What Are Decentralized Identifiers (DIDs) and How Are They Used?

The way we manage digital identities today is broken. Centralized providers like Google, Facebook, and government agencies control our identities and income personal gains from our data. This leaves users with little say over how their identity information is used. Decentralized identifiers provide an alternative approach where users own and control their identities independently. DIDs allow users to prove whom they are without relying on a central authority. 

Here we will discuss what decentralized identifiers are, how they work, and their key advantages and limitations. We will also explore the emerging standards around DIDs and their potential impact on the future of digital identity. By understanding decentralized identifiers, we can evaluate their ability to transform identity management and offer users more autonomy over their online personas. This has significant implications for digital privacy, security, and user empowerment going forward. So let's unravel the power of decentralized identifiers and how they may reshape our online identities.

What are decentralized identifiers?

A decentralized identifier or DID is a unique long-term identifier that can be used to identify entities on the web in a decentralized way. DIDs are managed independently from any centralized registry, identity provider, or certificate authority.

DIDs are represented as URIs that resolve authentication credentials and information about the entity. They allow the entity to prove control over the identifier and authenticate itself based on cryptographic keys.

DIDs are managed by the entity itself through a "DID document" which contains public keys, service endpoints, and other information. The DID document can be stored on any decentralized storage and resolved through a distributed lookup protocol.

This means that no single entity controls or manages the DIDs. They exist independently of any authority and can be created by anyone at any time.

DIDs aim to give individuals full autonomy over their digital identity. They can be used to authenticate entities in a verifiable, secure, and privacy-preserving manner. DIDs form the basis for a decentralized identity ecosystem where individuals own and control the data associated with their identities.

Types of decentralized identifiers

Here are the main types of decentralized identifiers:

• Self-sovereign DIDs - These are DIDs that are fully controlled by the entity they identify. The entity creates and manages its own DID and DID document. Self-sovereign DIDs give the highest degree of autonomy over digital identity.
• Peer DIDs - These are DIDs that are managed by a decentralized peer network. The peer network collectively manages the DID registry and resolution. The entity still has full control over its DID document.
• Proxy DIDs - These are DIDs that are managed on behalf of an entity by a third party called a proxy. The proxy creates and maintains the DID and resolution service. The entity delegates certain powers to the proxy but still retains ownership of the identifier.
• Sponsored DIDs - These are DIDs that are issued by an organization to represent an entity. The entity does not fully control the DID but gains identity attributes from the sponsoring organization. Sponsored DIDs give the entity less autonomy over its digital identity.

Decentralized identifiers range from being fully self-sovereign and controlled by the entity to being sponsored and proxy DIDs that are managed by third parties on behalf of the entity. Self-sovereign DIDs provide the highest degree of decentralization and user autonomy over digital identity.

Standards for decentralized identifiers

Some several standards and specifications define the data model and functional requirements for decentralized identifiers:

The W3C Decentralized Identifier (DID) specification is the main standard that defines the syntax, semantics, and validation rules for DIDs. It also specifies the DID document that contains information about a DID.

The W3C Verifiable Credentials Data Model defines how credentials containing verifiable claims about DIDs can be issued, presented, and verified. These credentials can help prove identity attributes in a decentralized way.

The W3C Decentralized Document Access Control defines mechanisms for managing access to DID documents and the resources they point to. This helps enforce the privacy and security of DIDs.

The Decentralized Identity Foundation has created DID specifications to ensure interoperability among DID systems. They define DID methods that map DIDs to specific resolution systems.

The Organization for the Advancement of Structured Information Standards (OASIS) is working on standards for decentralized identity management. This includes specifications for DID exchange formats, profiles, and registration.

Together, these standards define the data model, resolution mechanisms, credential formats, access control, and interoperability requirements for decentralized identifiers. They form the foundation for the decentralized identity ecosystem around DIDs.

While still evolving, these standards are helping make decentralized identifiers more standardized, secure, and interoperable across different identity systems.

Advantages and need of decentralized identifiers

Decentralized identifiers provide users with more autonomy and control over their digital identities. They allow users to:

• Own their digital identities: With DIDs, users fully own and control their identifiers instead of relying on centralized providers. This gives users sovereignty over who can access and use their identity data.
• Manage identity portability: Since DIDs are decoupled from any particular identity system, users can easily port their identities across different applications and platforms.
• Increase privacy and security: Since DIDs are not registered with any central registry, there is no single point of failure or data collection. This reduces the risk of identity theft and data breaches.
• Create verifiable credentials: DIDs enable users to issue, present and verify credentials containing identity attributes in a trustworthy manner without relying on centralized authorities.

The current centralized identity systems have several weaknesses that DIDs aim to solve:

• Single point of failure: When a central identity provider fails or is compromised, all users can be affected. DIDs distribute this risk across multiple components.
• Lock-in effect: Centralized providers can lock users into their specific platforms, making it hard for users to port their identities elsewhere. DIDs mitigate this lock-in effect.
• Lack of transparency: Centralized providers usually have full control over users' identity data with little transparency. DIDs put users back in the driver's seat of their digital identities.
• Weak privacy: Centralized providers often collect excessive identity data for their purposes. DIDs can improve privacy by limiting data collection and sharing.

In essence, decentralized identifiers offer a better approach to digital identity management by putting users, not providers, in control of their identities. They fulfill the need for more autonomy, interoperability, privacy, transparency, and security in an increasingly digital world.

How do decentralized identifiers work?

Decentralized identifiers allow entities to own and control their digital identities independently, without relying on a central registry or authority. To achieve this, a decentralized identifier consists of two main components: the identifier itself and an associated DID document.

The DID resolves to a DID document which contains information about the entity like authentication methods, public keys, service endpoints, and verifiable credentials. Since DIDs are not registered centrally, the resolution to the DID document happens through a distributed system that may use blockchains, IPFS, or other decentralized technologies.

Entities with DIDs can authenticate themselves by proving their control over cryptographic keys linked to their DID document. This proves their ownership of the identifier. They can also issue, present, and verify digital credentials that contain verifiable claims about their identity attributes, all without centralized authorities. The DID documents are typically stored on decentralized storage systems to make them censorship-resistant and permanent.

An entity first generates a DID and DID document, stores the document on decentralized storage, and then other entities can resolve the DID to the document to verify the entity's identity. The entity proves its identity by demonstrating control over the corresponding cryptographic keys. This entire process happens in a decentralized manner without requiring central authorities. This model gives entities full autonomy and control over their digital identities.

Use cases of decentralized identifiers

Decentralized identifiers have several potential use cases where their advantages come into play. One major use case is self-sovereign identity where individuals own and control their digital identities independently. DIDs allow users to manage their identities across different applications and platforms while maintaining full autonomy. This can enable more privacy, transparency, and control for users in the digital world.

Another major use case is verifiable credentials which rely on DIDs. DIDs allow entities to issue, store, present, and verify digital credentials containing verifiable claims about their identity attributes. This has applications in areas like education, healthcare, and employment where verifying credentials in a trusted and privacy-preserving manner is important.

DIDs also enable identity management for the decentralized web. As more applications and data move to decentralized networks like blockchains, DIDs provide a standardized way to identify and authenticate entities within those networks. This facilitates interactions between decentralized applications and resources.

In supply chain management and IoT, DIDs can be used to uniquely identify physical objects in addition to digital identities. This allows objects to transact and interact with each other in an autonomous and verifiable manner.

In general, any system that requires strong digital identity management with high user autonomy, privacy, security, and interoperability can benefit from using decentralized identifiers. As the need for robust yet reusable identities grows online, DIDs are poised to play an important role in shaping the future of digital identity.

Future of decentralized identifiers

Decentralized identifiers are still an emerging concept but they are poised to transform how digital identities will be managed in the future. As the need for strong yet user-controlled digital identities grows, DIDs offer a promising solution. Here are some ways DIDs may shape the future of identity:

• Widespread adoption - As more applications require verifiable credentials and decentralized access control, DIDs are likely to see wider adoption. Use cases like self-sovereign identity, the decentralized web, and IoT could drive mainstream use of DIDs.
• Integration with blockchains - More DID implementations will leverage blockchains to enable fully decentralized identity management. Blockchains offer a censorship-resistant and permanent medium to store DID documents.
• Improved standards - Existing standards around DIDs will continue to evolve and converge to ensure interoperability. New specifications covering areas like revocation, renewal, and cross-DID interactions will emerge.
• Greater DID interoperability - As DIDs are used across different systems, the need for DIDs to interact with each other will increase. This will likely drive the development of interoperability standards and frameworks.
• Stronger user tools - More user-friendly tools and wallets will be created to help users easily create, manage and use their DIDs. This will improve the overall user experience of decentralized identities.
• Combining identities - Methods may be developed to combine DIDs with other identity systems to improve overall identity management. This could offer the benefits of decentralization along with the features of traditional identities.

In general, decentralized identifiers are poised to become the de facto standard for digital identities of the future. As their capabilities and user tools improve, adoption is likely to accelerate, gradually replacing the need for centralized identities. DIDs represent a user-centric approach to digital identity management that puts individuals in control - a model that seems inevitable for the future web.

Conclusion

Decentralized identifiers offer a promising new approach to digital identity that gives users full autonomy and control. While still emerging, DIDs have the potential to transform how identity will be managed online in the future. By embracing this decentralized model and the standards around it, we can build a more user-centric, private, and trusted identity ecosystem. 

So, as we move into an increasingly digital world where identities become more valuable, decentralized identifiers may provide the key for users to truly own their identities and have agency over how their data is used. DIDs represent a revolutionary shift towards putting individuals, not corporations, in the driver's seat of their digital identities.