few years, people have come up with a lot of ideas for how blockchain digital identity management could be used, including ones that are specific to certain industries or sectors.


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