Blockchain is rebuilding the digital ecosystem, and here is what that shift looks like.
As COVID-19 accelerates the shift to a non-face-to-face, digital era, we wanted to share an article on the digital ecosystem that blockchain is reshaping.
As the move to a non-face-to-face, digital era speeds up, platforms have grown enormous, and problems with how user data is managed and used — leaks and misuse of personal information caused by indiscriminate data practices — keep surfacing. The root of it is that user data belongs to the platform companies. As awareness of the problem grows, so does the importance of data sovereignty, and DID identity verification technology, which lets individuals control and use their own personal data, is expected to serve as a fundamental solution.
Interest in and awareness of data sovereignty keep rising in practice, and inquiries about DID from governments, local authorities, and companies have increased sharply. Interest is also growing in new digital business models built on DID identity verification — ones centered on the user rather than the service, where individuals generate value by trading their own data.
The Gangwon Province integrated platform that ICONLOOP is currently helping to build is one example. Rather than simply consolidating services as before, it is shifting the paradigm of authentication toward a form that focuses on securing data sovereignty for residents and returning value to them in exchange for the data they provide. Beyond that, services applying DID are launching across a range of fields — mobile driver's licenses, vaccine passports, and more — and as DID's versatility steadily widens, we expect it to establish itself as the new method of identity verification in the post-COVID era now arriving.
From ID cards to ownership... prove it with blockchain
The pandemic is pulling the digital economy forward. All the economic activity once based offline is moving onto internet networks, and at the same time a new economic ecosystem centered on digital data is taking shape. As the pandemic made online connection ("ontact") the preferred mode, this trend gained powerful momentum.
Blockchain technology is being reassessed for its usefulness alongside the rise of the digital economy, because there are limits to what existing internet networks alone can do to realize a digital economy. Blockchain, the assessment goes, is the technology that fills in the missing piece of the puzzle.
For people with no mutual trust to meet online and do business, they need to confirm several things: whether the other party is trustworthy, whether the information presented is false, and so on. The existing internet had no such function, leaving it vulnerable to fraud and forgery and forcing complicated processes to be inserted just to establish trust. That complexity was bound to be an obstacle to the spread of the digital economy.
Blockchain has solutions that resolve this easily: the "decentralized identifier (DID)," which can implement digital ID cards, and the "non-fungible token (NFT)," used as a certificate of digital ownership. With blockchain-based rights-proof technologies like DID and NFT, participants in the economic ecosystem can easily prove their credentials and their ownership. It is no coincidence that DID and NFT have emerged as the hottest keywords in the blockchain industry just as the digital economy is rising.
As blockchain reinvents the "internet of information" as the "internet of rights," the basic infrastructure of the digital economy has started to work.
DID draws attention as a data sovereignty technology... use cases pour in, from driver's licenses to vaccine passports
DID is a technology that uses distributed systems such as blockchain to let individuals have their identity and credential information verified and to provide verifiable authentication information when it is needed.
With DID, the separate parties involved — ▲the individual ▲the credential issuer ▲the verifying institution — can easily confirm whether information is genuine through the blockchain network and thereby form a trust relationship. Compared with the previous approach, in which each party had to integrate its systems with the others, it dramatically reduces cost and time.
Take hiring, for example. If a company running a blind recruitment process only wants to confirm whether an applicant holds a bachelor's degree, the applicant can obtain a graduation certificate from the issuing institution — the school — store it in a DID wallet, and selectively submit only the information about holding a bachelor's degree. Because the school registers encrypted information on the blockchain that allows the certificate's authenticity to be confirmed at the moment of issuance, the company can easily verify the information the applicant submitted by querying the blockchain.
Look closely at this process and another important characteristic of DID stands out: DID returns data sovereignty to the individual. The fact that individuals keep their own information and decide where to use it is a major difference from existing centralized systems. It clearly has advantages in security and privacy over the previous approach, in which a single company held large volumes of user information.
In a digital economy that runs on data as its fuel, the question of sovereignty over that data is emerging as a considerably important issue.
- As giant platform companies use personal information indiscriminately,
- problems such as leaks and misuse of personal information keep occurring.
- The source of the problem is that user data belongs to the platform companies.
- As awareness of this problem has grown, the importance of data sovereignty has come to the fore.
- DID technology, which lets individuals control and use their own personal information, is drawing attention as the solution.
- JH Kim, CEO of ICONLOOP
Market research firm Market Research Future predicts the "blockchain identity management" market will grow more than 85% a year on average to reach USD 1.9 billion (about KRW 2.26 trillion) by 2023. Another research firm, Zion Market Research, forecasts that the global blockchain identity verification market will grow 80% a year on average to approach a total of USD 3.4 billion (about KRW 4.046 trillion) by 2024.
With the government treating DID as infrastructure for the "non-face-to-face economy" and actively pushing its spread, a variety of DID-based services are expected to work their way into everyday life quickly.
In particular, once blockchain-based mobile driver's licenses are introduced starting next year, DID use is expected to become commonplace. The mobile driver's license, a national ID, will be issued as an integrated ID usable both offline and online. It is DID-based: users receive and keep the ID on their smartphone and decide whether to provide it each time identity confirmation is requested. The history of the ID's use is stored on the individual's own smartphone so that only the person can view it, and is not stored on a central server.
Through this approach, "the government retains public authority over ID issuance but does not intervene in the individual's use and verification process," according to the explanation. Starting with public servant IDs last year, the government is pushing the transition to DID-based mobile IDs — disability certificates this year, driver's licenses next year, and national merit certificates after that.
Vaccine passports, which have drawn attention recently, are cited as the field that stands to benefit most from applying DID. Because they contain sensitive medical information, security and privacy matter, and because a verification system interoperable across countries must be built quickly, there is no better alternative than DID.
- For each country to adopt a mutually interoperable vaccination confirmation system,
- there would have to be a process of reaching agreement and then building the system, and that process looks likely to take far too long and be too difficult.
- If vaccine passports are built on DID, each country becomes an issuer of certificates on the blockchain,
- and mutual verification of vaccination certificates becomes possible without any separate agreement.
- I think a vaccine passport using blockchain DID would be the service that works best in the current situation.
- Wookyun Koh, CEO of MediBloc
Since April, the Korea Disease Control and Prevention Agency (KDCA) has been running COOV, a DID-based service for issuing COVID-19 vaccination certificates. Blockchain and DID technology was applied through a donation of technology from the domestic startup Blockchain Labs. By adopting DID, the KDCA said, "we have blocked the possibility of forgery or alteration of certificates and made it possible to verify the fact of COVID-19 vaccination using minimal personal information."
Beyond Korea, New York City, Colombia, and the Linux Foundation are also looking at DID as the base technology for vaccination certificates.
New York City has developed and is piloting Excelsior Pass, a blockchain-based vaccine passport, in cooperation with IBM. Colombia has launched the blockchain vaccine passport VitaPass at the national level and is pushing to expand it to other Latin American countries.
The Linux Foundation launched a new initiative, the Good Health Pass Collaborative (GHPC), to discuss the privacy protection and ethical standards required when implementing COVID-19 vaccination certificate systems as well as common system standards. Many blockchain companies are taking part, including Korea's Blockchain Labs, ConsenSys Health, and Cardea.
NFTs open a world where everything of value can be traded
NFTs are regarded as an important technology driving the digital economy, in that they have opened a world where everything of value can be traded.
An NFT, a form of token issued on a blockchain, is mainly used to represent ownership of a specific digital file.
One bitcoin has the same value as any other, so if you swap yours with someone else's you still hold the same one bitcoin. In other words, it is fungible. NFTs, by contrast, carry a unique code, so each is distinguishable from the others and none can be substituted for another. That is why they are called non-fungible tokens, or NFTs.
Combine an NFT with a digital file and each NFT takes on a different value depending on how the market values that file. The NFT's unique code also acts as the digital file's "serial number," indicating ownership. In short, an NFT can carry the market value of a digital file and prove ownership of it as well.
When something clearly has economic value but ownership of it cannot be clearly established, trading is hard to get going. Game items, discount coupons, and loyalty mileage are like that. Attach NFTs to them and a new trading market can form. The popular cat-collecting game CryptoKitties is a signature success story.
Recently, even things nobody thought of as having economic value have become tradable as NFTs. The "first tweet" left by Twitter founder Jack Dorsey was sold in March for USD 2.9 million (about KRW 3.2 billion) through a tweet auction platform operated by a company called Valuables.
The interesting part is that even after the sale, anyone can still view Jack Dorsey's first tweet, and it is still possible to take and use the tweet's URL. So the buyer cannot claim intellectual property rights or exclusive usage rights either. It was valued at KRW 3.2 billion purely on the strength of being the "first tweet NFT" acknowledged by Jack Dorsey, and on the fact that this can be verified.
That is possible because the history of the NFT's issuance and trading is recorded on the blockchain, so anyone can verify "the fact that it is an NFT acknowledged by Jack Dorsey" — that is, its authenticity.
It is not only Dorsey's tweet: the winning bids for other digital files sold recently at high prices were all formed by a similar mechanism. A digital file reproducing the game record of the fourth match in which Lee Sedol, a 9-dan player, beat the AI AlphaGo in 2016 recently sold for KRW 250 million. A video of two British brothers that went up on YouTube 14 years ago and became a hit was issued as an NFT and fetched a winning bid of more than KRW 800 million.
It is hard to make sense of in terms of traditional economic common sense, but the NFT market is growing at a frightening pace. According to the NFT information site NonFungible.com, the NFT market topped USD 338 million (about KRW 377 billion) last year. In the first quarter of this year it recorded USD 2 billion (about KRW 2.23 trillion) in trading volume, 131 times larger than the same period a year earlier.
- Things whose value was hard to express as a clear amount of money can now be sold, with their rights guaranteed, through NFTs.
- Together with DID, NFTs have a big advantage in that they are a technology capable of realizing the internet of rights.
- Jonghwan Kim, advisor at Blocko
NFTs are also being combined with a variety of digital platforms including the metaverse and virtual and augmented reality (VR/AR) — attempts to attach NFTs to items usable inside those digital platforms.
The metaverse is a virtual world that digitally recreates a world resembling reality. Through an avatar, a second self, you can attend lectures, watch concerts, and do all sorts of other things. Clothes and bags to dress up an avatar, concert admission tickets, and the like are paid items, and considerable spending is already happening. Issue such items as NFTs and it becomes possible to use them in other services or convert them into cash. Metaverse services with hundreds of millions of users, such as Roblox and ZEPETO, are in fact considering adopting NFTs. VR/AR services can also develop new offerings, for instance by making digital items visible only to people who hold a particular NFT.
- Once a structure exists for issuing items as NFTs and exchanging them,
- it will become possible to carry items from existing popular games into the metaverse,
- and if diverse services are connected through NFTs, a newly launched service could get the chance to grow explosively.
- For example, you could place an NFT dragon on Lotte Tower in Jamsil and make it visible only to people who hold the NFT.
- Things that were not possible before, that simply could not be done on the internet, are becoming possible with blockchain and NFTs.
- Sungwon Choi, CEO of SuperTree
- Source: ZDNet Korea
- Original article: https://n.news.naver.com/mnews/article/092/0002223154?sid=105
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