The Importance of Digital Identities in Web 3.0

IBC Group News
4 min readJul 9, 2022

Digital identities have evolved from simple verification documents to quintessential enablers of modern life. This is especially true during times of the pandemic when classes, work, medical appointments, shopping, and much of our routines were transferred to the world of the Internet.

Thanks to constant innovations in technology looking to enrich the lives of an ever-connected population, we’ve seen the rise of digital identities as a form of modern security. Digital identities and Web 3.0 go hand in hand, as decentralization allows users to once again be the sole owners of their digital identities. As a result, big tech companies can no longer misuse and commercialize their users’ private data.

What are digital identities?

Digital identities usually fall under two specific categories:

1. Digitized credential document:

This could simply be your passport, driver’s license, or a government-issued ID card. This identifying document is then digitized for online use. The main idea is to empower remote access to services that would usually require a physical passport/ID check.

Using these types of digital identities, an investor could remotely take out a loan from an online bank, a couple could remotely sign up for a romantic cruise, or perhaps an elderly lady could remotely withdraw pension funds.

2. Character profiles:

Character profiles typically consist of user profiles on social media, career/networking sites, and even minuscule pieces of information such as online purchases, webinar registrations, and the type of newsletters a user is subscribed to.

Social media sites you sign up to can be privy to all this information and can use it to create your secret digital profile. The purpose of this profile is to feed you better (more personalized) content in the form of ads, trending stories, social causes, and anything else that will keep you scrolling for as long as possible.

Furthermore, character profiles could also be a digitized form of reputation. Perhaps a graphic designer could store testimonials, diplomas, reviews, and art snippets on a website. A person could also have an employment record made available online via certain websites.

Why are digital identities important in the Web 3.0 space?

Digital identities are paramount to the success of Web 3.0, because of how they allow people to represent themselves in their unique way. Thanks to the numerous Web 3.0 services available on decentralized apps (dApps), it is necessary to have a digital identity to securely browse these dApps and accomplish a list of objectives, including interacting with other users in decentralized social media apps.

Here are a few more examples:

  • A common idea associated with Web 3.0 is being paid in tokens to browse the web, view ads, or test beta features. As smart contracts mainly power Web 3.0, a digital identity may be necessary to determine what type of ads should be served to users with specific interests. For example, an avid gamer is more likely to interact positively with a Blockchain gaming ad and not as well with an ad promoting a world tour package.
  • dApps storing private credentials such as login details, credit scores, and IP addresses will need to create secure digital identities to ensure a person cannot fraudulently take another person’s identity and create trouble.

Decentralized digital identities

The difference between Web 2.0 digital identities and their decentralized counterparts is that when a digital identity is decentralized, third-party websites can no longer control your digital appearance.

For example, when a social media account is seen to be posting controversial political content, the company behind the website can unjustifiably censor the account and/or ‘shadow-ban’ it as well. Big tech companies such as Facebook and Google have also been reported to sell their user’s private data.

Since Web 2.0 social media sites own all of their users’ data and their digital profiles, they are free to do whatever they would like with it. Content creators can be shut down at a moment’s notice without a legitimate cause or explanation.

Decentralization solves all of these problems by creating a trustless environment where users can individually manage their data and not rely on centralized authorities to decide what happens to their digital identities.

Does a decentralized digital identity truly exist?

There are already numerous startups looking to build a decentralized ecosystem on Web 3.0. Point Network aims to create a fully decentralized internet or in other words, ‘Web 3.0’. The Point Browser enables users to create their own unique digital identity that is completely out of the hands of a third-party organization.

A user with the handle @john will automatically become the owner of his very own domain space at “https://john.point". This ‘.point’ domain name is used for Point Network’s version of digital identities in the form of a Web 3.0 website.

In addition to domain names, each user’s digital identity will be used for various other decentralized applications (dApps), such as decentralized social media, decentralized email, and public payment handles.

By having a decentralized digital identity, users will automatically be authenticated on all Web 3.0 dApps. That means no more having to register accounts and remember a bunch of passwords for each application.

Conclusion

A World Bank study revealed that 1 billion people do not have any proof of identity. But thanks to digital identities, these people can still be a part of society and enjoy their time online. When it comes to keeping a user’s data secure, decentralized digital identities like Point Network’s may present the solution.

Digital identities have had a profound effect on our digital lives, especially because of the improved access it provides to an ever-increasing amount of online services. Although there are concerns about how data is managed, Web 3.0 can potentially solve many problems associated with centralized digital identities.

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