An Introduction to Web3 Identities

Web2 was a movement that fundamentally created a new form of the Internet, one that notably encouraged online users to create content for themselves. This push for more user-generated content led to the rise of websites like Wikipedia and social media platforms like Facebook, Instagram, and Twitter/X. 

But over the years, there has been growing concern over the internet as we know it. Most notably, many Web2 tech companies have faced backlash and criticism from users regarding how they have handled people’s data over the years. Web3 digital identities and the concept of digital identity in Web3, as a result, were developed as a response to these problems, offering users solutions that hinge on helping them reclaim ownership of their online data.

Defining 'Digital Identity'

At its core, a digital identity in the Web2 sense is essentially online data that describes a person within the digital space. This data is frequently used to authenticate and verify that users are who they say they are, often taking the form of email addresses, usernames and passwords, home addresses, social security numbers, driver’s license numbers, and even browsing history. The usage of all this personal information has become so commonplace in the Web2 world that people can’t engage in many virtual activities without this data.

But in the Web2 system, user data storage primarily relies on a centralized identity management system (CIM). How a CIM works is that a government or corporation like Meta or Google manages and stores all the data it owns in one centralized area. By relying on a CIM, users can utilize mechanisms like single sign-on (SSO) to access multiple applications and websites with only one set of credentials. However, while CIMs can increase user experience, they also ensure that major tech companies have complete authority over people’s personal data, a tradeoff that many users are not particularly happy with. 

Overall, many online users are dissatisfied with the current state of Web2 as they are not comfortable with either giving up their personal information or control. According to an article on CoinTelegraph, “Fifty-four percent of respondents said they were worried about their rights and freedoms are being threatened by technology, with 44% citing online privacy concerns, 38% being unhappy about online ads and 35% reporting feeling a lack of control over their data.” 

Several online users are pushing for a more decentralized web that is not only more secure but also fully owned and controlled by them. For some people, Web3 is the potential future of the Internet.

So What is a Web3 Digital Identity?

The basic concept of a Web3 digital identity is that it refers to a digital identity that is owned and managed by a single individual instead of a centralized entity. Unlike Web2, in which digital identities are managed on centralized platforms like servers or the cloud, Web3 identities are built on decentralized technologies like blockchains. A blockchain is a decentralized database that securely and transparently records all transactions made between multiple parties and users. The idea is that by utilizing blockchain technology, users would actually have more control and say over how they store and manage their personal data.   

Ultimately, Web3 champions the idea of Self-Sovereign Identity, meaning that rather than giving centralized parties the ability to control and process our personal information, users would be in full control of our own data and digital assets instead. Under this new decentralized version of the Internet, Web3 would ensure benefits such as:

• Greater Privacy: Users will be able to decide what personal information they share and with whom, ensuring they only need to provide the most necessary information when logging into websites/applications or engaging with specific transactions.
•  Greater Security: By leveraging decentralized networks and storing their data on their own devices, users will not only have more control over their information, but also have greater protection against breaches from hackers, identity theft, and fraud. 
• Interoperability: Web3 identities are interoperable, meaning that users will be able to access various applications and services using the same set of credentials without needing to create separate accounts or sacrificing personal data. 

Examples of Web3 Digital Identities

Two notable use cases of Web3 digital identities are Ethereum Name Service (ENS) and Bitcoin Name Service (BNS). ENS and BNS are protocols that cement an online user’s identity on a blockchain via unique identifiers. This means that once a person has selected an available name and claimed it, only they have access to that name. 

Ultimately, ENS is specifically designed for the Ethereum blockchain. BNS, however, is built on the Bitcoin blockchain and offer users the following:

• A decentralized Web3 domain name system that is made specifically for the Bitcoin blockchain and is registered by Stacks. 
• Users can generate and manage human-readable domain names that end with the extension that end with Bitcoin-based extensions like “.btc.”
• Domain names can be used to send and receive payments, provide seamless login capabilities, manage multiple Web3 accounts, and cannot be blocked or deleted.

ENS and BNS are not the only two examples of different ways Web3 digital identities are used. Nowadays, there are a variety of other projects and applications that attempt to decentralize the Internet via Web3 digital identities as well.

The Future of the Internet

While Web2 is an important milestone that changed how people use the Internet, it also comes with privacy and security issues that put their digital identities at risk. From emails to home addresses, the personal information that makes up digital identities is owned by central entities. This leaves people with very little control over their data.

Thankfully, Web3 could be the solution to these problems as it proposes a decentralized Internet in which individuals, not centralized entities, have total control over their personal data and digital identities.

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