The Future of Decentralized Identity in Cybersecurity

Decentralized identity is a blockchain-based model of digital identity management, where users control their data.

Statistics show the need for better solutions to prevent identity fraud and increase security. As such, decentralized identity, is fast gaining popularity as a strategic approach to cybersecurity.

Learn more about it in this article.

Vital Statistics

Identity fraud is a significant threat in the business sector.

The global market for decentralized identity in cybersecurity solutions is expected to grow to about $6 billion by 2027. This is an impressive CAGR of 89%.

Meanwhile, in the US, roughly 87% of businesses are confirmed to have experienced fraud. Similarly, almost all individuals, except 1.19%, had experienced instances of attempted identity fraud.

“The days of businesses keeping silos of sensitive consumer data are long gone. Blockchain is emerging as a game changer.”

Key Features of Decentralized Identities

Privacy

Decentralized identities in cybersecurity provide an extra layer of privacy. Users decide on specific information to release ensuring that only the needed information is provided in each transaction.

Security

Naturally, security is one of the most crucial benefits of cybersecurity and decentralized identity solutions. Taking the third party out of the equation lowers the dangers of identity theft and data breaches.

Interoperability

Decentralized identities are adaptable and can be used across different applications and platforms. They are designed to be open.

The Reality of Today’s Digital Identity Management

Ever 22 seconds, someone in the Untied States becomes a victim of identity theft. Today, businesses and organizations recognize that companies are at risk of cyberattacks and data breaches.

A decentralized digital identity management system is no longer simply a nice thing to have but a must-have to ensure protection. 

No Proper Cybersecurity Measure

Most organizations are not using proper measures to protect customers against identity fraud. 97% of companies participating in a survey listed challenges they had experienced with identity verification, including credential compromise and account takeover.

Others believe that issues related to data protection are the major constraints in implementing cybersecurity and identity solutions.

Increased Identity Theft

Cases of identity theft keep increasing. Most businesses plan to allocate more funds toward identity verification.

In a recent survey, 17% of the businesses disclosed that up to 20% of the company’s IT budget is allocated to identity verification. And 30% of the respondents indicated that up to 40% of the IT budget is allocated to cybersecurity. 

Companies Looking for Cybersecurity Solutions

Companies are actively seeking ways to improve identity verification. 91% of organizations plan to boost their budget allocation for identity verification solutions by about 10%. 

The current reality proves the need for a better solution to digital identity management. So far, decentralized identity in cybersecurity seems to be the most appropriate solution. 

Let’s take a closer look at how decentralized identity verification works:

Decentralized Identity: The Required Solution

In 2017, Equifax reported a breach that exposed the personal data of about 147 million people. The data breach was easier because all this data was stored in a single place.

Had the company used blockchain-based cybersecurity management, it could have been avoided.

Decentralized identity is not an improvement of the old way of identity management. It’s a totally different way. Instead of third parties holding data, individuals manage their digital identities. This is referred to as Self-Sovereign Identity (SSI).

The concept of decentralized identity has existed for years. Estonia, a small country in Europe, has been using a blockchain-based digital identity system for about 20 years. Through the system, eID, the people of Estonia can access services like e-voting, e-business, e-healthcare, and e-banking with digital IDs. The individuals stay in control of their data. 

What Does Decentralized Identity Look Like?

Decentralized Identifiers– cryptographic keys that are unique to one individual. You have public keys used by others to identify you and a private key that you hold securely. All these are stored on a blockchain.

Digital Wallets – this is where you store your private key and decentralized identifiers. With the wallet, you can control what information you choose to share. For instance, you can prove your address without revealing your name.

Challenges to the Adoption of Decentralized Identity in Cybersecurity

There are a few challenges that still hinder the rapid adoption of decentralized identities:

• Cost of new systems
• Consumers’ lack of efficient understanding or awareness – the decentralization concept
• Unclear regulations
• Technology can be intimidating
• Resistance from established cybersecurity providers
• Security worries over being responsible for managing private keys.

Decentralized Identity Management Companies in the USA

• Evernym
• Hu-manity.Co
• Civic Technologies
• Antier
• Fractal
• Edge
• Hub
• 1Kosmos
• Persona
• NuID

Conclusion

Identity fraud and digital identity theft are on the rise, and experts are proposing decentralized identity in cybersecurity.

This approach allows individuals to manage their data, eliminating a single point of failure. Decentralized identity solutions may just be the future of cybersecurity.