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Countries need to Implement Blockchain-based Digital Identities

Why do we handle Papers when our day-to-day life is Digital?

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Every single day we sign different documents and contracts. The weird thing is: we still sign them with pen and paper. How is that maintainable in our digital era? We do everything online but digital signatures are still no part of it.

There are many kinds of digital identities. In easy terms: as soon as you turn on your phone you have a digital identity. The question is not how to create a digital identity but rather how to create trust between digital identities. Here are the two problems digital identities are facing today:

  1. Proving that you are who you say you are
  2. Your control over your personally identifiable information

Pen and Paper Signatures

Just a few days ago I opened a bank account at the German Commerzbank. The amount of paperwork? Tremendously. Opening a bank account completely online? Impossible. To set up a bank account in Germany it is necessary to sign some contracts and forms by hand and in paper form. If you are the customer of an advanced online bank it might be that you sign a contract, take a photo of it and upload it to the bank’s homepage. In my case, it was a face-to-face meeting.

Digital Identity Cards

Just a few months ago I visited Estonia. Estonia is one of the very few countries which is offering its own citizens and people from around the world a digital identity card. With this card, you can sign contracts, open bank accounts, transfer properties, or even vote online. In September I decided to become an eResident of Estonia. Everything I read about the eResidency program was more advanced than any other nations around the globe. The compelling about an eResidency? You can use the Estonian digital identity card to open bank accounts, set up businesses, pay taxes, and much more.

Opening a Bank Account with a Digital Identity Card

In October I set up an Estonian bank account at the LHV Bank. Here is how it worked: I visited them in person and applied for a bank account. Everything else worked remotely. The actual bank account opening happened a few days later. The bank sent me two documents via email which I signed by using a program and my digital identity card. This took around one minute and I simply sent the signed documents back to the bank, also by using Gmail. Just a few hours later I was able to login to my online banking by using my digital identity card. That was easy and it felt very 21st century like.

Secure

Let’s be honest. We have all tried to fake signatures when we were kids. Our parent’s signatures, our teacher’s signatures, we basically tried to fake every signature we saw. And if we are honest it is pretty easy to fake a signature when practicing a little bit.
Digital identities and digital signatures are still perceived as a threat to privacy and security. This is no mystery if we are looking onto recent events like the Yahoo email hack.
The reality is different. We already have real technologies in use which enhance our privacy. Remarkably important is the blockchain technology. Estonia is one country which implemented this technology into their infrastructure. Estonia now uses keyless signatures on a blockchain. This basically makes sure that history cannot be rewritten or in other terms: your client cannot pretend not having signed the contract 4 weeks ago.

Control over your Identity

In Western countries, we are using identity cards like the passport, or drivers license to prove our identity. In the future, our identity combined with our biometric data might be stored securely on a blockchain. Here are the two big advantages:

  • Decentralized: A decentralized digital identity means that no central authority has control over you. No government and no corporation.
  • Immutable: Nobody can change a record which is stored in a recent block.

Blockchain-based digital identities will make sure that you have 100% control over your personal data. It will create trust between different parties and when paired with biometric data your identity might be very safe against any form of fraud.

It is time to Implement

Governments will save tremendous amounts of money by implementing digital identities as soon as possible. Estonia is the greatest example of a successful implementation. The advantages are huge and they range from speed to security. It is about time to implement these technologies as soon as possible.

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