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Web 3.0 Core Components: Is Identity Management the Next billion market?

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In Crypto, in the absence of an identity, machines are rapidly taking over territory.

An Indispensable Core Component of Web 3.0: Identity Management, the Next 100 billion Market?

原文来源：欧科云链 OKLink

In the Web 3.0 era, with the help of DID (Decentralized identity system), the control of identity and data is returned to users. While getting rid of the control of centralized data service platform, the information aggregation of DID makes users' digital identity more rich and three-dimensional. Lay the foundation for open finance, games and other diversified application scenarios.

Of course, to make up for the lack of identity in the crypto world and build a network that can deliver high value such as trust, DID, as an indispensable core component of Web 3.0, is becoming the next billion market...

In the early days of the Internet, there was a popular saying: "On the Internet, nobody knows you" re a dog."

The phrase itself was the title of a Cartoon in the New Yorker on July 5, 1993, showing two dogs, one sitting in a chair in front of a computer, uttering the "classic quote" with another dog sitting on the floor.

Photo source: Internet

Thanks to this remark, the cartoon became the Most reprinted in the New Yorker, and some say it represents an understanding of the Internet, highlighting users' ability to send and receive information in a way that doesn't reveal their personal information.

But the good times did not last long, due to the absence of digital identity on the Internet, such as online violence, human flesh search and other activities began to go crazy, this sentence also became the portrayal of the chaotic situation at that time.

In Our Trust: Why We Trust And Outliers (Liars and Outliers), Bruce Schneier, an American cryptographer and information security expert, lays out four different kinds of social pressures: moral, reputational, institutional and protective.

He believes that social pressures are the origin of trust, and that these pressures constrain the behavior of individuals and enable groups to cooperate.

It is not difficult to understand the phenomenon of the wild growth of the Internet in the early stage. It is precisely because the identity of the digital world is disconnected from the real society that the pressure in the real world cannot be transferred to the Internet, so that it has become a wilderness where trust needs to be reshaped and reconstructed.

As we all know, the word "identity" covers a range of social, cultural, regional, psychological, political, religious and other dimensions. It is "the set of attributes associated with an entity", which can be a person, an institution, an application or a device.

In order to solve the above problems, the network real-name system was put forward. After all, identity-based trust systems have accompanied the development of human society throughout history.

The combination of photographs, paperwork, and credit created the modern identity system, which is still used today as a means for citizens to enter the economy and confirm their contributions to society.

As of March 31, 2021, nearly two thirds (65.6%) of the world's Internet users, a variety of Internet applications and services through computer devices, the integration of digital life and real life, and tens of thousands of users, enterprises and institutions interact with each other all the time.

In this interaction, there are two digital identity modes, one is the Internet traditional account mode, the other is one-click login.

Under the traditional account mode, different websites and applications have their own independent identity registration and login systems when we use them.

Essentially, we give our identity information to the service provider, the service provider creates the ID, then lends it to us, and the data we generate is stored on their servers. The downside of this model is that each application needs to create accounts, and the more accounts there are, the more chaotic the management becomes.

Thus the second one - click login mode emerged. In simple terms, we upload our data to the central system of a login service provider, which, with the authorization of the individual, provides our data to third parties.

For example, we generally accept the service of one-click login of various applications through the account ID provided by wechat, Alipay, Facebook, Twitter and other big platforms.

While easier to use, entrusting personal data to big platforms is extremely dangerous for both companies and users, raising two sharp questions.

First, users lack ownership of their data, leaving platforms to reap the lion's share of revenue. For all of 2021, Facebook posted a profit of $39.4 billion, up 35% from a year earlier, while Google's Q4 AD revenue topped $60 billion last year, making the income of creators producing content for those platforms look paltry.

Even MrBeast (Jimmy Donaldson), Youtube's highest-paid Internet celebrity in 2021, was only $54 million, and that's what he and his team earned together.

Our digital identities are owned and utilized by these platforms, and thousands of data form accurate user portraits. With the analysis of big data, our behaviors and preferences become the objects of platform prediction and advertising. Most people not only produce data for nothing, but also pay for platform services and advertising.

Secondly, the centralized architecture means that privacy leakage is an inevitable event once it happens. The most notorious example was Cambridge Analytica's unauthorized collection of data from 50 million Facebook users for political campaign ads.

Whether it is traditional account mode or one-click login, the control of personal data never belongs to users themselves, and as the pain point of data leakage and abuse becomes increasingly prominent, identity recognition under Web 2.0 is coming to an inflection point.

Man vs. Machine: Identity loss in Web 3.0

The advent of Web 3.0 is seen as a turning point in creating powerful identity systems, a flexible, shared and resilient decentralized identity layer that will unleash greater innovation through a wider design space.

Block chain distributed architecture, tamper-resistant, hash encryption feature is to establish a credible, the identity of the decentralized system, ensure the application fully Shared, across multiple industries and ecological and individuals can manage identities at the same time, do not need to rely on to provide application platform, block chain is not with the decentralized identity strong binding, But it can be said that blockchain technology and protocols are the optimal solution for building decentralized identity systems.

Like the early days of the Internet, there is a lack of identity in today's crypto world. Compared with DeFi, NFT, DAO, etc., decentralized identity (DID) is still a neglected topic.

Many blockchain projects are trying to create a more efficient environment than the current world. After all, if they can achieve this goal, they can capture the value of the existing crypto ecosystem and expand it to connect crypto to the real world.

Amentum Capital attributes the lack of such a transformative product to the fact that the blockchain ecosystem is difficult to govern due to the lack of a secure enough identity layer, i.e., a decentralized unique identity protocol.

Here we need to introduce an interesting experiment. If you were put in a completely closed room, with only a small hole to communicate with the other room via text, you could write down any questions and slip them through the hole, and the other person would pass the answers back. So how do you tell if someone is a real person or a computer from pen and paper?

The above experiment was a simplified version of the Turing Test, in which Alan believed that if a machine could fool participants into making false judgments, it passed the test and was considered to have human intelligence.

Although artificial intelligence such as Jarvis in Iron Man is still a long way off, AI is already being used in gaming, finance and other fields. IOSG team pointed out that with the new business model convergence, is the high-speed development of hardware and machine learning theory, and Crypto world, AI intelligence will further exponential savage growth.

In real life, we have a series of identity certificates such as ID cards and bank cards as moats to resist unofficial AI's excessive participation in economic activities, but in Crypto, due to the absence of identity, the machine is rapidly attacking the city.

Take P2E model as an example. In essence, P2E is a business strategy that reduces the cost of acquiring customers by subsidizing users and hopes to convert user stickiness into business value by encouraging users.

But now, with the fleece party, the P2E is being taken over by machines that don't pay for the experience or even the transmission value. It is reported that about 30% of THE SLPS in Axie Infinity have been removed and sold off by robots, which to some extent has increased the difficulty for the project party in economic model update and market value management.

In addition to chain games, NFT, DAO governance, DeFi loan mortgage and other scenarios are also facing various limitations due to the lack of identity. Obviously, DID, as a market waiting to explode, its exploration and scale will increase exponentially in the future.

Building better Web3.0: DID and data sovereignty and privacy protection

A while back, there was a graphic that went viral in the crypto world, illustrating the changes from Web 1.0 to Web 2.0 to Web 3.0.

While Web 1.0 was a user name and password login mode, Web 2.0 is a one-click login mode with Google, Facebook and wechat accounts. With Web 3.0, you log in using your wallet.

Photo source: Internet

Is "use your wallet to log in" the so-called DID, what does DID mean to us?

DID (Decentralized identity System) refers to decentralization, which allows individuals or organizations to fully own, manage, and control their own digital identity data instead of multiple centralized providers managing multiple digital identities.

Users can carry, hide, disclose or revoke their certificates, and the dependent party can always verify the authenticity and validity of the certificates. In addition, users can display different identifiers according to the needs of the occasion. For example, underage drinking is prohibited in the United States. With DID, only a statement proving that the seller is over 21 years old is provided to the seller without sharing the date of birth.

In this sense, "Login with wallet" is an application of DID. This shift means that our data and information are no longer stored on the servers of large companies, and we can freely enjoy the use of data without risking the control of data and assets by a centralized entity.

Of course, prototypes of DID are already out there, though easy-to-use tools, including privacy and private key management, have yet to be developed.

The DID architecture has been broken down from the bottom up into four components: identifier standards, infrastructure, credentials, applications (wallets, products), and of course projects that impact at multiple levels beyond any single layer.

Photo credit: Amber

At the level of identifier standards, DID of W3C (World Wide Web Consortium) and DID of DIF (Decentralized Identity Foundation) play a key role.

The W3C DID standard is used to identify people, organizations, and things and implements many security and privacy guarantees. It is mainly composed of the base layer DID specification and the application layer verifiable declaration.

Role is the DIF users have full ownership, users can interface development any logo registration or the analytical system through a unified interface identifier, any type of distributed in order to establish an open, decentralized identity ecosystem, and ensure the interoperability between all participants. DIF's alliance members include Microsoft, IBM, Accenture and other well-known companies.

Centralized data caused by misuse, platform fragmentation and users to data loss of sovereignty is spawned DID the reality of soil, chain blocks, decentralization, without permission of the distributed database, and is used for data integrity audit and cryptography technology such as identity authentication, rather then to existing Internet application layer under add a universal identity layer, Then use an identity layer to help users take back their data sovereignty from the giants.

In the existing crypto world, transaction records and behavioral data on individual chains are a "gold mine to be mined." Meanwhile, with the increase of robot activities, it is inevitable to defend the rights and interests of biological people.

As an indispensable component of Web 3.0, DID plays the role of infrastructure. As we all know that modern finance is essentially a variety of derivative gameplay built on credit, there will be more and more rich gameplay based on DID in the future.

Due to space limitations, we will introduce various practices and explorations of DID in blockchain in the following articles. Of course, the development of DID is still in its early days, and we'll keep an eye on new use cases to bring you more first-hand information.