Part 3: Decentralized Identity — Industry Use Cases

11 min readJan 6, 2024

Decentralized Identity (DID) has emerged as a revolutionary concept across various industries, offering a paradigm shift in how identity is managed and authenticated. In the realm of the travel industry, the World Economic Forum (WEF), in collaboration with its partners, through the project “Shaping the Future of Security in Travel”. In the BFSI industry, decentralized finance (DeFi) platforms leverage DIDs to provide users with more control over their financial identities, enabling them to seamlessly access services without relying on traditional intermediaries. In healthcare, DIDs contribute to secure and interoperable health records, ensuring that patient data is portable, private, and under individual control. Moreover, the supply chain industry utilizes DIDs to enhance transparency and traceability, allowing stakeholders to verify the authenticity of products and track their journey through the supply chain. In the education sector, DIDs can streamline credential verification, making it easier for employers to verify the qualifications and experience of potential hires. In the government sectors, the DIDs can lead to more efficient and secure citizen identity management, reducing the risk of identity theft and fraud.

Across the board, decentralized identity holds the promise of empowering individuals with greater control over their personal information while fostering trust, security, and efficiency in various industry applications.

Cross-Border Travel Journey Process

The cross-border travel journey process involves specific stages and activities that travellers go through when crossing international borders. Identity plays a central and multifaceted role in the realm of travel. It encompasses various aspects that are essential for both individuals and authorities responsible for facilitating safe and efficient international travel. Accurate identity verification is fundamental to national security. Authorities at the cross border use identity checks to screen individuals for potential threats or criminal activities, and respective governments keep records of travellers' entry and exit, helping to monitor visa compliance and immigration patterns.

Airlines, hotels and car rental companies require identity information for reservations and check-in, and many travel companies offer loyalty programs that rely on customer identity to provide personalized services and rewards. Decentralized identity plays a crucial role in the travel industry by redefining how you prove your identity, share personal information, and navigate the intricacies of international travel.

The traveller's digital identity represents a fundamental shift in how identity and verification and traveller information sharing are approached in the context of travel. It is designed to enhance both security and convenience for travellers while enabling more efficient and effective processes for law enforcement, immigration, and aviation security officials. Travellers can selectively share biometric, biographic, and travel history data with relevant authorities and private sector entities such as immigration, hotels, airlines, car rental, etc.), and travellers can tailor the information and share specific details to each authority or service provider.

The KTDI (https://ktdi.org/) is a World Economic Forum Initiative that brings together global consortiums, including organizations, governments and citizens.

Redefining Healthcare- A decentralized approach

The current healthcare landscape, characterized by its complexity and the fragmentation of patient data across various providers and systems, presents considerable challenges in patient data management, access, and security. In this environment, DID technology emerges as a transformative solution with the potential to overhaul how health data is handled. DIDs can empower patients with unprecedented control over their health information, breaking down the silos that currently hinder efficient data management in healthcare.

DIDs allow patients to have a singular, secure digital identity that links to their health records, regardless of where the records are kept. This unified approach contrasts sharply with the existing system, where patient data is scattered across multiple healthcare providers and systems, making it challenging to access and share information efficiently. With DIDs, patients can grant or revoke access to their health records as needed, facilitating seamless sharing among healthcare providers.

With the interoperability standard by W3C, the DID can address the interoperability issue in healthcare. By providing a standard format for identities and data access, DIDs enable different healthcare systems and providers to communicate and share data more effectively. This interoperability is crucial for providing comprehensive and coordinated care, especially for patients with complex medical histories who see multiple providers.

The further use cases in healthcare industries are:

Medical Record Management- The integration of DIDs in medical record management significantly empowers patients, providing them with unparalleled control and ease in managing their health records. In this system, patients have their medical records linked to their personal DID.
Clinical Trials and Research — The DID in clinical trials and research in the realm of secure data sharing offers a solution that balances the need for comprehensive data access with the imperative of maintaining patient privacy. In clinical trials, where sensitive patient data forms the backbone of research. In the traditional model, it is often challenged by privacy concerns and security risks. DID provide a solution to address these challenges effectively.
Insurance Claim Processing — The DIDs can improve insurance claim processing by facilitating a secure, efficient, and verifiable exchange of data between healthcare providers and insurance companies. Traditionally, insurance claims processing is a tedious process that is prone to delays, errors, and fraud risks. DIDs offer a digital solution to these issues by establishing a secure and immutable identity for each patient linked to their insurance and health data.
Telehealth and Remote Patient Monitoring — The integration of DIDs into telehealth and remote patient monitoring systems presents an implementable solution to the challenges of secure and compliant data sharing in these increasingly vital healthcare services.

Decentralized Identity and its Relevance in BFSI

Decentralized Identity (DID) represents a paradigm shift in how customer identities are managed, verified, and utilized, addressing several longstanding challenges faced by the industry. At the core of its appeal is the enhanced security and reduced fraud risk. Traditional financial systems, with centralized repositories of personal data, are prone to large-scale data breaches. DID mitigates this by decentralizing the control of identity data, significantly lowering the chances of such breaches and consequently reducing identity theft and fraud.

Streamlining KYC and Compliance Process: The integration of DID in the KYC processes marks a significant advancement in streamlining identity verification in financial services. As you already know, KYC, a mandatory compliance procedure for financial institutions, involves verifying the identity of the clients to prevent fraud and money laundering.
Identity Theft and Fraud — Using DID for identity theft and fraud detection in financial systems provides a robust and innovative approach. For fraud detection, the financial systems can integrate DIDs with their existing fraud detection systems. For example, transaction monitoring systems can use the unforgeable nature of DIDs to verify the identity of parties in real time, reducing the likelihood of fraudulent transactions.
Customer Onboarding — For the onboarding activities, the DID can be used effectively. When a new customer creates an account with a financial institutions, the institution can be assigned a unique DID. This DID is the digital representation of their identity, securely linked to the verified personal information. The process involves validating the user’s identity documents and biometric data, which is then cryptographically associated with their DID. For each transaction or login attempt, the financial institution can request the user to provide cryptographic proof that they control the DID. This proof can be a digital signature or a token generated by the user’s device linked to the DID. This method ensures that the person accessing the service or initiating the transaction is the legitimate owner of the DID, thereby preventing impersonation.
Open Banking — Open Banking, a practice that allows third-party providers (TPPs) to access financial data through APIs with customer consent, is revolutionizing traditional banking models. It enables a more competitive environment where users benefit from personalized financial services, such as budgeting tools, investment advice, and loan offers, etc. However, the success of Open Banking hinges on robust security and user trust, which is where DID comes into play.
Account Portability — Account Portability, facilitated by DID, represents a significant leap forward in banking convenience and efficiency. In this scenario, switching from one bank to another becomes a seamless process, primarily driven by the capabilities of DIDs. Typically, changing bank accounts is a cumbersome process involving extensive paperwork, multiple identity verification, and considerable time. However, with DIDs, the need for these traditional procedures is substantially reduced.
Loan Application — Streamlined loan applications facilitated by DIDs represent a significant enhancement in the lending process, offering a more efficient, secure, and user-friendly approach. In a traditional loan application process, applications are required to provide extensive documentation to prove the customer’s identity and income, which can be a time-consuming process that often leads to delays in the approval process. With the integration with the DIDs, this scenario changes dramatically.
Cross Border Transaction — Cross Border Transactions, critical to the global economy, often face challenges like friction, inefficiency, and a lack of transparency, which DIDs are uniquely positioned to address and potentially revolutionize. In the realm of international trade, remittance, and investments, the seamless and secure flow of transactions across borders is paramount. DIDs offer a solution to providing a secure, verifiable, and decentralized digital identity for each participant in a transaction.
Payments with Digital Wallets — The use of DIDs in conjunction with digital wallets for cross-border payments facilitates instantaneous transactions. Traditional international payments can be time-consuming, often taking days to process due to the involvement of multiple intermediaries and the need to navigate various national banking systems. However, with DIDs, the process is streamlined as the payment is transferred directly from one digital wallet to another, bypassing conventional banking channels. Moreover, the use of DIDs ensures that each transaction is securely tied to the identity of the sender and the receiver, thereby enhancing trust and transparency in the process.

Supply Chain and Logistic

In the supply chain and logistics industry, the implementation of DIDs presents a myriad of use cases to enhance transparency, traceability, and overall efficiency. DIDs can leveraged to assign unique digital identities to products, creating a decentralized and secure system for tracking their movement through the entire supply chain.

Product Authentication — DIDs enable stakeholders to verify the authenticity of products at every stage of the supply chain. By attaching the unique identifier to each item, parties involved can easily confirm the origin and integrity of the product, reducing the risk of counterfeiting.
Traceability and Provenance — With DIDs, the journey of a product from its source to the end consumer becomes transparent and traceable. This is crucial for industries such as food and pharmaceuticals, where tracking the origin and conditions of products is vital for compliance, safety and quality assurance.
Record-Keeping — DIDs streamline the record-keeping process by providing a decentralized and tamper-resistant ledger of product information. This ensures that data related to each product’s manufacturing, shipping, and handling is accurate, secure and easily accessible by authorized parties.
Smart contracts for Transactions — Integration of smart contracts with DIDs can automate certain aspects of transactions within the supply chain. For example, smart contracts can automatically trigger payments when predefined conditions, like successful delivery or quality check, etc., are met, reducing the need for manual or other software to do this job.

Education and Employment Sector

DID in the education sector offers significant advantages by streamlining credential verification processes, particularly in the context of hiring and employment. The implementation of DIDs in this sector creates a more secure, authentic, efficient and user-centric system for validating academic qualifications and professional experience. Here are a few use cases,

Digital Credentials — DIDs enable the creation of digital credentials for academic achievements, certifications, and professional experiences. Each credential is securely stored on a decentralized ledger, making it tamper-resistant and ensuring its authenticity.
Immutable Academic Records — DIDs provide a decentralized and immutable ledger for academic records. This ensures that educational achievements, such as degrees and certifications, cannot be forged or altered, enhancing the trustworthiness of the information presented by job applications.
Global Credential Portability — DIDs facilitate the global portability of credentials. Individuals who have earned qualifications from institutions in different countries can present their digital credentials in a standard format, simplifying the evaluation of qualifications in diverse international contexts.
Smart Contracts for Hiring Process — Integration of DIDs with smart contracts can automate parts of the hiring process. For example, smart contracts can be designed to automatically verify educational credentials and trigger the next steps in the hiring process, reducing administrative overhead and ensuring a smoother recruitment workflow.

Government Sector

DID in the government sector holds immense potential for transforming citizen identity management, introducing efficiency security, and reducing the risk associated with identity theft and fraud. Here are a few use cases,

Secure Digital IDs — DIDs enable the creation of secure and tamper-proof digital identities for citizens. These digital IDs are stored on a decentralized and cryptographically secure ledger. DIDs streamline the identity verification process for government services.
Fraud in public programs — In the welfare and social security programs, DIDs can be used to ensure that individuals receiving benefits are accurately identified and eligible. This reduces the likelihood of fraudulent activities and corruption and ensures public resources are allocated efficiently.
Voting Process — DIDs can be applied to enhance the security and transparency of voting systems. Each citizen’s voting record can be securely stored on a decentralized ledger, preventing tampering and ensuring the integrity of democratic processes.
Interoperability across government departments — DIDs foster interoperability among different government departments. Individuals can have a single decentralized identity that is recognized and accepted across various government departments, streamlining administrative processes and reducing redundancies in identity verification.
Emergency and Crisis Management — In times of emergencies or crisis, quick and accurate identification of citizens is crucial. DIDs can play a vital role in ensuring that individuals are accurately identified and provided with necessary support and services during such situations.
Land and Property Registration — DIDs can be used to secure digital real estate land registration. This not only ensures the authenticity of land registration but also reduces fraud in this segment.

Social Media

Social Media platforms have become integral to our lives, serving as the primary channel for communication, networking, and self-expression. As we all know, we are facing a significant challenge related to privacy, security, and control of our personal data, and this is where decentralization comes into play, offering a compelling and timely solution.

Content Ownership and Control- The evolution towards a decentralized network marks a profound transformation in the landscape of content ownership and control, positioning users as primary stakeholders in these domains. Decentralized networks prioritize and amplify user ownership.
Community-Driven Content Curation — This feature of decentralized social networks represents a departure from the algorithmic-driven approaches prevalent in traditional platforms. Within decentralized networks, the power to shape the content landscape is decentralized to the communities themselves. Users within specific communities wield significant agency in curating and surfacing content that resonates with the shared interests, values, and objectives of their community members.
Tokenized rewards and incentives — The decentralized social networks introduce a way to acknowledge and encourage meaningful contributions by users. In decentralized social networks, you have the opportunity to earn tokens as a form of recognition for active participation and valuable contributions to the platform.

Conclusion

In the end, The broad applicability of DIDs across customer-facing, managing ownership and supply chain movement use cases underscores their transformative potential in establishing secure, efficient, and user-centric systems. As industries continue to explore the benefits of decentralized identity, we expect to see an increasingly diverse range of applications and innovative solutions leveraging DIDs to enhance trust, security, and transparency.