Given the alarming frequency of successful hacks, today’s cybersecurity systems are clearly failing. This is particularly true with identities, which are in the crosshairs of most cybersecurity attacks. One promising technology for resolving this situation is the distributed ledger system known as blockchain.

In many people’s minds, blockchain is associated with cryptocurrencies, but that is only one of its applications. While it was indeed created to facilitate secure crypto exchanges, blockchain is also effective in many other areas, including conventional banking and healthcare. For example, there are several promising use cases in healthcare for streamlining administration and providing real-time data sharing. It’s an attractive option because data in a blockchain is secure, trustworthy, tamper-proof and for all is unhackable in the traditional sense.

Here’s why. In a blockchain, data is entered into sequential “blocks” and encrypted using public key cryptography. Once entered, the data cannot be updated or altered in any way. It is immutable. Each new block is time-stamped and linked to the previous block in the chain. The only way to change data is by creating a new block. This action would be instantly visible to all participants, because blockchains are distributed databases. All the records reside on all the nodes in the system and are available to participants in near real time. For this reason, tampering is virtually impossible to conceal.

There are two primary categories of blockchains, public and private, also referred to as permissionless and permissioned. In a public blockchain any individual can participate, access the blockchain and create blocks. These blockchains are by nature permissionless, i.e. all participants can perform all available functions.

In contrast, private blockchains are controlled by a single entity – a company or consortium – that determines who can have a node in the system. Also, in a private blockchain, some nodes may have more permissions than others, such as the ability to add blocks vs. only read data.

Blockchains differ from conventional databases in important ways. The data in a conventional database can be modified by the system administrator. Even when data is stored in an encrypted format address, it still can be modified by the administrator or by users themselves.

Furthermore, there is no way to know that a modification has occurred. In contrast, data in a blockchain simply can’t be modified. Also, conventional centralized databases provide an attractive target to hackers, sometimes even referred to as a honeypot. Since blockchains are distributed (decentralized) databases, there’s no obvious target to attack.

Blockchain and Identity Management

Taken together, all these features make blockchains ideal for identity management. Blockchain stores each user’s identity information as a decentralized identifier (DID) in that individual’s own digital “safe.” The DID is protected with public key encryption, which offers a much higher level of security than current methods. All information in the distributed ledger is time stamped and given a unique cryptographic signature.

Personally identifiable information (PII) can never be modified. Doing so would break or invalidate the chain because the cryptographic signatures that hold it together would no longer match. Also, the data is replicated (distributed) to every participant in the system, making transactions highly visible to all. The very nature of a blockchain makes tampering with data difficult and discourages the kind of attacks that are common on conventional centralized identity databases.

The blockchain automatically processes, validates, and authenticates PII data exchanges and authentications. It provides a robust audit trail of all identity information stored on a particular dataset. This lets auditors quickly verify transactions with no need to deal with a third party.

With blockchain, a user’s identity data is controlled by that individual, rather than by a centralized organization. This feature is important for GDPR compliance, as it lets the user decide what identity information to provide and to whom.

Once the exclusive purview of crypto, blockchain technology is now being put to use in many vertical market segments. It is particularly well-suited to the management of identities because it provides a very high level of security while simplifying administration and delivering a superior user experience.