Question: how much do you own online? Unless you have some cryptocurrency stored in a wallet, the answer is nothing. Web3 promises to change that. But where is it realistically headed beyond Musk-endorsed shitcoins and NFT monkeys? Blockchain innovations are truly taking off, so it's time to look at how Web3 will completely revolutionise our online identity.
Time for a new wallet
Is your wallet slowly disintegrating every time you pull it out of your back pocket? Then maybe it's time to consider getting one on the blockchain. In just a few years' time, the number of digital wallet owners rose from virtually zero to 50 million. And even Brave and Opera automatically integrate a native wallet for their users in the browser. So what is this digital wallet for?
Just like a real wallet, it can store money. In this case: cryptocurrency and crypto tokens. But it can also store your data and identity. This is exactly the promise of Web3: to create an internet of ownership. And simply owning money doesn't cut it. That's why the quick rise of self-sovereign identity might just fulfill Web3's potential once and for all.
A brief history of online identity
To understand why this is revolutionary, let's have a look at how our online identity evolved over the last decades.
Web1: the simpler times
You log in to services and websites with a simple username and password, which has no actual connection to you as a human being, except it being stored in your memory. It also required you to juggle many different logins, as you had to create a new identity for every service you wanted to use.
Web2: the current state of affairs
In the name of convenience, many web2 services require logins to be linked to a single identity. The easiest way to do this is to use a third party to verify your identity. For example: your Facebook, Twitter or LinkedIn social account. Your identity is somewhat centralised on these services, but there are two problems.
- Your identity is still shattered and spread throughout different accounts, and you have to create new accounts for every service. Every time you do, a new identity is created somewhere online.
- Your personal information is owned by third parties like Facebook, Google and Apple are. And if any of them get hacked, your data is up for grabs.
Web3: self-sovereign identity
Up until now, there were basically two extremes to online identity. Either you were pseudo-anonymous; or you gave up your whole identity through a scan of your or ID or with apps like Itsme. There was no in-between.
Web3 introduces a third option. By storing your online identity in your own digital wallet, you not only harmonise all your data in one account, but you also own that information. Moreover, it uses advanced cryptography, so it would require a digital miracle to breach anyone's wallet.
As a result, when you need to log in to certain websites or services, you can simply offer them the minimum amount of data they need. If a website needs to confirm you're of age, they simply check the blockchain if you are 18 or older. No need for your name, address, email, social security number or the name of your mom's first pet.
Need a reminder of how self-sovereign identity works again?
The features of Web3 identity
- Proof of device: Sometimes you need to prove your identity through the device you’re using. Cookies kind of do that, but they can't provide actual proof. Web3 can offer this proof without giving up any extra data.
- Proof of humanity: Prove that you are who you say you are without saying who you are. Services who want to know you are actually human, now have no other way than to ask for your complete identity. With proof of humanity, Twitter can ban all bots without asking for anyone's data, and finally end Elon's beef.
- Full identity: Services that need to know who you actually are - say the bank if you want to get a loan - now have to take ownership of your data. Security breaches could make you 'lose' your identity. Web3 would decentralize this data, putting the 'sovereign' in 'self-sovereign identity'.
Pseudonym tracking: Use your Web3 'address' anonymously or pseudonymously. When the websites you visit want to track you, the only thing they have is your blockchain address. It's similar to cookie consent, but that relies on trust. You can never be sure that the website is actually respecting your consent. A Web3 transaction is a mathematical equation. This is already quite popular in the crypto space and the online gaming community.
Enforcing good behavior: This is a key feature of any blockchain application. For instance, Bitcoin works because good behavior (mining new coins) is rewarded. The same principle can be applied to online identity. If you visit a website, it could take a small amount of cryptocurrency in escrow, say 50 cents.
If your behavior is 'normal', you get the money back as soon as you leave. But if you start spamming a website with bots, it will cost 50 cents for every account, making it very expensive. Browsers like Brave even reward their users with a certain amount of BAT (Basic Attention Token) for watching ads. This can then be donated back to your favourite creators online.
Some examples of Web3 identity services
Curious to see how it works? You can create your own wallet on the blockchain with a number of services.
For instance, ENS (Ethereum Name Service) and Unstoppable Domains give you a digital blockchain address with a domain name, much like websites get a domain name for their IP address. So in the case of ENS, 'nicolaslierman.eh' links directly to my blockchain wallet. You can use this 'address' to create accounts and log in to servers. Other notable services to explore are self-sovereign identity services Polygon ID and Proofofhumanity.id.
How should companies respond to this trend?
It's clear that Web3 is breaking through faster than ever. Moreover, in the Web3 era, there is no place or need for cookies. Plenty of MultiMinds' clients are already preparing themselves for this new era of online identity.