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Advancing Blockchain & Identity

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One World Identity (OWI), an independent advisory company focused on trust and the data economy, delivered a report in 2017 which pursued to lay a foundation for understanding blockchain and identity. The report acknowledged five main conclusions on 2017’s blockchain and identity outlook:


· Smart contracts are under-explored.

· Authorization use cases have potential for growth.

· Blockchain has a problem with identity creation.

· The on-chain/off-chain pivot is a persistent challenge.

· Investors and entrepreneurs need to better align blockchain functionality with identity use cases.


Recently, OWI issued an updated report addressing its 2017 conclusions titled, “Blockchain and Identity in 2018: A Year of Promise and Pilots.” The report explores whether last year’s five declarations have come to fruition and setting five new predictions for 2018.


OWI summarized that the market started addressing the questions critical to blockchain development in the identity space. Forming solutions around a defined set of identity use cases and governance structures designed with targeted functionalities and regulatory concerns in mind. Based on OWI’s 2107 conclusions, below is how they advanced:



SMART CONTRACTS ARE UNDER-EXPLORED


A few early and established tools prove the viability of smart contracts for identity use cases. Smart contracts are central to the authentication architecture of the more established players in the space. The overall velocity of development in the smart contract space, both for identity and broader use cases, has increased. Security concerns are still a major factor, but smart contract technologies and the ability to troubleshoot them are maturing.



AUTHORIZATION USE CASES HAVE POTENTIAL FOR GROWTH


While overall market adoption of blockchain-based authorization solutions remains low in respect to other identity building blocks, OWI maintains its optimism about the potential of distributed ledgers for authorizations surrounding the identity of things (IDoT). Major platform players as well as enterprises have laid out plans for either experimentation or outright implementation of blockchain-based identity and authorization, including Microsoft, Okta, IBM and major banks and financial institutions.



BLOCKCHAIN HAS A PROBLEM WITH IDENTITY CREATION


Identity Creation for people, entities and other non-digitally-native things continues to be an enduring problem for blockchain-based identity technologies. To address the problem, organizations are combining real-world legacy identity credentials with blockchain based security and transactability of digital identity manifestations. The technology to do this is in place today by some of the pioneers of blockchain-identity, but operational adoption at scale is still needed to properly gain grounds in this area.



THE ON-CHAIN / OFF-CHAIN PIVOT IS A PERSISTENT CHALLENGE


The transfer point of identity data between a real-world person and an on-chain digital representation isn’t something a distributed ledger can solve, and translation errors are a long-term problem. Over the last year, OWI found organizations aimed to address this challenge by moving the point of physical creation and digital creation closer together.



INVESTORS AND ENTREPRENEURS NEED TO BETTER ALIGN BLOCKCHAIN FUNCTIONALITY WITH IDENTITY USE CASES


The past year was plagued by rampant fundraising fraud and outright scams surrounding blockchain technology, proving the need for a more critical approach for aligning existing identity issues with suitable blockchain solutions. Nevertheless, the concept of “blockchain, not bitcoin” continues to gain momentum, benefiting the development of practical, innovative identity solutions.


In general, many of OWI’s predictions were accurate, though the space is developing to address its most pressing challenges very quickly. The report highlights 18 companies and organizations, 13 featured companies and five up-and-coming companies at the forefront of the blockchain identity landscape. Each influencing the development of the space and looking to address its challenges by building necessary infrastructure and developing and deploying identity specific solutions. The future of blockchain and identity will be molded by these key players making the infrastructure and solutions put forth in 2018 and beyond interesting to watch.


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