Decentralized, independent and anonymous user-owned identities will be a part of the Web3 stack, but only if we stay conscious of the pitfalls.
Despite a few hopeful signs for those looking for spring, crypto winter remains. Pundits and analysts addressing the market woes often point out the hopeful upsides. These hard times will likely shake out bad projects and leave a more robust ecosystem. Like most parts of evolution, it's an elegant system to contemplate but not always pretty to watch.
It's an excellent time to return to the fundamentals — projects that deliver real utility and address human needs with actual use cases. One of the fundamental parts of any Web3 ecosystem is identity, and it's a big deal to people.
A recent survey of 8,000 respondents by Opinionium showed that 80% of consumers prefer online brands with strong digital identity verification. Web3 promises a new host of expanded services, some transactional, so there is good reason for the Web3 community to focus on the promise of a blockchain-protected, decentralized identity (DID).
Ontology Network ONG/USD has been working on this issue since before its network launch in 2018, as part of its stated mission of "bringing trust, privacy, and security to Web3 through decentralized identity and data solutions."
We spoke with Humpty Calderon, head of community at Ontology, to learn more about the state and future of a truly decentralized, user-controlled, independent and anonymous identity system for Web3.
BZ: Why is self-sovereign identity an important feature for Web3 development?
Calderon: "With Web2 identities, like Facebook identity or Google identity, you create identities, and they are user services, but those identities are not yours. They are owned by those organizations. Data that you produce using those products is aggregated, mined, and monetized by these companies. You have neither a say in how your data is used nor a share of that revenue.
In Web3, we see an opportunity for individuals to own their identity to create richer user experiences in this ecosystem, but also for them to own the data on the backend. So currently, member identity is centered in, for all intents and purposes, your Web3 wallet, your MetaMask, is your Web3 identity. You sign in with them, and you do transactions. All the data that's on the back end is accessible via the private key via your wallet.
Decentralized identity takes it a step further. So DID is not a new concept. It was developed by the Decentralized Identity Foundation (DIF) and the World Wide Web Consortium (W3C) for quite some time. It allows you to take the identity that is currently siloed within one blockchain and take it across multiple blockchains. So my identity, and more importantly, the reputation that I build using this identity on blockchain, is portable and interoperable."
Is the idea of controlling your identity tied to monetization? And doesn't that suggest our identities are just a commodity to sell?
"I would argue that it isn't about the financialization of your data. It's about control and setting permissions to dictate how that data gets used. So it is up to you how that data is used, whether you choose to financialized that or not. The idea is for users to fully own and consent to how their data is used."
How many users are using Ontology's decentralized identities?
"In the area of decentralized identity, Ontology is one of the more mature projects. We have been building this since before they launched their blockchain; they were a member of the Decentralized Identity Foundation. There are more than 1.6 million on OntIDs that have been distributed. And so what that means is that Ontology has provided this self-sovereign identity for 1.6 million identities.
Keep in mind that in Web3 identities work a little differently than your email, where you may have different identities for different use cases, you may have an identity for DeFi, you may have an identity for interacting with DAOs and governance and so on. Because you want to be able to segment those areas of your Web3 activity. That's good PSYOPS. At least you want to be able to protect your identity, and you don't want to connect those identities for all sorts of use."
The term psyops (psychological operations) has a gray history at best, what makes it a relevant term for Web3?
"I'm not the first to use it. It means you want to create systems that allow you to have a segmented identity, and segmented use of your data, in the Web3 ecosystem. So you protect yourself if anybody wishes to identify you in the real world."
Doesn't the idea of truly decentralized and anonymous identity open up more possibilities for bad actors that want to use crypto for illegal activity?
"The same could be said about cash, right? Cash is probably one of the more anonymous ways to perform a transaction. I think we need to be reflective about the development that we do. And we need to be thoughtful and inclusive of different people and to be able to understand the future that we're building and so that it's not dystopian."
What about in cases where true anonymity can be used to plan or fund terrorism?
"There's going to be some malicious actors and people that are going to use the technology. This technology isn't exclusive to blockchain. The other thing I wanted to talk about is using your decentralized identity to build your reputation.
One of the other projects that Ontology is incubating is called Orange Protocol. And Orange Protocol is not the only one working on how we can build reputation, so it's usable within the blockchain space, still respecting people's privacy and their self-sovereign identity, but in a way that we can unlock access to the good actors, and segment communities based on interests. We can develop a system using DID-verifiable credentials, VCs, which provide some reputation proof for these individuals. And that could be positive and negative.
One school of thought says we should not be making negative attestations, and we should be making positive attestations. But negative attestations are valuable, especially in the social space. We want to make sure that the people we're interacting with are good actors. In fact, if you read the Decentralized Society paper that was written by Puja Ohlhaver, E. Glen Weyl and Vitalik Buterin in May, that's exactly the argument they're making."
How does Ontology fit into the Web3 ecosystem? What essential piece does it provide for developers?
"Ontology has experience and proficiency in the space of decentralized identity, reputation, and data. They've been working on DID since before they launched their network. So this is something that they truly believe in. So what that means, especially with the launch of EVM integration, is that any project that seeks to develop a protocol, a community that wants to build on top of this very rich and robust identity stack can build on Ontology."
What should we be looking forward to from Ontology in 2022?
"This year was formative for many of us to understand the space of Web3 is changing. There is this new and novel way of engaging and building with communities through DAOs. While often not decentralized or autonomous, the mission, purpose and impact of these DAOs are continuing to grow. Ontology is tooling for these DAO communities to be able to build with identity and reputation mechanisms. Orange Protocol is building a reputation-proof system that's backed by Web3 data and on-chain and off-chain data to be able to provision reputation models on the other end. That can unlock better onboarding mechanisms to create better incentive alignment with contributors and more robust governance systems that get away from plutocratic voting systems."
It's easy to see the value in a decentralized identity that gives users more control over their personal data, which has been famously abused, productized and resold clandestinely by big tech companies.
Ontology offers the prospect of increased identity independence for the user, allowing users to control how their information is used and making it possible to access multiple chains and apps with a single DID wallet sign-in.
I still have reservations about how a system of truly anonymous decentralization will keep bad actors from gaming the system to cover their activities. If there is a loophole, people hiding their actions will use it. It isn't a matter of "if" — it is a statistical certainty as the technology grows.
I also worry that the idea of ranking users decentralized identities by positive and negative behavior. I think the system is well-intended but does not screen out criminal behavior, and has a creepy Orwellian overtone, much like the social ranking system in China.
So, the reality of workable DID may be within our grasp, but we still have to work out some of the "how," which means revisiting some of the "why." In such a young space as Web3, we may be seeing another case where the technology is ready, but the philosophy behind it just isn't as stable.
Still, Ontology is an impressive Layer 1 project that adds real value to projects, so it will be interesting to see where they take it.
Cover image source Mohamed Hassan from Pixabay.
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