The Value, Opportunity and Challenge of Digital Identity in the Context of Metaverse

A very interesting example, in the highlight moments of the headlines, people were once immersed in the information flow recommendation of algorithms and technologies to weave their own information cocoon. The popularity of live streaming e-commerce makes us start to care about the recommendations of “people” again. Because of human nature, people will always look for the resonance of values ​​and cultural circles among the same kind, and gain identity. The uniqueness of Li Jiaqi and Wei Ya’s success maximizes the resonance crowd they can win. In today’s life, a lot of face-to-face communication has been transferred to the Internet, but the core part of communication and connection is still people. In the future life of the meta-universe, whether the communication platform is Web3.0 or a virtual space of the meta-universe, people will always be the core, and seeking identity in the meta-universe will also be an unchanging theme.

The prerequisite for obtaining an identity is to have an identity first, and the current discussion is more of a digital identity. Digital identity is a very broad category, and its development has experienced centralized digital identity, federalized digital identity and distributed digital identity. Among them, distributed digital identities are supported by underlying technologies such as blockchain and distributed ledgers, and have gradually expanded their identity attributes from people and objects to data, which is of great significance in realizing the comprehensive interconnection of digital objects and privacy identity management.

The digital identity we are discussing today is a distributed digital identity (DID) in the context of the meta universe. The quantum school believes that digital identity in the context of meta-universe is completely separated from the real world, and it is the only proof of people in digital space-time. Through this digital identity, people will recreate themselves here and build their own second life. This digital identity is connected to a decentralized database, and all the data generated by people’s behavior belongs to themselves. No one can control your life except yourself. This looks much more sexy than the concept of the second curve of life. The second curve of life evolved from Morrison’s “Second Curve”. The basic fact of the second curve is change. The essence of the second curve of life is Life Plan B. In contrast, recreating one’s own “dream space” in the meta-universe world is more attractive.

The current general consensus believes that the most direct value that blockchain technology brings to Metaverse has three points: one is a unique digital identity; the other is a decentralized distributed economic system; and the third is that personal data is completely owned by oneself. From the perspective of the digital world hierarchy of “meta universe” digital natives to digital twins and then to the coexistence of virtual and real, the current exploration of digital identities is still focused on digital native DID.

The value of DID in the context of meta universe

1. As a key foundation for realizing credible interaction and transaction of data assets

 DID acts as an identity center. Because users control their center, they can decide when, with whom, and under what conditions their digital identity elements are revealed. With the widespread adoption of the DID standard, individuals will not be locked into a single ecosystem or isolated approach. DID has the following three characteristics:

1) Decentralization: DID and its associated information are stored in distributed systems such as blockchain. Users can use private keys and signatures to prove their identity data and transaction ownership, and they can also verify the identity of the other party, digital assets, and transaction ownership. Authenticity reduces the authority’s control over the associated information of the logo.

2) Identities are autonomous and controllable: DID is not restricted to the issuance and authorization of authoritative organizations, users have the right and ability to independently manage the associated information of the identity, and achieve the purpose of identity autonomy from the root of the identity, breaking the existing variety Mode of centralized management of network resources.

3) Identity transferability: Identity owners can use their identity data wherever they need it, without relying on a specific identity service provider, and a user can generate multiple digital identities as required.

The Value, Opportunity and Challenge of Digital Identity in the Context of Metaverse

Figure 1: Components of DID architecture

2. Provide users with control, security, privacy and portability

In the physical world, identity is an integral part of a well-functioning society. In the meta-universe world, DID is also an indispensable and important part of the digital world. The quantum school proposed that the meta-universe directly allowed mankind to enter the era of “mathematical contract” from the “social contract”. Smart contracts are the key to the meta-universe world governance system. After the Metaverse has a mathematical contract, each person’s digital identity is intelligently supervised by multiple mathematical contracts, and will be alerted or prohibited at the moment of breach of contract. This again involves the issue of the reputation value of digital identities, and this topic is temporarily beyond the scope of this article. DID identity owners can use their identity data wherever they need it, without relying on a specific identity service provider. Users can autonomously control their identity data and protect the security and privacy of user identity data. At the same time, a user can generate multiple digital identities as required, and its operation portability is also obvious.

The Value, Opportunity and Challenge of Digital Identity in the Context of Metaverse

Figure 2: Application scenarios of DID

DID Opportunities in the Context of Metaverse

 One, NFT anchor

The full name of NFT is Non-Fungible Token, and the Chinese name is non-homogeneous token. The biggest feature of NFT non-homogeneous tokens is that they are indivisible and unique. Just like there are no two exactly the same leaves in the world, so does the NFT attribute. Moreover, the characteristic of NFT is guaranteed by its token contract on the chain. If NFT assets are issued on Ethereum, as long as the Ethereum network is secure, then the attributes of your NFT assets are determined and cannot be tampered with or deleted. , Its most important feature is: scarcity.

Each NFT ID can only be owned by one owner, and one owner can have multiple NFTs. NFT has built a set of contract models, which brings great convenience and precision to the identification of digital works ownership. Signatures, seals, and stamps far beyond the real world are difficult to tamper with. This is why it is recognized.

While fraud and plagiarism still plague artists and creators, the powerful DID infrastructure solves this problem. Applications can be built on DID to allow creators to prove that they created NFTs that represent digital or physical assets. Buyers and sellers will also be able to verify the provenance of digital artwork.

NFT can be used as an anchor for decentralized identity.

Second, unlock the next stage of DeFi

So far, mortgage loans have been the backbone of DeFi’s growth. Having a strong DID layer can allow “on-chain” credit scoring and provide users with credit-based loans. In addition, because users directly control their credit scores, they can better monitor and adjust their lending behavior. Therefore, DID provides an opportunity to further democratize decentralized finance.

In addition, having a strong identity layer for financial applications can solve other current problems in DeFi. For example, a recent survey on digital identity opportunities conducted by Deloitte for institutions showed that it reviewed customer account details, signed contracts/verified signatures, KYC and verification There are many application opportunities in terms of transaction information.

The Value, Opportunity and Challenge of Digital Identity in the Context of Metaverse

Source: Deloitte Global Blockchain Survey 2021

DID Challenge in the Context of Metaverse: Digital Identity Safe Depository

 In the Web3 era of user creation, user ownership, user control, and protocol distribution, the necessity of creating a strong identity system needs to be re-emphasized. A powerful identity system has a more convenient and powerful mechanism, but the essential problem will not change. The digital wealth under the digital identity is completely yours and no one can deprive it.

However, in the world of Metaverse, although the identity can be controlled autonomously and users have unprecedented freedom, it comes with security issues. How to safely store and use digital identities and digital assets under digital identities? This brings a new proposition.

Deloitte’s 2021 Global Blockchain Survey report predicts that digital asset custody and new payment channels will stand out among the potential applications of digital assets. Encrypted assets are a brand-new concept, and their design and application methods are very different. Therefore, encrypted asset custody can be carried out in a variety of modes. In order to ensure strong operational protection and respect the unique operational preferences of customers, unlike publicly traded securities and other assets, the new technological infrastructure and brand-new processes and procedures of digital asset self-custody are welcomed by institutions. At the same time, for the digital identities of individual users, how to meet the low threshold of entry and use of WEB2.0 users and achieve credible distribution will be a direction worthy of continuous exploration. 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-value-opportunity-and-challenge-of-digital-identity-in-the-context-of-metaverse/
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