Mercator Blog

Decentralized ID and self-sovereign identity are in the works
Date: September 27, 2019
Tim Sloane
VP, Payments Innovation
The report, Distributed and Self-Sovereign Identity Solutions: Part 1, Technology Overview, described the technologies that are creating a new blockchain-based digital identity called self-sovereign identity (SSI). Although built for the internet, SSI is mobile centric and can be used to identify a user across all channels. It also enables verifiable credentials that can be used for Know Your Customer / Customer Information (KYC/CIP) programs. By establishing a trusted web, SSI enables the verification of claims made by an individual. The claims could be for permits, licenses, or other accreditations, or they could be claims of age, income, insurance status, or any other important claim. Part 1 also presented a likely sequence for the introduction of this technology, starting with biometrics (including behavioral), FIDO Alliance public key authentication, distributed/decentralized Identity, and finally self-sovereign identity. SSI extends a decentralized identity into a personal hub or nexus that correlates all of the relationships an individual has established on the internet. These are only visible to, and can only be shared by, the individual.

The most important attribute of SSI is that it enables the owner of the identity to have relationships be validated by a new authenticator. It also allows any of an individual’s existing relationships to answer specific questions about that relationship, yet all of this remains under the control of the individual who owns the digital ID. For banks, government agencies, or other entities helping to validate the information they have regarding an individual is a revenue-generating opportunity. Their willingness to confirm facts about an individual to a new entity trying to authenticate the individual or confirm facts associated with that individual represents a significant cost savings compared to the effort that would be required to collect and validate all that information through other methods.

This new secure and trusted internet service will take time to evolve and requires upgrades to existing internet protocols such as the Domain Name System (DNS). These efforts are underway and SSI will need to be implemented as an open standard available to all, just like email (SMTP), the web (HTML and many others), or DNS itself. This requires an evolution that is only just beginning, but major participants are investing in making this happen, including corporate giants such as IBM and Microsoft. The Mercator Advisory Group report, Distributed and Self-Sovereign Identity Solutions: Part 2, Implementations and Suppliers identifies the most influential participants, how they have positioned themselves in the market, and the standards and open source organizations through which they aim to convert this vision into a reality. It also describes early implementations that have already been put into operation by financial institutions and government agencies.