Decentralized identity management is essential


By Ron Moritz, the analysts union

When considering investments and vendors related to the Metaverse and Web 3.0, cautiously avoid those who cannot convince you that they have a solid strategy for leveraging widely adopted and decentralized identity management standards and technology. .

People should minimize the exposure of parts of their real identity when signing transactions in the virtual world. Personal keys, blockchains and decentralized applications are essential for this to work.


Thanks to technological advancements such as virtual reality headsets and mobile devices, we are on the cusp of the “fourth generation” of cyberspace – the cyberspace of our dreams (and nightmares). Parallel to this technological renewal, we have the opportunity of a return to authenticity.

As more and more people work, play and hang out in virtual worlds, the digital identity management solutions of the past will no longer suffice. We will need new ways to ensure that identities are immutable and verifiable at the intersection of the metaverse and Web 3.0 virtual worlds.

Explosive complexity

Avatars, the digital representations of a person in these emerging virtual worlds, can be anything: animals, robots, fantastical creatures, even aliens. They can be of any age, sex or species. They may have different powers or abilities than avatars in other cyberspaces. And individuals can choose to create and operate a large number of avatars for different purposes and experiences.

The complexity multiplies because the rules and governance can and will vary widely across metaverses. For example, an alcohol-themed metaverse might have a rule that only avatars of people who are at least 21 years old can enter. Some of these rules and regulations may be enforced by law enforcement officers who maintain order in their respective regions or areas within the Metaverse. Other agents may enforce security policies designed to protect users from attack or harassment by other users (for example, when wearing clothing with offensive words).

In this example, notice how parts of a person’s real identity can be linked to their metaverse identity in some places, but not all. For Web 3.0 to thrive securely, we need to find ways for participants to control elements of their real identities and choose the private data they will expose through their metaverse identities.

In the real world, a person’s identity is often tied to things like home address, phone number, and email. These credentials are used to verify you and give you access to different businesses and services which in turn give access to various things (like transport or electricity).

The metaverse? Not exactly the same, and in many cases quite different in many cases.

Critical Insight: While central hubs that require an email address or phone number to receive an email or SMS verification code can be moved to the metaverse, many new services may not require a permanent account . Instead, they can grant access based on a decentralized identity system.

Decentralized Identity Management (DeIdM)

This system, where a person can authentically interact with different places, businesses and people, is the key to Web 3.0. Currently it is not possible to grant access to other places in the metaverse as there is no way for an avatar representing a real person to be identified outside of their server or host service.

Metaverse Critical Success Factor:

For the metaverse to succeed, we will need the ability to sign transactions with our personal keys and use them in different blockchains or decentralized applications to expose the minimum real identity elements required to provide the requested services.

Virtual worlds that allow many avatars per person could also benefit from these technologies.

Some features, such as authenticity and access control, introduce new challenges. However, they are still possible using a public/private key pair system at all levels of interaction between the metaverses and the characters within – from logging in via chat channels to customization options for characters like clothing color combinations and company uniforms.

Therefore, changing the identity management paradigm is a key requirement for creating healthy metaverses and preventing unwanted elements such as hate speech, fake news, and trolls causing chaos.

We need new tools that allow users to manage their digital identities across different environments, platforms, websites, and apps, and control what pieces of private data they expose. It is also about building trust between people.

The internet was built on the idea that anyone could create anything online and then share it with others around the world. But the current model also makes it easier for bad actors, experts, and influencers to share ideas and take action without accountability.

The metaverse and Web 3.0 are complex ideas, and it will take a lot of work to design an identity management system that allows maximum freedom while allowing businesses to provide different services and spaces that people want to access.

To be successful, systems designed for the next generation of cyberspace must provide a better balance of identity and anonymity than those available today.

The good news is that standards for decentralized identity infrastructure and interoperability for e-commerce, national ID, and other services are being developed by organizations such as the Decentralized ID Foundation (DIF ) and the World Wide Web Consortium (W3C). Moreover, the potential of the DeIdM encourages the experimentation of several large companies:

  • Microsoft is testing decentralized identification of verifiable credentials, such as college transcripts and professional certifications, tied to the Azure Active Directory service.
  • Verizon is working on a decentralized identity system to pass control of identity information to users. And,
  • Mastercard offers a new digital identity infrastructure.

It is essential that we get the right DeIdM; the Metaverse and Web 3.0 will fail without it.

Are you investing in business and technology on the right track with DeIdM? If you need help with this, contact me!

© 2022 – Ron Moritz – All rights reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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