Digital Identity: Centralized or Decentralized Futures — Intro (1/3)

Software is eating our world, including our identities. What does the future of digital identity look like when web3 takes over?

If this topic interest you, considering joining the conversation Thursday, Jan 13th: click here

I want to tell a story.

In order for me to tell this story, we, the writer and reader need to have a couple key ideas synched, some would say interlinked. If not, most of our time together will be lost.

Note: If you doubt any of these, sit with them for a little, try them out for size, but don’t get hung up, they are mainly for a baseline. Identity is an infinitely complex topic. Worst case scenario, suspend your belief for a few.

Let’s interlink (connect) on these:

1. What is identity? Identity is the ability to be represented in a transaction/interaction.
2. What does identity enable? Identity enables commerce and interactions.
3. How does identity emerge? Identity emerges physically and/or digitally.
4. Who controls identity? Identity is controlled by centralized or decentralized entities (people or orgs).
5. Why is identity important? Identity allows for trust to emerge in transactions/interactions.

Synced? If yes, let’s talk about our path together.

We will divide the discussion into 3 parts:

• The abstract, meant to weave us down a path of high level thoughts.
• The details or technicals, meant for us to free fall down different rabbit holes of complex ideas.
• Lastly, call to action, meant to make everything we discuss tangible.

Let’s get started.

The Abstract

Meet 6a, short for Android 6a24. He’s a droid that has lived through many eons of human existence, now living in an era of teleportation, off-world. Through this time he encountered many civilizations that engaged in commerce.

We’re going to teleport 6a and anchor to 3 key eras of 6a’s existence:

1. ‘Cavemen’ era, where commerce required total and real-time physical presence.
2. Renaissance era; where commerce became ledger based with physical presence (also, double-entry bookkeeping).
3. Digital era; where commerce became, entirely or partially, digital.

‘Cavemen’ Era

During this time, in order for any commerce to be transacted, all physical entities needed to be present (person and objects). If person A transacted with person B, all goods to be exchanged must be physically present at the time of transaction.

The cost of not having the item physically was too high if you wanted to complete a transaction i.e. lying, cheating, stealing. Also, the cost of carrying items on you at all times was too high.

Why? during this time, the main form of commerce was likely just food. Food did not have a great ability to be transported i.e. shelf-life. Therefore, commerce was very heavily bound by the transport & carrying cost of that particular item.

But, when commerce did occur, it would happen amongst locals. Tribes of different regions likely never transacted. What would these transactions likely look like?

History tells us that commerce took place in the form of bartering. But if were were to discuss bartering under the lens of identity, how was it represented, how did it emerge, who controlled it, and why did they trust each other to complete the transactions?

Each party likely represented themselves as part of a tribe, where consensus of trust was based on everyday physical interaction. If you weren’t recognizable, you likely got beat up, eaten, or pushed away. And the control came from each individual person.

The only form of confirming if you were indeed who you said you were, was to be recognized by another human, based on your physical appearance and the language you shared.

Well during this time 6a got bored very quickly. As you would imagine the days were extremely long, slow, and boring. After all, he came from the future where information gets beamed in micro seconds.

6a decides to teleport to…

Renaissance Era

Things picked up here.

Commerce was taking place on a ledger and double-entry bookkeeping blew up. Apparently, some guy name Medici (linked in case you’re curious) was a good salesman.

This took transactions and interactions of the commerce space to completely different levels. What was once completely restricted to real-time & total physical presence, became ledger based, meaning that the carry and transport cost of commerce decreased. Allowing individuals to trade based on mutual trust that could be recorded in a ledger.

If we revisit the same components as before, how was identity it represented, how did it emerge, who controlled it, and why did they trust each other to complete the transactions?

Here it’s important to begin identifying the idea that a centralized body emerged, holding the ledger e.g. businesses, the church, or the state. Identity still primarily resided at the control of the individual, as in, the identity represented belonged to each party, physically or verbally, expressing the trust required for the transaction. Confirming via physical or ledger form if you owned something and if your reputation was good or bad.

The key differences were that double-spending was a problem, the exchange was no longer bartering, and transactions could be held on credit. (I would imagine defaulting on your credit during this time was not as pleasant as filing for bankruptcy)

Without getting too deep into the nuances of history, here is where we start to see the emergence of centralized data structures that are controlled by an organization, that could impose restrictions to your transactions. This data of course was in analog (or physical) form. But if the organization could not prove or trust your claims, for expected transaction, they would reject it.

Here we see the complexity of identity, trust, reputation, and ownership increase. Options to perform commerce grew and so did its complexity.

This era surely was more exciting but not as exciting as..

Digital Era

Now 6a felt more at home. Information began to live on machines. Ledgers went from analog to digital forms. Everything that was performed in the physical world began to take shape in the digital world.

Physical transactions were highly augmented by digital information. As a matter a fact, most transactions today are purely based off digital information. Where organizations make decisions to approve a transaction based on information that exist about us somewhere out in the digital-world.

What is this information? It ranges anywhere from:

• telephone data
• banking data
• credit data
• utility data
• social data
• location data

The list can probably continue..it is unquestionable, technology has made transacting more convenient, while simultaneously increasing the complexity of identity.

All of the elements that proof-of-work (PoW) required in the analog world, proving you either own or are in possession of something required actual physical work, begins to get overlaid onto the digital world (not going to talk about bitcoin, yet).

So, as we have done twice before, lets bring in the questions..

How is identity represented, how does it emerge, who controls it, and why do counter-parties trust each other to complete the transactions?

Identity can take 2 forms:

1. It can be the representation based of the old analog form.
2. Or, it can be based off whatever API an organization is connected to, determining if the person creating the transaction is who they say they are.

The issue here is that, the API information used to represent us in that transaction can many times be incomplete/partial or inaccurate. We also have ZERO visibility or control of the data. Trust becomes completely outsourced to this centralized structures. Yes, convenience is exponential but so is fraud and centralization.

Centralization isn’t all bad but there are many limitations when it comes to commerce & identity.

This leads us to the next section..details or technicals.

Which we will cover tomorrow, sinking our teeth into what this all means and getting dirty.

See yah then!

Alright, well if you made it this far, thank you, and you’ve completed the Abstract portion of this read..

All errors and typos are my own.

If this topic interest you, considering joining the conversation Thursday, Jan 13th: click here

About the author

Les is a Data Scientist at Prove, he’s constantly noodling how data represents us in the digital world and how we can be better represented and safer when transacting in the economy, now and in the future.

He’s also a punk in the @BladeRunnerPunk community.

Prove, is the modern way of proving identity with just a phone. (more on this in the next section)