Part 3: Blockchange and Identity – The Foundational Use Case

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The right to identity is a fundamental human right as defined by the United Nations Human Rights’ 1989 Convention on the Rights of the Child.78 While the initial definition of identity as a human right was focused particularly on children, the adoption of the Sustainable Development Goals (SDGs) further supported the concept, with SDG 16.9 setting the objective of “legal identity for all, including birth registration.”79

The central importance of identity to human development and participation in society is now broadly recognized. Modern identity and access management (IAM) came into focus during the late 1930s, when a group of European countries began issuing national ID cards. During this time, creating a more systematic approach for establishing and authenticating the official use of trusted identities emerged. More recently, IAM has benefited from biometrics and the emergence of digital platforms and solutions. Digital identity is indeed becoming the default standard for most if not all forms of ID. Recent estimates suggest that over one hundred countries currently issue national ID cards of various sorts.

Of course, the universe of identity stretches far beyond government-issued, general purpose IDs assigned to individuals. Different institutions (colleges, companies, libraries, workplaces) issue their own identities, and most individuals also possess a wide array of different online identities for different services. In addition, and particularly with the proliferation of sensors and the IoT economy, objects and “things” (e.g., parts in a supply or shipping chain) now have their own identities. One of the central challenges of modern identity is its fragmentation and variation across platform and individuals. There are also issues related to interoperability between different forms of identity, and the fact that different identities confer very different privileges, rights, services or forms of access. The universe of identities is vast and manifold. Every identity in effect poses its own set of challenges and difficulties—and, of course, opportunities.

The contemporary IAM literature focuses on two central types of identity.80 The first is foundational identity, which is usually equated with legal identity. Here, after collecting attributes, individuals are issued a unique ID that is legally recognized at the national level and can be used to access different services.81 Legal IDs are almost always issued by the state in a centralized fashion. National ID cards are perhaps the best example of a foundational identity.

The second type is called functional or transactional ID. In this case, a particular entity, public or private, issues individuals or customers a unique ID that is only valid for the specific purposes previously established by the issuing entity. Electoral identities, health or car insurance cards, and ecommerce login credentials are good examples.

As the potential of blockchain to enable social change has grown, identity – and the need for more and better trusted identifiers across contexts – has regularly been flagged as an area of particular potential impact. Blockchain, it is felt, can help address many of the challenges related to identity. This report examines if, when, and how blockchain’s attributes can unlock new value and address stubborn challenges at different stages of the identity lifecycle. In this section, we discuss in more detail why identity matters for creating social change, consider why identity is a foundational Blockchange use case, and examine the potential for blockchain to address problems at different stages of the lifecycle. In addition, we use our case study research to reflect on the maturity of experimentation at different stages of the lifecycle.

Why Identity Matters for Social Change

Identity is a key component for a wide array of social concerns. To broadly understand the importance of identity at the individual level, consider the many challenges arising from a lack of identity. In its Identity for Development (ID4D)82 initiative, the World Bank has explored a number of these challenges,83 including those related to accessing:

  • Financial services – a lack of identity creates barriers to opening a bank account and accessing credit, among other issues.
  • Basic public services and social protection – including social security, food support, pensions, as well as more general rights and services provided by governments.
  • Healthcare – including access to health insurance, and health services like vaccinations and maternal care.
  • Education – including enrollment at all levels of education and the ability to access scholarships for higher education.
  • Political and legal rights – including fundamental civic concerns, like voting, filing petitions, and the ability to own property.

These challenges – as well as less immediately obvious development-related issues such as the inability to buy a mobile SIM card – can affect all those lacking legal identities but hit already vulnerable and marginalized populations hardest. Without legal identity, girls can face even more difficulty avoiding early or child marriage; refugees and asylum seekers can face greater threats when crossing borders, leading to more unsafe migration practices, such as patronizing people-smuggling networks; and the poor and unbanked can face challenges receiving salaries or welfare payments.84

Identity challenges are persistent and deeply entrenched. They are not likely to dissipate without some type of concerted intervention. As it stands, half of all low-to-middle-income countries do not have systems in place to register births. This problem is notably present in South Asia and Sub-Saharan Africa, where just 39 percent and 44 percent of children are officially registered at birth.85 Identity problems are often deeply intertwined with existing social, political and governmental problems.

While secondary to the many human costs resulting from the lack of identification, ineffective or non-existent identification systems also create significant challenges for governments. Without a clear understanding of their populations, governments face major challenges in effectively delivering services, collecting taxes, recognizing and rectifying duplicative programs, allocating resources in an efficient and evidence-based manner, efficiently responding to crises, managing borders and ensuring national security, and collecting accurate statistics.86

Considered broadly, identity is relevant for a number of social change topic areas; challenges arising from insufficient identity solutions exist within each domain.

Why Identity Matters for Blockchange

In addition to being essential for a number of social change objectives, identity is also foundational for other Blockchange use cases – i.e., track and trace and smarter contracting efforts. Recognizing this, a diversity of corporations, consortiums, and initiatives are pioneering an array of new blockchain for identity projects and protocols87. For each type of use case, the creation of trusted identifiers for tangible or intangible objects is essential. Without a clear and trusted understanding of how a signifier tracks to a signified person or object, it is impossible to track and trace certain objects over time and to confirm that certain actions occurred as part of a smart contract.

Track and Trace

Identity Requirement A trusted digital identity is required for tangible or intangible objects. Once such identity is recorded in a blockchain, users can track and trace its transactional history. Example Walmart and IBM’s Smart Package88 initiative aims to track package contents, conditions, location, and other details. In order for these activities to occur, a confirmed identity for each package is needed.

Smarter Contracting

Identity Requirement Blockchain smart contracts are automatic, algorithmically enforced and take an “if this, then that” form. They are also linked to the blockchain identities of the parties involved in the process. Contract execution is confirmed by nodes and linked to such parties only. Example The Bext 36089 project uses smart contracts to pay coffee farmers automatically based on bean analysis conducted at the source. Confirmed identities are a prerequisite for fair and accurate funds to be released to the correct farmers.

A benchmarking study conducted by researchers at the University of Cambridge makes clear the importance of identity in the emergent blockchain ecosystem.90 The study’s authors found that across-public-and private-sector DLT implementations, 73% involved tracking digital records, 70% monitor financial assets, 55% involved tracking physical items, and another 55% involved the direct creation of digital identities. The creation of a trusted identity (for individuals or objects) is essential across all four realms.

  1. United Nations: Office of the High Commissioner for Human Rights. 1996-2018. 

  2. Eric Burger and Clare Sullivan. “E-residency and blockchain.” Computer Law & Security Review. Vol. 33(4) August 2017: 470-481. 

  3. “Identification for Development: Strategic Framework” World Bank Group, January 25, 2016. 

  4. Passports are issued nationally but recognized internationally. In countries where no national ID card exist, passports can be used as such. 

  5. Identification for Development (ID4D). World Bank. 

  6. “Principles on Identification for Sustainable Development: Toward the Digital Age.” World Bank Group. February 2017. 

  7. Identification for Development, World Bank Group. 2018. 

  8. “Identification for Development: Strategic Framework.” Identification for Development, World Bank Group. January 25, 2016. 

  9. “Principles on Identification for Sustainable Development: Toward the Digital Age.” World Bank Group. February 2017. 

  10. Hyperledger, Evernym, IBM, ID2020, R3, and the Sovrin Foundation are among the main actors that seek to establish the standards and early conceptual models for using blockchain for identity while, for instance, BanQu, uPort, Civic, ObjectTech, ShoCard, Tierion and Cambridge Blockchain have sought to provide identity solutions using blockchain. 

  11. Helen Partz. “Walmart To Implement Blockchain-Based Delivery System.” Coin Telegraph, March 2, 2018. 

  12. Bext360, 2018. 

  13. Garrick Hileman and Michael Rauchs. “2017 Global Blockchain Benchmarking Study.” September 22, 2017.