This blog was written by an independent guest blogger.
IAM (identity access management) involves numerous IT practices to enforce identity authentication and verification. But Web3 could change how we use the internet by simplifying data protection and IAM procedures.
Two factors contribute to the need for authentication practices that are both fast and accurate. One, rising cyber threat activity, and two, infrastructure changes and complexity. Now, IT teams need new ways to authorize identity credentials to adapt to an evolving environment.
What is Web3?
Web3 (sometimes called Web 3.0, or the metaverse) is a new version of the internet that is based on blockchain technology. It includes concepts such as token-based economics and decentralization, but Web3 is more than just a way to improve cash flow with crypto.
Many experts agree that Web3 can also provide improved data security, scalability, and privacy for users, factors that are missing from our current version of the internet, which is run by big tech. Some of the world’s largest corporations have private data stored in their servers that they use for marketing, development, and other profitable ventures.
Web3, on the other hand, encourages decentralized software protocols that will allow users to manage their privacy more effectively and allow organizations and applications to authenticate users more accurately. In fact, many Web3 enthusiasts argue that Web3 technology is ideal for implementing and enforcing IAM.
How does Web3 improve authentication practices?
The short answer: blockchain.
Blockchain is a system of recording and tracking information in a way that makes it almost impossible to cheat, hack, or change the system. It serves as a digital ledger of transactions that can be duplicated and distributed across all systems connected to the blockchain.
In the same way that blockchain can be used to track digital financial transactions, it can also be used to validate credentials and authenticate users.
What makes Web3 great for dealing with IAM is that it is built on cryptography, the foundation of blockchain authorization.
Think of it as a universal, distributed data store with two kinds of nodes. One node, the wallet node, participates in the network by making claims, and the other, a full node, participates in the network by verifying claims through collaboration.
When a transaction is submitted to the database, the network uses the information available to determine whether or not the transaction is valid. Once the full nodes collaborate to determine whether the transaction is valid, it becomes a part of the datastore truth, and the wallet node can now make claims, such as the ownership of data or the truth of your identity.
Crypto wallets as identity
As you can see, blockchain cryptography can do more than help improve your cash flow with cryptocurrencies, digital tokens, and NFTs. But what does it have to do with IAM?
The technology behind blockchain wallets allows wallet nodes to serve as an identity that can be used for authentication purposes. Private and public cryptographic keys are already a popular way to secure communication between parties online. But the proliferation of people interacting with the blockchain through crypto wallets is changing how we view IAM.
On a decentralized network like Web3, blockchain wallets serve as an identity that can be used for authentication.
For example, using IAM to validate credentials requires multi-factor authentication and access key authentication, and that these credentials be stored in an organization’s centralized database. But since a crypto wallet also serves as an identity, there is no reason for further authentication factors or a centralized database. The identity of the person is already recognized by the blockchain network as truth.
Blockchain and identity will change the way we use the internet
Web3 has been discussed for nearly a decade, but the lack of infrastructure to maintain data privacy across the internet has remained a barrier on the path toward secure, decentralized authentication.
Now, blockchain technology is widely regarded as one of the most secure ways to make claims and transactions online. It simplifies cryptographic key authentication in a way that is nearly impossible to defraud.
Web3 is based on blockchain technology that combines convenience with security, giving it the potential to disrupt authentication processes as we know them. Instead of numerous administrators faced with authenticating a series of credentials for various accounts across the web that are associated with the same identity, decentralized identification protocols like crypto wallets create a source of truth that can’t be denied.
The concept of a decentralized ID through the use of a crypto wallet is still speculative; however, the idea is picking up steam with some major players, including AWS and Microsoft. A decentralized ID validates the person’s identity through the available collective information like user behaviors and authentication factors.
Instead of that data being owned and aggregated by big tech, third parties, and other corporations for business gains, this personal data would be claimed by the decentralized ID. Since authentication data is linked to their unique wallet or decentralized ID, it will give users more control over what information they would like to share with third parties.
There are nearly 360 million domains registered around the globe, many requiring various authentication protocols and collecting information about who you are and the actions you make online.
Zero-knowledge proofs is another idea that is related to Web3 and IAM. It means that although the information is private, it is proven to be true. This is the core of decentralized IDs. Using public-key cryptography, a fact like your identity can be established and validated by the blockchain. That means that your identity is proven to be true without having to give away any more personal information.
Token gating and authorization
Not only will Web3 identities have the ability to authenticate conventional applications, but they will also allow users to participate in other on-chain activities with IAM implications. Broad wallet adoption could be a game-changer for IAM.
Token gating is a Web3 concept that can be used to restrict access and provide exclusive content to holders of a certain token. It represents an economic shift that commoditizes digital content. But it also means that authorization based on decentralized IDs can be applied to assets, databases, and other access-controlled systems.
For example, let’s say you want to register for a new online service. To validate your identity, the company will collect various identifying factors like your name, address, phone number, credit card information, date of birth, and sometimes your social security number. You’ve likely typed out this information hundreds of times and willingly given it to other companies.
When you sign up for an online service with Web3, your information is already securely stored and validated within your decentralized ID. You no longer will have to give companies access to personal information to prove your identity, sign up for services, or set up accounts. Your decentralized ID as a source of truth proves that you are who you say you are.
More people are working from home than ever, companies offer flexible hybrid and remote workplace opportunities, and industries are finding new ways to utilize IoT technologies. What might have seemed to be a passing tech craze has turned into a revolutionary identity management machine.
Many still wonder how blockchain technologies can solve real-world problems. But increasing concerns over data privacy and authentication protocols have led experts to believe that Web3 will streamline user authentication practices.
While financial use cases of Web3 and blockchain are the most accessible for users to grasp, it is becoming apparent that these technologies have the power to change the way we interact with the internet forever.