The concept of digital identity -the personal data we voluntarily or involuntarily share online- is a cornerstone of cyberspace. Defining digital identity, regulating it and empowering the user is the next challenge we face.
Digital identity is one of the founding principles of digitalization. It is also a major challenge faced by companies, government bodies and users to achieve a fully fledged yet risk-free virtual experience. A single record of our personal data and our online activity that is kept safe and can be controlled by the user, is a prerequisite for moving toward new digital paradigms driven by cybersecurity and decentralization. What’s more, digital identity promises to blur the boundaries between the physical and virtual worlds by facilitating authentication and service integration.
The entrepreneurial ecosystem plays a key role in developing this concept and the technology that supports it. Institutions are not lagging behind in this commitment, with initiatives at the EU level defining digital identity as a citizen's right. Regulation and innovation are making great strides on the road to this new conception of our virtual self.
Digital identity: I am myself, and also my search history
Most of what defines and identifies us, from our circumstances to our tastes, experiences and habits, is reflected in the virtual world. That pool of personal information, associated with identified, individual users, has become a valuable asset in an increasingly data-driven economy.
Digital identity is the set of attributes that identify us in the network: in addition to our personal data, our identity comprises all the information we have generated through our online activity. Together, these data allow for building our profile and reputation on the web. But the data is currently segmented among a myriad of service providers, each in charge of managing and protecting its own logs and records. To address the cybersecurity, privacy and interoperability issues that this situation creates, the discussion around our virtual selves has arrived at the concept of sovereign digital identity (SSI).
"Digital identity has evolved to address the challenges of privacy and user sovereignty," explains Antonio Macías, head of payment solutions at BBVA in Spain. “So far we live in a system where identity-related data is distributed across multiple environments, with each environment being responsible for safeguarding its own data. We are now evolving, shoulder-by-shoulder with regulatory developments, toward a self-sovereign identity, where users regain control of their data."
"Sovereign identity opens the door to owning one's own identity," says Cai Felip, CEO of Union Avatars, a Spanish startup that approaches digital identity management through photo-realistic avatars. "Thanks to verifiable credentials, you can choose which parts of your identity you show and to whom, building interconnected digital profiles that you can manage and control yourself."
The startups that are redefining our virtual selves
At the core of sovereign digital identity is the concept of the digital identity wallet, where the user's personal information is stored. And developing this technology is the goal pursued by Dalion, the first pilot project to successfully complete the Spanish financial sandbox. BBVA has recently joined the Dalion consortium, which enables members of the public to self-manage their data and digital credentials from their mobile devices thanks to blockchain technology.
"For a solution such as digital identity to succeed, a step forward is to identify use cases that bring added value and novelty to the relationship among the general public, companies and government bodies," says Antonio Macías of BBVA.
Other standouts include startups such as Gamium, which develops digital identity as part of a decentralized metaverse project; or Gataca, which emerged at the Massachusetts Institute of Technology (MIT): its products include a digital wallet for smartphones and a software platform for credential management and verification. For Irene Hernández, the founder and CEO of the company, there is a word that defines the future of this technology: interoperability. A standard must be created to allow the use of a single digital identity across different services.
Latin America is also home to successful proposals, such as the Brazilian Unico, which offers biometric authentication and digital signature solutions, or social and inclusive ones, such as the joint initiative of the innovation laboratory of the Inter-American Development Bank (IDB Lab) and the NGO Bitcoin Argentina, DIDI, which seeks to improve access to quality goods and services for vulnerable populations.
Digital identity as a public and private standard
The European Union is currently drafting a European Self-Sovereign Identity Framework (ESSIF) based on the use of decentralized identifiers or DIDs, which are both unique and global, to enable verifiable identification of a person while remaining decoupled from centralized registries, identity providers and certification authorities.
The European Commission's eIDAS 2 regulation, currently in the pipeline, supports this type of identifier and seeks to make a cross-border electronic identification system in the EU, the e-ID, a reality.
By 2024, Member States must provide any EU citizen who so wishes with a digital wallet, valid throughout the EU, which every company and organization will have to accept as a method of authentication.
In addition, digital identity is emerging as a key lever to promote digital and financial inclusion. "What is the widespread problem with government digital identity systems? They are difficult to use," reflects Irene Hernández of Gataca. "With decentralized digital identity, accessibility is going to improve exponentially, because the focus is on the user experience."