Monday, March 9, 2015

New IDs with Blockchain Technology

Identities on the Blockchain

Changing how Identity is created

The structure of how an identity is managed is evolving. Encryption has been an important tool for technical consumers to protect their private information virtually, but not how that information is accessed. The Federal Trade Commission recommends using encryption to protect your identity online. Trusting third parties, that have single access points of failure, to store all of your information is no longer best practice. The identity of individuals can now be handled with better discretion, than even the owner, once transcribed on a decentralized ledger.

Blockchain technology introduces new ways to use encryption to organize the data flow of your identity and who can view different information that composes your identity. Bitcoin and blockchain operations do not offer complete anonymity. There are alternative tokens that offer a higher degree of privacy than the base Bitcoin Protocol offers. The rise of crypto-currencies will offer various degrees of privacy and have different levels of difficulty to ‘figuring out’ someones identity.

A New Offering for Identity

Facebook, Google, and Twitter store vast amounts of information about their users. In the last few years, these companies have such in-depth privacy policies so frequently that Facebook now gives free Basics Courses on how to protect your privacy online. Skimming over a User Terms of Agreement is an acceptable cultural joke, and many consumers are now unsure of how to secure leaks of their identity. Identity services have begun to emerge using blockchain technology that will link a user identity to the Blockchain; granting no single group control of that identity. Examples of a new offerings for identity is NameCoin and OneName.

Namecoin - Website

The way an individual’s identity is created will evolve as blockchain technological innovations bring new avenues of security. Creation of these new services will come as a need arises for better identification services. Namecoin has emerged as the first legitimate attempt to assign value to data on a blockchain. Namecoin has a similar background to Bitcoin’s creation. An open source code left open to anyone. There are a few differences between Namecoin and Bitcoin but the two are not the same. Namecoin is used to register names on a decentralized ledger that has a similar structure of Bitcoin’s Blockchain. Spending a Namecoin gives you a domain registered at nameid.org. That identity is valid for around 200-250 days requiring a small Namecoin cost to update. A NameID is created. The value of a single Namecoin today is 1 NMC to .0017 BTC.

NameID allows:

Access websites using the .bit domain (with TLS/SSL)

Store identity information such as Email, GPG key, BTC address (OneName), TLS fingerprints, Bitmessage address

Human readable Tor .onion names/domains.

File signatures, Voting, bonds/stocks/shares, web of trust, escrow and notary services (to be implemented).

OneName - Website (WSJ Review - Article)

OneName is an alternate to a Bitcoin Address and are listed on nameid.org

OneName emerged as a solution to QR codes for sending and receiving Bitcoins. Owning a Name is as simple as registering a new username. The OneName username can be used with Namecoin accepting services to complete a blockchain identity. These identities can be used in Apps and Services in the future that offer quick sign-up to online services without giving any information you don’t assign to that OneName address. Store List Here

Possible uses for Blockchain ID’s

The emergence of a FedCoin (Ad Heavy Article) has been discussed in the last year and is a vision of where government entrance into the crypto-currency domain has been predicted. Countries have recently begun creating electronic money systems as alternatives to traditional fiat currency. The debate of the economic effects of cryptocurrencies on a country's government will not be the focus of discussion here. Aside from monetary government implication, the possibility of identities issued by the government on blockchain systems is also just as possible.

An upgraded ID technology service would offer more information security than traditional identity services. Social security identification numbers can be replaced by a sidechain that offers federal authorized identity hash numbers assigned to transactions on the blockchain. Government services, job offerings, or federal benefits, could all be accessed by referencing an identity transaction on the blockchain. Federal entities could create side-chains that distribute tokens that can be referenced to a single point of creation. Identity assignment will be incredibly more important if a federal level identification is created, but the possibility for services like a Blockchain Federal level ID could be created.

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Blockchain offers many new ‘killer-apps’ that can be created with it’s new disruptive technology. Keeping informed of how information is handled on any blockchain requires no trust. Transactions are audited with the creation of each block in a blockchain starting from a Genesis Block. The longer a blockchain represents how many audits have been completed. Trust will change the way information is shared, and identity services could be the first of many new tech services over the horizon.

Services Explained

Altcoins - A token reward set by a blockchain developer for distribution between users for various services. The value of each token is in relation to the value of the data that can be accessed with that token.

Signatures - a cryptographic signature is a mathematical mechanism that allows a user to prove ownership. On a blockchain network the token, and the wallet it is associated with, are linked by an algorithm. The software that interacts with the blockchain will sign the transaction with the private key of the parties interacting in the transaction. Private keys are a hash signature to show absolute ownership of the contents of the associated wallet.

Miners - Hardware in a blockchain network that is rewarded for processing services which can include transaction requests, synchronizing, and proof-of-work (mathematical) calculations. Miners can connect to their blockchains via various software and hardware.

Proof-of-Existence Services - Convert data files into a cryptographic hash algorithm (SHA256 specifically) which represent the file (as a whole) when the hash was created. The hash that is created of the document is unique to the contents of the document, and any adjustments to the document will result in a different SHA256 hash and would invalidate the transaction, rejecting the change. Website

Smart Contracts - Multiple inputs are placed into a single transaction. Those individual inputs can be independently signed by multiple parties and once conditions are agreed upon. The single output of all the inputs generates a unique hash. These contracts, located on a blockchain, can be used for multiple functions. Example: Assurance Contracts & Wills

Block Explorer - a service that provides an interface to interact with blockchain information. This service is a third party interaction to the client itself.

Private Keys - Every bitcoin wallet contains at least 1 private key. A private key grants the ability to spend the bitcoins attached to a transaction. Once a private key is used it can no longer be used again to spend those bitcoins.

Genesis Block - The first block, or ledger, created on a blockchain.

Oracles - Scripts or Code written to determine if a mechanism has passed or failed certain parameters. Oracles are implemented as a test condition and for verifying outputs.

Escrow Services - Perform duties as a representative of a particular account. Escrow services dealing in cryptocurrencies often offer private and public key representation.

M-of-N - N is the total amount of private keys assigned to validate a specific address. M is the minimum number of N keys needed to validate a transaction from that address. A 2-of-3 transaction requires 2 of the 3 private keys to validate the transaction.