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Custodians and verifiers will be a key player in helping individuals and consortiums securely store their core identity data, linked to the entire data set behind it

Originally published on Entrepreneur.com

The ability to decentralizing one’s identity within a digital world is a captivating idea subject to fierce debate. For one, it’s questionable whether a practical decentralized system can be implemented in the real world. Considering the prospect of a successful DAO hack, for example, it is easy to imagine how vulnerable a fully automated system could be.

The word ‘decentralization’ has origins during the French Revolution period, referring to the restructuring of the government function when reviewing the dynamics of government and bureaucratic centralization in the 1800s. There have been various attempts to achieve decentralization since then, with some critiquing that these efforts merely resulted in further centralization. If such a process sounds familiar, that is because a similar phenomenon has unfolded within the blockchain industry over the past decade.

In the meantime, it has become clear that the concept of decentralization may be applied only in a matter of degree. In other words, certain centralized portions always remain such that middlemen will always act as arbitrager.

Here is a narrative to the decentralized data world in the (near) future.

In this hypothetical world, everyone has full ownership of the tremendous amount of data that we all produce each day. Individuals may claim, by default, rights to the record of every purchase and every communication otherwise subject to storage. If any entity would like to monetize individual’s data, they must receive approval and share the proceeds. The society is divided into two groups: individuals one who likes to monetize their personal data and those who block all personal data from being used for second purposes. The divide between these two groups is both philosophical and practical.

Assuming that 50% of the population are comfortable with the risks and opportunities of sharing their data, it is foreseeable that data industry could still maintain profitable business ventures in this space. As data owners create business value from their own data, failure to properly manage data could result in penalties. Data collectors acting as middle men could help moderate the management process, in this case. To avoid overweighting the power and influence of data collectors, primary validators and secondary validators (i.e., validators of validators) would be needed to work constantly to maintain the relationship between all relevant stakeholders within the system.

Such a process would require a tool for the exchange of value, whether data is shared for monetary reasons on a temporary or permanent basis. Blockchain technology can be used to help manage this process seamlessly. Since the successful introduction of Bitcoin in 2009, the world has witnessed a succession of altcoins, bitcoin alternatives that seek to replicate an immutable, secure value transfer method. Some people may choose among the wide array of cryptocurrencies when selecting a method of transferring value, while others may take full control and create their own.

For those engaging with the full bespoke method, interoperability between coin networks will matter significantly as altcoins will not be transferable if they are not made compatible with other altcoins. Such a system would provide no value to the act of owning one’s personal data. Therefore, a method that enables interoperability will help produce millions of signals by connecting thousands of altcoins. Nevertheless, who exactly would take responsibility if such a system fails?

Organizations like the International Organization for Standardization (ISO) and Decentralized Identity Foundation (DIF) establish standards for data management processes. Individuals claiming their own altcoins must comply with these standards, either by themselves or through the assistance of professional services. Without such compliance, individuals are fully liable to any lost transaction value. Furthermore, those who decide to use existing altcoins could request an audit to determine whether or not the altcoin of their choice complies with the industry standard. Either way, the standard compliance will be a central point of any framework.

Given the nature of decentralization, however, not everyone is required to follow one single set of standards. Some individuals who own their data may find one standard inconvenient or pricey to manage, while another consortium of data owners may prefer a standard more compatible with their own offerings as individuals. This would result in the coexistence of several standards with multiple purposes. Some individual data owners may remain isolated or gather within the structure of some form of a consortium.

What compels the behavior of individual data owners?

As one can easily imagine, it would require a lot of effort to remain an individual data owner. First, they would need to be technical enough to understand the data storage structure and altcoin creation methodology. On top of that, they would need a firm grasp of proper compliance with interoperable methods and standards. Several platforms offer such services catered to individuals, yet they are still in the early stages of their growth and development. Furthermore, individuals would be fully liable for all consequences of potential system faults. Lastly, maintenance costs may exceed the income generated from the monetization of data. Together, individual data owners may soon realize that having full control of data ownership is unsustainable, and may ultimately find the prospect of remaining alone to be dissuasive.

Meanwhile, the competition between consortiums by which each develops a system that offers an easy-to-use and reasonable user experience will encourage them to innovate, facilitating growth. Though individuals may utilize these consortiums, they still retain data ownership. Therefore, there is a good prospect of a win-win outcome.

How do we measure the value of data?

When evaluating the prospects of monetization, one must consider that highly valued data is made more useful to healthcare systems and scientific studies in the public and private sectors when it is associated with an underlying identity. Clearly defined and captured identity data enables analysis in multiple layers, with geographic and demographic verticals. In this case, identity may not only be derived from government-certified IDs, but also privately created IDs like online social media platforms, educational institutions, and social clubs. These identities reflect an individual’s interests and social status.

Since the identity-inclusive data will become a highly valuable asset, custodians and verifiers will be a key player in helping individuals and consortiums securely store their core ID data, linked to the entire data set behind it.

Data without its identity tagging may also be available. Some data might have lost its identity linkage, while other data might have its data ownership expire due to the patent or copyright validity, online platform closure, or the death of the data owner. These data types are consolidated as public data and maintained with the financial and operational support of the government or public research institutions, who benefit from its usage. Further entities might try to acquire ownership of this data, as they find it highly valuable.

To preserve the high value of each data asset, ensuring that high-quality identity information is attached to it becomes crucial. In the future, this facet of data quality will bring more attention to the identity custodianship and validation processes.

Decentralized identity in the digital world

Decentralized Identifiers (DIDs) is defined as “a new type of identifier for verifiable, “self-sovereign” digital identity. DIDs are fully under the control of the DID subject, independent from any centralized registry, identity provider, or certificate authority.” according to W3C Community Group.

Under the terms of this definition, DID subjects have full control of their own identity and its usage. Such systems of decentralization have been researched by large corporations, such as IBM, Microsoft, and those involved in the Decentralized Identity Foundation (DIF) working group.

The integrity of such a system can be maintained by a collaborative approach including the efforts of data claimers, verifiers, attesters, and several different types of middlemen that offer smooth and convenient management processes. By applying the ‘human intervention’ itself into the previously automated system, it is finally possible to experience a functional, fully-decentralized system. The middle man’s role will become more important in a way to provide a convenient environment for each stakeholder. As we speak, organizations like Kilt Protocol are working towards the goal of enabling decentralized identity management.

By applying the ‘human intervention’ itself into the previously automated system, it is finally possible to experience a functional, fully-decentralized system.

Although we are living in a fast-changing world of technological advancement, the field of decentralized data is still undergoing foundational growth and development. Thus far, the implementation of various governance systems has demonstrated the unique characteristics of public blockchain protocols. Decentralized identity is one of the areas that will be largely disrupted by blockchain technology, and further applications and expansions of these concepts will definitely remain subject to fierce innovation and debate.