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Microsoft to Embrace Decentralized Identity Systems Built on the Blockchain


Bitcoin, Litecoin, and Ethereum are getting a boost from an unlikely partner, Microsoft, who plans to work with blockchain technology in creating decentralized identity systems. Through the process of decentralization users will have full control over their identity, making this the perfect solution to a growing systemic problem. The tech giant has agreed to join the ID2020 initiative, an alliance of public and private companies, as well as governments, working towards improving the lives if 1.1 billion people around the world lacking any form of legal identity. With this agreement, Microsoft is making a donation of $1 million as well as allocating additional resources and human-power to the cause.

The Problem

Over 1 billion people across the globe lack a proper form of identification that is recognized by the world’s governing bodies, leaving them without many basic rights such as healthcare, public education, access to banking, and more. This also makes those without a legal form of identification more susceptible to displacement and human trafficking. On a macro level, this problem prevents aid organizations from accounting for accurate population data, making it difficult for them to allocate resources appropriately where they are needed most.

The Solution

The use of blockchain technology is paramount in the attempt to provide digital identities to those in need. Blockchain technology is a brilliant solution for providing digital identities to those in need, as it allows for the distribution of trust across a decentralized network. This ensures that no one entity control over information and ultimately keeping data and identity information secure.

Blockchain identity solutions work on a system of trust known as “attestations,” inherent in many public blockchains such as Bitcoin and Ethereum. In this process, an individual asserts pieces of their identity which are then verified by trusted parties. This differs from the current identification process which entails accessing and authenticating data through the use of password protection.

Through the process of decentralized IDs (DIDs), identity is verified through a variety of methods such as fingerprint scanning, facial recognition, date of birth information, social media accounts, and more. With no physical form of identity required, individuals run no risk of losing their identity, as it is securely stored on the blockchain. Each individual determines when their information is distributed and to whom, giving the individual full control over their identity.

How does Microsoft fit in?

The company plans to use its Microsoft Authenticator app to support DIDs, along with public blockchains such as Bitcoin, Ethereum, and Litecoin to foster the growth of this project. Currently the Authenticator app is used as a secondary proof of identity verification on mobile devices and already has millions of users worldwide. The plan is for this application to be used in conjunction with DIDs to directly manage cryptographic and identity information. Users will be able to allow Microsoft to act as their user agent on their behalf to manage user information and cryptographic keys. However, this won’t give Microsoft access to the ID itself, which is encrypted and rooted on the blockchain and unable to be viewed.

This is another step in the direction of further blockchain development for Microsoft, which has already been working with the Decentralized Identity Foundation and Tierion on DID projects, as well as the Enterprise Ethereum Alliance to incorporate aspects of blockchain into their business. “We believe it is essential for individuals to own and control all elements of their digital identity. Rather than grant broad consent to countless apps and services, and have their identity data spread across numerous providers, individuals need a secure encrypted digital hub where they can store their identity data and easily control access to this,” said Director of the Microsoft Identity Division Alex Simons.  

Through the process of implementing these decentralized identity systems, Microsoft is demonstrating even further adoption/incorporation of blockchain technology at the enterprise level.

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