Microsoft Builds on Decentralized Identity Vision

Microsoft wants to give people more control over their digital identities. In doing so, it aims to shift the power between consumers and the businesses currently holding most of their data.

Organizations have the bulk of control over users' information, and people are becoming more aware. More than 75% think companies need to protect their information — a 16% increase from last year — and 68% strongly agree it's their responsibility to protect their information. More are taking action by changing passwords and enabling multifactor authentication (MFA) after learning of a breach.

Still, more can be done, and Microsoft this week shared updates on its plan to reshape the future of identity. In February 2018, it outlined this vision and explained its investment in using blockchain and distributed ledger technologies to create decentralized digital identities. Rather than having people give broad consent to apps and services and spread their identities across providers, Microsoft wants them to have an "encrypted digital hub" for storing identity data.

"Our goal is to create a decentralized identity ecosystem where millions of organizations, billions of people, and countless devices can securely interact over an interoperable system built on standards and open source components," writes Daniel Buchner, program manager in Microsoft's Identity Division, in an update published Monday.

In a separate blog post posted today, Joy Chik, corporate vice president for Microsoft Identity, explained the role of businesses in helping to achieve this goal. She argues in a world where people have greater control over information, businesses must be more intentional about the type of information they collect, where it's from, where it's stored, and how much it collects.

"They accept information from individuals that an independent authority has verified, like citizenship verified by a government agency or education level verified by a university," she writes. With these verifiable credentials, people can prove who they are without the business holding all of their sensitive data. This puts less liability on organizations and gives people control. Further, businesses can choose to store data with people rather than keeping it themselves.

"The individual, in essence, becomes a data controller," she adds. "This changes the relationship — and the balance of power — within organizations."

As part of a decentralized identity (DID) system, public keys and identifiers can be linked to distributed ledger tech (Bitcoin, Ethereum, and others) that complies with standards set by the community via the Decentralized Identity Foundation (DIF) and W3C Credentials Community Group. But while these ledgers are useful for the foundation of decentralized identifiers, they should not be used to store personal identity data, Microsoft says. This demands different storage. Its solution is Identity Hubs, unveiled in early March, which are decentralized, off-chain personal data stores that give people control over identity info, official documents, app data, and more.

Since early 2018, Microsoft has been building on its vision with contributions to emerging industry standards and development of open source components, explains Alex Simons, vice president of program management for Microsoft's Identity Division, in Monday's blog post. This week Microsoft announced an early preview of Identity Overlay Network (ION). The is a DID network based on Sidetree, a blockchain-agnostic protocol for building DID networks; it was built in partnership with Microsoft and other DIF members, including Transmute and Consensys.

ION is a public and permission-less open network that anyone can use to create DIDs and manage their public key infrastructure (PKI) state. The code for its reference node is still under development, Microsoft says, and there are still aspects to be implemented before it's ready to be tested on the Bitcoin mainnet. In the coming months, it'll be working with open source contributors and players in the identity community to publicly launch ION on Bitcoin's mainnet.

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