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How Can We Solve the Problem of Identity Management with Blockchain?

Now many companies have started knowing about the potential of blockchain to develop their applications. The need for secure identity management system has become very important because currently, US retailers are losing about $32 billion because of fraud. All of this is happening because of the poor identification system that is currently existing. Migrating the identity management entirely in the blockchain is not going to happen overnight but we need a system that protects the identity information and the authentication process. Multi-factor authentication was introduced to solve the current issues but enabling multi-factor authentication with blockchain will help to make it more secure and will add an extra layer of security to the application.

Authentication using blockchain will be as easy as taking a picture because for the entire authentication process user must scan the QR code only with the application. To use the authentication using blockchain one must be using an application and whenever there is an authentication request it must be authorized from the app scanning the QR code. These days we have a smartphone with us with most of the time so, it will be more reliable than traditional authentication system. Authentication on the blockchain will be based on ID generated by the blockchain. This ID is a data that is stored on the block and contains the information to verify the identity like date of birth. This information can be verified by any third party that is authorized to retrieve the information from blockchain. A public key is assigned to the identification issuing service and the private key is assigned to the user. The user can then sign a signature that will verify against the public key stored in the blockchain. This identification will be used as a source of authentication while using the service. Since all of these are done in blockchain it will serve as a decentralized source of authentication. Blockchain app for authentication will be like a single-sign-on portal that can be used by another app not being owned by a single entity and will only be used for the authentication purpose. The protected app will have to request a digital signature and an ID from a user requesting access. This app will authorize the authentication if it finds that the signature is valid.

Blockchain provides a compelling solution to the problem of combining accessibility with privacy and security. Information can be transferred securely using end-to-end encryption. All the events are referenced and documented on the blockchain, so all the data are trusted and reliable. This technology wasn't possible a few years ago but with a smart contract on blockchain, this all has become possible.
Whenever we try to create an account or website we are asked a lot of information that might not be required to use the service. The problem with this is if the service that we are using is compromised or our account is compromised then all the information that we provided on that website are leaked. We can solve this issue by applying the single sign-in system with blockchain and providing the information that is required for the service user is requesting. By this way the user can access on the service he is trying to use, and the information of the user is not shared, it will only be verified from the blockchain. No information will be stored on the web server while using the authentication with blockchain and the data of the user is not shared. This will prevent the personal information from being leaked.

It will also make it possible to transfer money between two parties without sharing any personal information. If the application needs to get the credit information of the user, then it can simply send a payment request now once the user gets the request for payment they have an option to deny or approve the payment request. If they want to approve the payment request, they can directly make the payment from the bank by forwarding the request to the bank. This will make the financial transaction more fast and secure. By applying blockchain in identity management we can get a comprehensive, secure and a decentralized authentication and identity verification.

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