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Can Blockchain Identity Management Enable Self-Sovereign Identity?

Is Blockchain Identity Management A Key to Self-Sovereign Identity?

A fundamental problem with the Internet, as it currently stands, is the problem of identity. Each year, millions of pounds and dollars are lost in fraud and identity theft because there is no secure, reliable and verifiable way for someone to prove their identity online or prevent someone else from using it maliciously. Many believe blockchain identity management could be a solution to this problem.

Understanding the drivers for innovation in identity management

As people share and spread more of their personal information across various online services, such as banking and payments, e-commerce accounts and social media, they are in essence creating multiple digital versions of themselves that can be accessed through a simple username and password. If any of these services suffer a breach, or if their credentials are compromised, then they are opening themselves up to cybercriminals.

While the security concerns with existing models are rising across the globe, the demand for reliable identity management solutions is higher than ever. Under the circumstances, many believe that blockchain is the answer. According to recent research, the market size of blockchain identity management is expected to grow from USD 90.4 million in 2018 to USD 1,929.9 million by 2023.

With its promise of security and immutability, blockchain identity management seems like a perfect tool for allowing individuals to take full control over their own data. Moreover, it could make it much easier for businesses to keep their customers’ information safe and up to date. However, is blockchain really a panacea?

What blockchain can and can’t do for solving identity management issues

The reason blockchain is suited for identity management is that it changes the way information is stored and removes the need for trust, which can be socially engineered. Rather than keeping information in various centralised databases, the data is encrypted as a single data source and stored across multiple systems.

The only person who can access this information is the individual, who does so through a private key that unlocks the data. This essentially makes individuals self-sovereign; they have complete control over how their data is stored and used by companies and authorities. Moreover, they can use that single data source to access every service they need.

This scenario may look mutually beneficial both for individuals and businesses at first sight, but there is a catch. On one hand, multiple industries that have to deal with identity management, like banking, financial services, insurance and healthcare, can avoid the risks of losing customer data and are relieved of the burden of continually updating customer information, for example, if an individual changes address. But on the other hand, businesses that are built on sharing data with others will suffer. Organisations need to be ready to share data across the industry as well as trust and accept the data management practices that others follow.

There is also a question of reliable identity verification that remains unanswered. Since most blockchain solutions offer some anonymity, you can generate and use as many wallets as you want. There is even a term in cybersecuritySybil Attack — that relates to blockchain’s ability to generate multiple wallets/identities. Currently, most legal ICOs have to perform AML and KYC procedures; they have to link real people’s identities with their digital identities (wallets).

Moreover, there is an open discussion happening around the question of whether autonomous machines and workpieces could have ‘their own identity’ and an ability to communicate with each other. Clearly, robotics and automation will have a profound impact on identity management. So, before speaking about digital identity, we need to address multiple questions associated with security risks, responsible innovation and AI ethics.


Blockchain technology can potentially help solve some of the identity management problems, with a trade-off, but the feasibility of this solution is still unanswered. One can use blockchain as secure storage for personal data as mentioned above. However, this brings up the issue of GDPR compliance. Once data is on the blockchain, it's forever there and cannot be removed.

Obviously, reliable authentication and identity-based validation techniques, as well as blockchain development expertise, need to be in place, before blockchain can be applied. Consider partnering with an experienced provider of blockchain software development services to make sure your blockchain project is set up for success right from the start.

These things are crucial for blockchain identity management to ever become a viable solution. At this point, blockchain is undoubtedly a big step forward in solving the challenges of secure storage and secure transfer for various commodities, assets and currency.

If you are ready to consider blockchain as a potential solution for your business, our white paper will help you understand the benefits and burdens of blockchain technology.

Moreover, our team of blockchain experts will be happy to answer any questions you might have. Get in touch with us!

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