Digital ID: What are the Pros and Cons?

2 February 2024

There have been numerous initiatives from government agencies, the private sector, and NGOs regarding the development and promotion of digital IDs.

Today, various forms of digital identification are used in daily activities, with the simplest being a username and password to log into applications and websites.

A Single Digital ID System consolidates various forms of identification into a unified and secure digital profile, simplifying authentication across different services. It aims to enhance security, reduce identity theft risks, and provide users with centralised control. Nevertheless, significant and legitimate concerns arise regarding Digital IDs, particularly with regards to privacy.

At the Next Block Expo in Berlin, we asked Blockchain and Web3 professionals about their take on the pros and cons of Digital IDs.

The survey at the Next Block Expo in Berlin gathered insights from Blockchain and Web3 professionals regarding the pros and cons of digital ID. Here are the key takeaways:

Pros:

Digital Ownership and Identity in the World of AI: Respondents highlighted the importance of having a digital identity in the era of AI, where deep fakes and identity-related issues are prevalent. Digital identity can serve as a crucial tool to maintain ownership and authenticity.

Convenience and Access: Digital identity was seen as a means to provide easy access to various products and services, especially in areas like gaming, where a central account could replace the need for separate accounts.

Empowerment and Privacy: Ownership of data and identity by the user was emphasised as a crucial factor. This would allow individuals to control and use their data as needed, without dependence on external authorities.

Enhanced Rights: Digital identity was seen as a way to enhance rights, especially for migrant populations, providing access to services and opportunities that might otherwise be restricted.

Blockchain Technology: The use of blockchain for digital identity was seen as a positive trend, with the potential to add significant value by allowing users to own and control their data.

Cons:

Security Concerns: Many respondents expressed concerns about the security of digital identity, fearing potential hacking and data leaks. The general public's lack of technological knowledge was highlighted as a challenge, making it difficult for individuals to make informed choices about the security of their digital IDs.

Risk of Theft: The risk of losing or having one's digital identity stolen was acknowledged as a drawback. The theft of digital identities could expose individuals to various risks and threats.

Educational Challenges: There were mentions of challenges related to education, emphasising the need for greater understanding among the population and regulators regarding the technicalities of digital identity.

Regulatory Hurdles: The importance of establishing clear regulations around digital identity was highlighted. It was suggested that both the population and regulators need to understand the benefits of digital identity and how to use it effectively.

Privacy Concerns: While digital identity was seen as more secure on the blockchain, there were still concerns about the delicate nature of personal details and the potential misuse of such information if not properly controlled.

In summary, the survey reflected a mix of optimism and caution regarding digital identity, with professionals acknowledging its potential benefits but also recognising the challenges and risks associated with its widespread adoption.